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OSLO, March 2 (Reuters) - Oslo-listed oil services firm Subsea 7 reported forecast-beating core earnings on Thursday and announced plans to pay a special dividend, sending its shares surging to the highest level since 2013.
The maker of seabed equipment and pipes for oil and gas extraction has sharply cut staff numbers in recent years to contend with falling demand from energy firms following a plunge in oil prices of more than 50 percent.
The company said its board would recommend a one-off dividend of 5 Norwegian crowns per share, equivalent to a total payout of about $200 million, reflecting a strong operating performance and good liquidity.
The firm’s shares were up 10 percent at 130 crowns at 0842 GMT, its highest level in three-and-a-half years and on track for their biggest one-day rise since early 2009.
Brokerage Pareto, with a “buy” rating on Subsea 7, said strong project execution and the first dividend payment since 2013 helped to trigger the positive reaction. Brokers Carnegie, which also recommends “buy”, said Subsea 7’s stock could hit 150 crowns near-term and as much as 200 crowns later this year.
Subsea 7 reported adjusted earning before interest, tax, depreciation and amortisation of $288 million for the fourth quarter, 54 percent ahead of the average forecast of $187 million in a Reuters poll of analysts.
“This performance reflected successful implementation of our cost reduction measures, while maintaining high standards of execution and preserving the group’s expertise and capability,” Subsea 7 Chief Executive Jean Cahuzac said.
Since the start of 2014, the company’s workforce has been cut by over 40 percent to some 8,000 by early 2017, while it has reduced its fleet by 12 vessels, including four mothballed vessels, to 33 vessels.
The company maintained its guidance for 2017 revenues to be in line with 2016 and for a drop in operating margins. It said there were prospects for an increase in subsea project awards within the next 12 months as oil prices have stabilised.
Brokerage Bernstein said that while the latest numbers were good, Subsea 7’s prospects were uncertain, and hence reiterated an “underperform” rating.
Siem Industries, the holding firm of Subsea 7 Chairman Kristian Siem and his family, is the company’s top shareholder with a stake of 21.3 percent. (Reporting by Nerijus Adomaitis, editing by Terje Solsvik and Jane Merriman)