MILAN, April 21 (Reuters) – Italy’s Saipem is working to expand new lines of business including wind farms to help it cope with a slump in order books among oil services groups.
Oil contractors around the world have come under pressure as weak oil prices force oil majors to cut billions of dollars in costs and delay final investment decisions on projects.
“We’re looking to grow in areas like wind farm projects, especially in the North Sea, and dismantling oil and gas platforms,” Saipem’s chief executive Stefano Cao said on Friday following the company’s first quarter results.
Production cuts by OPEC have helped crude prices, but recovery for oil contractors is expected to be uneven, with those finding it tougher to cut capacity and costs lagging others with more flexible business models.
Saipem, which has both onshore and offshore drilling assets, is a market leader in subsea engineering and construction (E&C) including the world’s most expensive oil field, Kazakhstan’s Kashagan.
“Pressure continues this year, especially in offshore E&C and few initiatives are being sanctioned… but we are on the right path” Cao said.
Saipem, jointly controlled by oil major Eni and state-lender fund FSI, said earlier on Friday it was sticking to forecasts for the year after operating profits in the first quarter fell 21 percent.
A slowdown in the group’s core offshore E&C business as well as in drilling led to a 20.3 percent fall in revenues to 2.3 billion euros ($2.5 billion) in the period.
“Saipem’s order intake was truly disappointing. Although we were prepared for a weak quarter, we believe that group’s order intake is the lowest since 2001,” broker Mediobanca said, but added margins had improved.
At 0816 GMT Saipem shares were up 1.9 percent, while the European oil and gas sector was down 0.5 percent.
Some analysts have said Saipem will need to streamline its business and sell off assets to help fund development.
But Cao denied a break up was being considered. “No way whatsoever. I’m not here to break up the company,” he said, adding the group could consider joining forces with others to help improve its onshore drilling performance.
(Editing by Agnieszka Flak and Alexander Smith)
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