OSLO, July 31 (Reuters) - Oil and gas service firm Subsea reported second-quarter earnings significantly above expectations on Thursday and unveiled plans to buy back another $200 million of its own shares.
Oslo-listed Subsea 7, which provides offshore construction work for energy companies, said tendering activity remained high, keeping its medium- to long-term outlook strong, even though short-term spending cuts by some oil companies might cloud the immediate outlook.
“In the light of continued strong performance, the strength of the balance sheet and confidence in our business, the board of directors has authorised a further share repurchase programme of up to $200 million,” Subsea 7 said a statement.
“This decision reaffirms our policy of returning excess cash to shareholders both in the form of share repurchases and dividends,” it said.
The buyback comes on top of a $200 million share repurchase programme just completed.
In Brazil, where the firm has struggled with a project for Petrobras and has taken big write offs, work has overcome the biggest hurdles and was now progressing according to expectations.
But in Mexico, where the firm is working on a contract for Pemex in the Bay of Campeche, construction was challenging, resulting in extra costs, and Subsea 7 expected protracted talks with the operator about recovering these costs.
Subsea 7’s second-quarter adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose to $452 million from $139 million a year earlier, well ahead of expectations for $372 million.
It also maintained its full-year guidance for revenue to rise compared to 2013 and adjusted EBITDA to increase “moderately” from 2013 but said that the murky short term outlook made it too difficult to guide beyond 2014. (Reporting by Balazs Koranyi. Editing by Jane Merriman)