Main events and developments, Second Quarter 2016

  • Focus on UK sector FPSO prospect and FLNG study with oil major
    Sevan Marine has continued to provide engineering support for the UK sector FPSO prospect during the quarter. Payments under the License Agreement remain subject to the field developers’ final investment decision and start of construction of the unit, which is not expected before 2017. Sevan Marine expects to continue to provide engineering support through 2016 and into 2017.

    A continuation of the FLNG feasibility study for a specific FLNG field development with a U.S. oil major was agreed and work started during the quarter which the agreed phase expected to run through the end of 2016.

  • Continued work on existing projects
    Sevan Marine continued to provide engineering and site support services for the Goliat, Logitel Offshore and Dana Western Isles projects. Work on the Logitel Offshore project will come to an end in Q3 2016 as the construction contracts with the yard in China have been cancelled. The work for Sevan Marine on the Goliat project is expected to decline substantially from Q3 2016 with the vessel now successfully producing in the Barent’s Sea.

    Sevan Marine remains entitled to a variable license fee linked to production with respect to the Dana Western Isles project. Sevan Marine continues to support the construction of the vessel at the COSCO yard in China, and Dana has announced that the FPSO will not commence production before the second half of 2017.

  • Further development work on the ultra deep water application with steel catenary risers
    Substantial progress was made regarding the Sevan Marine design for use in the U.S. Gulf of Mexico with Steel Catenary Risers (SCRs). A successful model test was carried out at the Offshore Technology Research Centre (OTRC) at Texas A&M University in May 2016 which attracted substantial market interest. Further testing and development is being planned for late 2016 and 2017. Sevan Marine hopes to obtain approval to use its unique cylindrical design with steel catenary risers as a non-disconnectable FPSO with the ability to retain cargo during a hurricane. This would be a first in the U.S. Gulf of Mexico and Sevan Marine believes it will provide a substantially cheaper solution compared to the disconnectable, turret based solutions used today.

  • Increased market awareness through increased business development activity
    Sevan Marine met with numerous oil companies, lease providers, suppliers, partners and clients in the U.S., China, Australia and Europe during the quarter. Sevan Marine also held a two day user forum in Arendal, Norway bringing together current operators and partners of existing Sevan Marine designed units. The feedback received is very positive. The Sevan Marine cylindrical design is widely seen by oil majors around the world as a credible and proven alternative to other floating installation designs. The inherent advantages are also well understood. Amongst these are excellent motion characteristics, lower operating costs, high deck load capacity, large storage space and substantial lower construction cost compared with alternatives when a turret is needed. Sevan Marine remains optimistic that the increased industry focus on cost-effective solutions will lead to increased work for the Company as the market improves.

    This increased market awareness has already led to the Sevan Marine concept being selected for small feasibility studies for projects in the Barents Sea and Caribbean.

  • HiLoad
    HiLoad LNG continued the marketing and development of both the HiLoad offloading system for FLNG and the Floating Regas Dock (“FRD”) for small scale regasification projects. With respect to the FRD, initial Pre-FEED work for the Vires Energy Corporation project in the Philippines was completed.

  • Improved Performance of KANFA
    The KANFA group saw improved results in the quarter driven by further recognition of margin on the USD 50 million OCTP project from Yinson Production which was successfully delivered in the quarter. KANFA maintained a solid workload in the quarter driven by the finalizing of the OCTP project.

  • Disposal of KANFA Aragon AS
    Sevan Marine announced on June 28, 2016 the successful disposal of its 50 percent stake in KANFA Aragon AS to SembCorp Marine Ltd for cash consideration of NOK 20 million.

    The disposal represents a further positive step in Sevan Marine’s efforts to reduce complexity, reduce cost and increase focus on its core cylindrical hull technology.

  • Logitel Offshore
    We refer to the press releases of May 23, 2016, August 05, 2016 and the Q1 2016 earnings release and comments made regarding the circumstances surrounding the legality and potential claims in relation to the Logitel Offshore Agreements. The Board of Sevan Marine maintains that substantial claims may be made against the parties involved, and Sevan Marine is dedicated to seeking the best outcome for the Company and its shareholders. The first step in this respect will be to commence legal action against Logitel Offshore Pte Ltd claiming payment of an amount exceeding USD 60 million in relation to the Logitel loan, and in parallel to commence arbitration against both Logitel Offshore Pte Ltd and Teekay Offshore Partners LP claiming payment of an amount of approximately USD 10 million in relation to the Fourpartite Agreement. Sevan Marine reserves the right to, at any time, pursue other involved parties. Agreements suspending time-bar limitations have been entered into with such involved parties.

    On August, 04 2016, Teekay Offshore Partners (“Teekay”) also made the announcement of the cancellation of the shipyard contracts for the two remaining Logitel Offshore units.

    The outcome of this situation and any potential recovery of value remains uncertain. As such, there remains material uncertainty regarding both the amount and timing of any payments in relation to the Logitel agreements. In accordance with IFRS accounting standards and based on the cancellation of the shipyard contracts, Sevan Marine has recorded a further non-cash impairment of USD 13 million in relation to the Logitel loan as per June 30, 2016. Sevan Marine will do its utmost to realize the underlying merits and outperform the impairments taken over the coming months.

  • Strategic Review Process
    Sevan Marine appointed Pareto Securities in April 2015 to explore potential strategic options for the Company. During the quarter, Sevan Marine received indicative expressions of interest from industrial parties regarding the purchase of certain assets of Sevan Marine. These offers reflected a discount to the current market value of the Company, and the Board has therefore decided to focus the strategic review process on Sevan Marine’s continued development as a standalone Company.

    Sevan Marine will focus its efforts on independently developing, marketing and supporting the execution of projects based on its unique cylindrical hull design. In doing such, the Company will seek to work with industry leading partners to further promote and develop the concept.

  • Dividend policy
    The Board has communicated an intention to pay a dividend depending upon developments. Given the uncertain market outlook, and the unresolved situation with regard to Logitel, no extraordinary dividend is planned in 2016.

Main Figures, Second Quarter 2016
(Previous quarter figures in brackets)

Operating revenue for the second quarter 2016 was USD 16.9 million (USD 21.0 million). EBITDA was negative USD 0.3 million (negative USD 7.0 million), and operating loss was USD 0.4 million (loss of USD 7.1 million). Net loss was USD 11.6 million (loss of USD 8.1 million). EBITDA is positively impacted by results in the Topside and Process segment where further margin on the OCTP project has been recognized in the quarter. The net loss in the quarter is negatively impacted by the further impairment of the Logitel Loan.

As of June 30, 2016, cash and cash equivalents amounted to USD 31.7 million (USD 41.3 million). The change in cash and cash equivalents is largely attributable to working capital changes in the Topside and Process segment as well as the NOK 20 million in proceeds received from the sale of Sevan Marine’s 50 percent stake in KANFA Aragon AS.

The equity ratio was 51.3 per cent as of June 30, 2016 (44.9 per cent).


  • Sevan Marine faces a difficult market with many key prospects continuing to be delayed. The Board expects that 2016 and 2017 will be difficult years. Substantial cost reduction measures have already been taken, including redundancies as well as temporary salary reductions and reduced working time by all employees. Despite further cost reductions, which will be required, the Board expects Floating Production cash flow to be negative in the coming quarters due to ongoing operating losses driven by a lack of work and license fees.
  • In the Floating Production segment, work on the Dana Western Isles and UK sector FPSO projects is expected to continue through the year and into 2017. Work on the Goliat and Logitel Offshore projects is expected to end in the coming months. Sevan Marine remains hopeful that it can secure further feasibility study work for 2016 and 2017 in addition to the FLNG study with the US oil major and small studies already received.
  • Sevan Marine is also hopeful that the Vires Energy Corporation Project in the Philippines will proceed with further FEED and follow-up work related to the FRD provided by Sevan Marine.
  • In the Topside and Process segment, KANFA AS does not expect to be awarded any substantial process package awards in 2016 given the low market activity. Cost reduction measures may also need to be taken if workload is insufficient. It is expected that the working capital change and cash flow in the segment will continue to be negative during Q3 2016 prior to reversing near year end 2016 when the final project milestone on the OCTP project is expected to be received. Technip has the option to take over the remaining 51 percent of KANFA AS in 2017 based on a multiple of 2014, 2015 and 2016 results. No substantial gains can be expected if Technip should decide to exercise this option.
  • Sevan Marine has received substantially increased interest in its unique design from many, high quality, global oil and gas majors. Sevan Marine believes this is a reflection of both the changing market place, increased willingness of oil majors to consider different technologies and Sevan Marine’s own business development efforts.
  • Sevan Marine believes given its unique cost effective solution, the increased market interest, its solid cash position and cost reduction plans that it has the resources and ability to successfully weather the current slowdown in activity and to regain profitability in the years to come.

Read more in the attached report.

Carl Lieungh (CEO) and Reese McNeel (CFO) will today at 10:00 a.m. (CET) give a presentation of the results at the Company’s premises, Skøyen, Verkstedveien 3, 0277 Oslo.

The presentation will be in English.

The presentation will also be broadcasted LIVE on

It is recommended that you log on to the webcast 5 minutes in advance of the presentation.

If you wish to attend the presentation in Oslo, please confirm by email: This email address is being protected from spambots. You need JavaScript enabled to view it.

If you wish to call-in to listen to the presentation, please find the call-in details attached.

pdfQ2 2016 Report
pdfCall in Details

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The information in this announcement is subject to the disclosure requirements of the Norwegian Securities Trading Act section 5-12 and/or the Oslo Børs - Continuing Obligations.

Sevan Marine ASA is specializing in design, engineering and project execution of floating units for offshore applications, based on its patented cylindrical floater technology. Sevan Marine ASA is listed on Oslo Børs with ticker SEVAN. For more information, please refer to

For more information please contact:

Carl Lieungh, CEO, Sevan Marine ASA (Media)
+47 37 40 40 00 office

Reese McNeel, CFO, Sevan Marine ASA (Analysts)
+47 37 40 40 00 office

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