Main events and developments, Third 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. Sevan Marine will continue to support the project through 2016 and 2017. Payments under the License Agreement remain subject to the field developers’ final investment decision and start of construction of the unit, which is now expected late 2017.

    The FLNG feasibility study for a specific FLNG field development with a US oil major continued during the quarter and is expected to run through the end of 2016. Sevan Marine expects that the project will continue through 2017.

  • 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 ended 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 declining and expected to finish in the coming months with the vessel now successfully producing in the Barents Sea.

    Sevan Marine is 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.

  • Progress on new developments
    Sevan Marine continued to work on new applications for its cylindrical technology, including participating in the Clean Electricity Production from Offshore Natural Gas (CEPONG) study being supported by the Scandinavian research institute SINTEF and other industrial partners. The CEPONG study includes evaluating the use of a cylindrical hull as an offshore natural gas power plant with CO2 capture and reinjection.

    Sevan Marine also continued development work on its ultra-deepwater application using steel catenary risers (SCRs). 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 US Gulf of Mexico and Sevan Marine believes it will provide a substantially cheaper solution compared to the disconnectable, turret based solutions used today.

  • Increased study activity
    The industry focus on cost-effective solutions and increased acceptance of the Sevan Marine cylindrical design is leading to increased early phase study work. During the quarter, Sevan Marine was awarded a study from OMV Norge AS to evaluate the Sevan Marine cylindrical hull design for application on the Wisting field development in the Barents Sea. In addition, Sevan Marine completed a study for an oil major regarding the use of the Sevan Marine design for a gas development in the Caribbean.

    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 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 continue to lead to increased study work for the Company as the market improves.

  • Further cost reductions
    In order to align the organization with the expected lower activity in the industry in 2017, further cost reduction initiatives were started in Q3. An additional headcount reduction of 10 to 15 people will be carried out in Q4 2016. A change in leadership was announced in October 2016 which will take effect from January 01, 2017 with the CEO Carl Lieungh stepping down and the current CFO Reese McNeel assuming the role as CEO and CFO. As a result of these restructuring measures, the Company will take a one-off restructuring charge in Q4 2016 in the range of USD 1.0 to 1.5 million. The Company has taken substantial cost reduction measures over the past 24 months including reductions in staff and overhead cost of more than 50 percent.

  • HiLoad
    HiLoad LNG continued the marketing and development of both the HiLoad LNG 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 in Q2 2016. HiLoad LNG is currently in discussions with Vires regarding future cooperation. The FRD has attracted substantial interest. The FRD is a cost effective alternative to standard FSRU solutions, particularly for small scale regasification projects.

  • Positive 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. Workload across the KANFA group declined during the quarter with projects now completed and limited new work coming in.

  • Logitel Offshore
    We refer to the Q2 2016 earnings release and comments made regarding the circumstances surrounding the legality and potential claims in relation to the Logitel Offshore Agreements. Sevan Marine is dedicated to seeking the best outcome for the Company and its shareholders.

    In this regard, Sevan Marine has commenced legal action against Logitel Offshore Pte Ltd claiming payment of approximately USD 60 million in relation to the Logitel loan, and in parallel has commenced 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.

    The outcome of this situation, any potential recovery of value and the timing of such recover remains uncertain. As such, there remains material uncertainty regarding both the amount and timing of any payments in relation to the Logitel agreements.

  • 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 for 2016.

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

Operating revenue for the third quarter 2016 was USD 5.1 million (USD 16.9 million). EBITDA was negative USD 0.8 million (negative USD 0.3 million), and operating loss was USD 0.8 million (loss of USD 0.4 million). Net profit was USD 0.4 million (loss of USD 11.6 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 profit in the quarter is positively impacted by book gains on currency holdings and the reversal of a historical tax provision related to the completion of the Goliat project.

As of Q3 2016, cash and cash equivalents amounted to USD 27.0 million (USD 31.7 million). The change in cash and cash equivalents is largely attributable to working capital changes in the Topside and Process segment as well as continuing operating losses. It is expected that the working capital change in the Topside and Process segment will improve in Q4 2016 when further project milestone payments are expected to be received. Floating Production cash flow is expected to remain negative for the coming quarters due to ongoing operating losses and further restructuring charges driven by a lack of sufficient work load and license fees.

The equity ratio was 57.4 percent as of September 30, 2016 (51.3 percent).


  • Sevan Marine continues to face a difficult market with many of its key prospects being further delayed in Q3. 2016 and 2017 will be challenging years. The Board is of the opinion though that the increased focus on cost effective solutions in the petroleum industry will be favourable for the Company in the medium to longer term. Floating units based on Sevan Marine’s technology represent inherent advantages. Amongst these are excellent motion characteristics, lower operating costs, high deck load capacity, large storage space and substantial lower cost compared with alternatives when a turret is needed.

  • In the Floating Production Segment, work on the Dana Western Isles and UK sector FPSO projects is expected to continue through 2016 and 2017. Sevan Marine is expecting the variable license fee related to the Dana Western Isles project to start generating revenue from late 2017 while any license fee on the UK sector FPSO opportunity is also now expected late 2017. Sevan Marine expects that it can secure further feasibility study work in 2017 particularly in relation to the FLNG project with the U.S. oil major and Barents Sea opportunities.

  • Sevan Marine is 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 HiLoad during 2017 and that the high interest in the FRD will materialize into further revenue in 2017.

  • 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. KANFA is tendering on several projects which may lead to additional work from 2017. Cost reduction measures are being taken as workload is insufficient. Sevan Marine is considering its strategic options with respect to its investment in KANFA AS.

  • 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 the changing market place, increased willingness of oil majors to consider different technologies and Sevan Marine’s own business development efforts.

  • Sevan Marine is confident given its unique cost effective solutions, 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 years to come.

  • Sevan Marine is focussing its efforts on independently developing, marketing and supporting the execution of projects based on its unique designs and engineering competence. In doing such, the Company is seeking to work with industry leading partners to further promote and develop its designs and concepts.

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.

pdfQ3 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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