Aker Solutions 2Q Earnings Lower Than Expected

- Aker Solutions 2Q Earnings Lower Than Expected

Friday, August 12, 2011
Aker Solutions

Aker Solutions' operating revenues in the second quarter of 2011 were NOK 7.8 billion. Earnings before interest, tax, depreciation and amortization amounted to NOK 636 million. Order intake in the quarter was NOK 14.3 billion.

"We have a strong order intake which reflects high tendering and activity levels across all business segments. In fact, our order backlog has increased 19 percent since the beginning of the year. This is in line with our long term growth plan. However, this quarter has also provided us with some reminders about the importance of further improving our operational performance," said Øyvind Eriksen, executive chairman of Aker Solutions.

Second quarter consolidated revenues was NOK 7 809 million, compared with NOK 8 096 million in the same period in 2010. EBITDA for the second quarter of 2011 was NOK 636 million (8.1 percent EBITDA margin), compared to NOK 853 million one year ago. Profits in the quarter were negatively affected by execution challenges and the final arbitration ruling on Blind Faith.

"In the second quarter quality costs related to execution issues in Brazil alone amounted to NOK 130 million in our Subsea and Process Systems businesses. With quality and customer satisfaction as two of our top priorities, this is obviously disappointing," Eriksen said.

Order intake in the second quarter was NOK 14.3 billion. At the end of the second quarter Aker Solutions' order backlog was NOK 46 billion - an increase of NOK 5.5 billion from the previous quarter.

During the second quarter Aker Solutions concluded the structural changes outlined at the company's capital markets day in December 2010. The final step was the demerger and separation from specialized EPC contractor Kværner ASA.

"Today Aker Solutions is a pure oil service player focusing on engineering, technology, products and field-life solutions. We have a strong cash position fueled by solid earnings and gains from strategic divestments. We will convert our financial strength to capacity with the aim of facilitating further growth. However, we will also ramp up our efforts of building a stronger quality culture to further improve our day-to-day operations," said Øyvind Eriksen.

"Our growth plans are ambitious and we need qualified people to meet these objectives. In the first half of 2011 we have hired almost 1 200 new colleagues worldwide. I am pleased to see that so many new colleagues share our technology vision and company values," adds Eriksen.

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EIA: Higher US Gas Production Expected for 2011

- EIA: Higher US Gas Production Expected for 2011

Tuesday, July 12, 2011
Dow Jones Newswires
NEW YORK
by Amy D'Onofrio

The U.S. Energy Information Administration raised its forecast for natural-gas production for 2011, and said inventories are expected to come close to last year's record levels this fall.

The EIA also expects demand for gas to be slightly stronger than previously expected.

U.S. gas production is expected to average 65.4 billion cubic feet a day in 2011, up 5.8% from last year. The forecast was up from last month's prediction of 4.5% growth in output, according to the agency's monthly Short Term Energy Outlook released Tuesday.

"Growing domestic natural gas production has reduced reliance on natural gas imports and contributed to increased exports," the EIA said.

That increase in production is partly due to drilling to access gas in shale rock formations, where output has shot up in recent years.

Pipeline gross exports to Mexico and Canada are expected to average 4.2 Bcf/d in 2011, up from 3.1 Bcf/d in 2010, while liquefied natural gas imports are seen falling to 1 Bcf/d, from 1.2 Bcf/d in 2010, the agency said.

Production continues to grow faster than consumption. Total gas consumption is forecast to increase by 2% in 2011 to 67.4 billion cubic feet a day, on higher demand from industrial and electric power consumers.

Consumption is expected to drop slightly in 2012 to 67.3 billion cubic feet a day. The EIA expects residential and commercial consumption to decline because cooler weather is expected in the Midwest and West, the EIA said.

Natural-gas prices at the benchmark Henry Hub should average $4.26 per million British thermal units over the second half of 2011, "as the inventory deficit relative to last year narrows," the EIA said. In June, prices averaged $4.54, or 34 cents higher than the forecast last month.

Uncertainty over natural gas prices is still lower this year compared with the same time last year, the statistical arm of the Department of Energy said.

Gas prices will likely come under downward pressure as inventories rise during the summer months, but prices are expected to average $4.54 in 2012 as production growth slows.

This year, inventories should remain high, however.

Inventories are forecast to surpass 3.8 trillion cubic feet at the end of October "because of current high production rates and a milder summer relative to last year," according to the report.

Copyright (c) 2011 Dow Jones & Company, Inc.

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SSGC: Pakistan's Estimated Gas Reserves Higher Than Expected

- SSGC: Pakistan's Estimated Gas Reserves Higher Than Expected

Monday, May 23, 2011
Asia Pulse Pte Ltd.

Pakistan holds an estimated 33 trillion cubic feet (tcf) of tight-gas reserves, higher than the existing estimated 27 tcf in the country, said the deputy managing director of operations of Sui Southern Gas Company (SSGC) Syed Hassan Nawab.

Nawab made the comment addressing the 7th International POGEE Conference 2011 for Oil and Gas and Energy Industry at the Karachi Expo Center on Wednesday. Joint Secretary Ministry of Petroleum and Natural Resources Raashid Bashir Maser was the chairman of the session.

Referring to a report of Pakistan Petroleum Exploration and Production Companies Association (PPEPCA), Nawab said the country will have sufficient natural gas if tight gas is explored with the help of advanced technology. He pointed out that the government has prepared the draft policy for tight gas and it is currently with the Council of Common Interest (CCI) and this will be approved soon.

Quoting some of the incentives in the draft tight gas policy, he said that investors will be offered 40 percent premium on the current gas price for exploring tight gas. Similarly, 50 percent premium will be offered on current gas price to investors if they commission their project by December 2011.

Hassan Nawab said that Pakistan can also produce gas from Thar coal with the help of underground coal gasification (UCG) technology. There is a potential to produce 35 tcf of coalbed methane from Thar coal, he noted.

He said that the availability of natural gas can be enhanced through import of liquefied natural gas (LNG) from neighboring countries like Qatar and Iran-through 3rd party arrangements. He said the country has a very large network of pipelines and the importer of LNG can pump this gas to their buyers in upcountry destinations.

(C) 2011 Asia Pulse Pte Ltd.

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