Oceaneering International, Inc. announced that it has secured a three-year Field Support Vessel Services contract from BP p.l.c. Oceaneering will provide project management, engineering, and vessel services offshore Angola on Blocks 18 and 31, commencing February 1, 2012. The contract provides for two option periods of one year each, exercisable by BP.
Two chartered vessels, the Ocean Intervention III and the Bourbon Oceanteam 101, will be supplied under the contract. Each vessel will be outfitted with two Oceaneering work class remotely operated vehicles (ROVs) capable of working in 3,000 meters of water. Oceaneering will mobilize its chartered vessel, the Ocean Intervention III, from the U.S. Gulf of Mexico to Angola commencing in early January 2012. The contract scope of work includes light subsea construction, inspection, maintenance, and repair services on existing and future subsea infrastructure. The contract has a provision for Oceaneering to provide, at BP’s option, a third vessel after the commencement date.
M. Kevin McEvoy, President and Chief Executive Officer, stated, “We are pleased to have secured this contract with BP, one of our largest customers. This project builds on our well-established deepwater vessel project capabilities in the U.S. Gulf of Mexico and represents a significant geographic expansion with considerable backlog for our Subsea Projects business. It further reinforces our long-term commitment to Angola, which is a growing market for Oceaneering’s services and products.
BP’s involvement with Angola goes back to the mid 1970s. During the 1990s, BP made very substantial investments in Angola’s offshore oil, and it is now an important part of the company’s upstream portfolio. The UK based oil giant on Tuesday confirmed that it has gained access to five more deepwater exploration and production blocks offshore Angola.
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Oceaneering International, Inc. today reported third quarter earnings for the period ended September 30, 2011. On revenue of $602 million, Oceaneering generated net income of $78.6 million, or $0.72 per share.
These results include an $18.3 million pre-tax gain, $11.9 million after tax using an incremental tax rate of 35%, on the previously announced sale of the Ocean Legend, a mobile offshore production system. Also, the third quarter results included a lower provision of income taxes due to recognition of $4.9 million of tax benefits principally related to prior years.
Oceaneering reported revenue of $516 million and net income of $59.2 million, or $0.54 per share, for the third quarter of 2010. For the second quarter of 2011, Oceaneering reported revenue of $546 million and net income of $56.7 million, or $0.52 per share.
Quarterly earnings were also higher year over year on the strength of record quarterly operating income from Remotely Operated Vehicles (ROV) and Subsea Products. Sequentially, Oceaneering’s quarterly EPS increase was attributable to improved operating income from four of its five business segments: ROV, Subsea Products, Subsea Projects and Advanced Technologies.
M. Kevin McEvoy, President and Chief Executive Officer, stated, “We are very pleased with our record EPS for the quarter, particularly in light of regulatory-constrained activity in the U.S. Gulf of Mexico (GOM). Our overall operations performed within expectations and we remain on track to achieve record EPS for the year.
“Compared to the second quarter of 2011, ROV operating income increased on the strength of higher international demand to provide drill support and vessel-based services. Our quarterly ROV days on hire increased to an all-time high of over 19,000 days. Subsea Products operating income rose on profit increases from most of our product lines, led by increased sales of valves and Installation and Workover Control System services. Subsea Products backlog at quarter-end was $403 million, comparable to our June 30 backlog of $405 million and up from $308 million one year ago.
“Sequentially, Subsea Projects operating income was higher due to the gain on the sale of the Ocean Legend and a slight seasonal increase in demand for our diving services. Advanced Technologies operating income improved on higher demand from the U.S. Navy to perform engineering services and submarine repair work.
“We are adjusting our 2011 EPS guidance range to $2.11 to $2.15, from $1.90 to $1.98, to reflect our third quarter results and our EPS outlook for the fourth quarter of $0.48 to $0.52, based on an expected quarterly tax rate of 31.5%. We continue to anticipate that our ROV and Subsea Products segments will achieve record operating income in 2011.
“We are initiating 2012 EPS guidance with a range of $2.35 to $2.55, as we expect another record earnings year. For our services and products, we anticipate continued international demand growth and a moderate rebound in overall activity in the GOM. The major determinant of our guidance range spread is the amount of operating income growth we generate from our Subsea Projects business.
“Compared to 2011, we anticipate all of our segments will have higher operating income results in 2012; ROV on greater service demand off West Africa and in the GOM and Subsea Products on the strength of higher tooling sales and increased throughput at our umbilical plants. For Subsea Projects, we foresee a gradual recovery in the GOM during 2012 and a substantial increase in revenue and operating income as a result of an anticipated international expansion of our deepwater vessel project capabilities.
“Looking beyond 2012, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. With our existing assets, we are well positioned to supply a wide range of the services and products required to support safe deepwater efforts of our customers.”
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