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Despite this sector’s resilience in2015, facilities companies have experienced increasing challenges this year through
industrial action, the delay of non-essential maintenance, the cancellation of capital projects, the renegotiation
of existing contracts and price competition for new work intensifying. There is also evidence that, where possible,
operators are conducting planned shutdowns and turnarounds of platforms less frequently as part of their drive
towards more efficient operations
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Contracting models are also being changed as certain oil and gas operators are consolidating their work to
fewer suppliers, while others are unbundling contracts and engaging directly with companies further down
the supply chain rather than through the traditional tier one contractors. There is also a trend towards more
performance-based contracts rather than traditional cost plus arrangements
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Positively, there have been limited business failures in this segment, with the majority of casualties heavily exposed
to cancellations in capital projects, reliant on a limited pool of customers, or operating in particularly low margin
markets. Enterprise Engineering, which went into administration earlier in the year, is an example of this.
Marine and Subsea
Tier 2:
Main Contractors and Consultants
Tier 3:
Products and Services, Components,
Sub-Contractors and Sub-Suppliers
Marine/subsea contractors
Heavy lift/pipelay contractors
Floating production storage units
Subsea manifold/riser design and manufacture
Marine/subsea equipment
Subsea inspection services
The falling commodity price did not impact the marine and subsea segment as quickly as reservoir or wells. Indeed,
marine and subsea focused companies recorded revenue growth of 7 per cent in 2014, reflective of a number of
large-scale subsea projects, such as Schiehallion, Greater Laggan and Kraken, incurring significant investment.
Each of these projects is forecast to require ongoing expenditure to 2018.
Although there remains a steady stream of long-standing business, companies in this sector are becoming
increasingly exposed to the fall in the number of new development projects. Revenues are thought to have fallen
by 14 per cent in 2015 with a further fall of 11 per cent expected in 2016 to £8.4 billion. Reduced activity has also
led to an oversupply of vessels domestically and globally, placing downward pressure on day-rates.
Figure 40: UK Marine and Subsea Segment Financial Results and Forecasts
Currency
£ million
2011
2012
2013
2014
2015E
2016E
2017E
Revenue
8,420
8,993
10,275
10,991
9,500
8,424
7,125
% Change
7%
14%
7%
(14%)
(11%)
(15%)
EBITDA
793
979
1,143
1,395
1,222
971
796
EBITDA
margin
9%
11%
11%
13%
13%
12%
11%
Source: EY
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Oil & Gas UK’s
Guidance for the Efficient Execution of Planned Maintenance Shutdowns
is available to download at
http://bit.ly/plannedMS30
A contracting model where the client pays the contractor an agreed mark-up based on the cost of the work.