Aker Solutions and Statoil cancel Cat B contract
24 June 2013 - Aker Solutions ASA and Statoil ASA have cancelled a contract for delivery of a semi-submersible rig capable of year-round well-intervention services on the Norwegian continental shelf.
The companies in April 2012 agreed Aker Solutions would build the so-called Category B (Cat B) rig and use it to provide Statoil with a range of well-intervention and drilling services for an initial eight years, starting in 2015. The technology development needed to build the rig has since proven to be considerably more demanding than initially anticipated and the parties on 24 June mutually agreed to terminate the contract with immediate effect.
"Aker Solutions and Statoil have together concluded that the project can't be realised within the framework of the contract," said Per Harald Kongelf, regional president for Norway at Aker Solutions. "Unfortunately, the technological issues weren't solved in the initial system definition phase of the project. We still believe in the concept of Cat B, but the technology needs more time to be developed."
Well-intervention services are used to boost recovery rates from oil and gas production wells and have traditionally taken place on fixed platforms. Ships and rigs have in more recent years been developed to perform the same type of service on subsea wells where recovery rates have been much lower. Developing the subsea technology needed for Cat B to provide the required services in shallow waters proved to be particularly challenging.
"We made significant progress in developing Cat B," Kongelf said. "We will seek to use the experience we've gained to explore future possibilities for maturing and realising this type of technology."
Each party will be accountable for its own project-related costs. Aker Solutions will in the second quarter book a one-off cost of NOK 375 million, of which NOK 355 million shall be recognised as an impairment of the investments in the Cat B project, while the remaining are operating costs. The charter period's contract value of NOK 11.2 billion will be removed from Aker Solutions' order backlog, which totalled NOK 71.7 billion at the end of March 2013.
The Cat B project was within the company's oilfield services business unit, which Aker Solutions has previously said it intends to spin off. The clarification surrounding the Cat B contract is expected to aid this process.
ENDS
For further information, please contact:
Media:
Bunny Nooryani, Chief Communications Officer, Aker Solutions. Tel: +47 67 59 42 71, Mob: +47 480 27 575, E-mail: bunny.nooryani@akersolutions.com
Investor relations:
Lasse Torkildsen, SVP Investor Relations, Aker Solutions. Tel: +47 675 13 039, Mob: +47 911 37 194, E-mail: lasse.torkildsene@akersolutions.com
Aker Solutions provides oilfield products, systems and services for customers in the oil and gas industry world-wide. The company's knowledge and technologies span from reservoir to production and through the life of a field.
Aker Solutions brings together engineering and technologies for oil and gas drilling, field development and production. The company employs approximately 28 000 people in more than 30 countries. We apply the knowledge and create and use technologies that deliver our customers' solutions.
Aker Solutions ASA is the parent company in the group, which consists of a number of separate legal entities. Aker Solutions is used as the common brand and trademark for most of these entities. In 2012 Aker Solutions had aggregated annual revenues of approximately NOK 45 billion. The company is listed on the Oslo Stock Exchange.
This press release may include forward-looking information or statements and is subject to our disclaimer, see www.akersolutions.com.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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