Subsea 7 — Earnings Release 2014

Jul 31, 2014

Subsea 7 S.A. Announces Second Quarter & Half Year 2014 Results

Subsea 7 S.A. Announces Second Quarter & Half Year 2014 Results

Luxembourg - 31 July 2014 - Subsea 7 S.A. (the Group)

(Oslo Børs: SUBC) announced today results for the

second quarter and first half 2014 which ended on 30

June 2014. The Group's reporting segments are set out

in Note 6 'Segment information'.

Second Quarter

Half Year

For the period (in $ millions, except Adjusted EBITDA

margin and per share data) Q2 2014 Unaudited

Q2 2013 Unaudited 1H 2014 Unaudited

1H 2013

Unaudited

Revenue 1,905 1,681 3,573 3,148

Adjusted EBITDA(1) 452 139 716

380

Adjusted EBITDA margin(1) 23.7% 8.3%

20.0% 12.1%

Net operating income 350 41 516

195

Net income/(loss) 265 (13) 401

119

Earnings per share - in $ per share(2)

Basic 0.82 (0.05) 1.27 0.35

Diluted 0.73 (0.05) 1.15 0.34

Weighted average number of common shares

373.1m 332.0m 374.7m 350.0m

As at (in $ millions) 30 Jun 2014

Unaudited 30 Jun 2013

Unaudited

Backlog 11,197 10,421

Cash and cash equivalents

845 1,084

Borrowings 919 1,397

(1) For explanations and reconciliations of

Adjusted EBITDA and Adjusted EBITDA margin please

refer to Note 8 of the Condensed Consolidated

Financial Statements included herein.

(2) For explanations and calculations for basic

and diluted earnings per share please refer to Note 7

of the Condensed Consolidated Financial Statements

included herein.

Jean Cahuzac, Chief Executive Officer, said:

Second quarter 2014

'The second quarter was another strong quarter for

the Group, both operationally and financially. I

continue to be pleased overall with our project

portfolio execution. Consistent with our previous

guidance, the Group's order backlog ended the second

quarter at $11.2 billion. Significant escalations on

existing contracts mitigated the impact of clients

delaying award dates for some of their new projects.

Global vessel utilisation was 91%, which reflects

good operational efficiency and a low level of dry-

docking and planned maintenance in the period.

Strong operational performance and good progress on

the Guará-Lula NE project was evidenced by the

installation of all four submerged buoys being

completed in the second quarter. Installation of the

risers is on-going and is progressing in line with

our expectations. The new-build, the Seven Waves,

commenced operations under contract in Brazil in the

middle of the quarter, approximately three months

ahead of schedule.

Cash generation was strong in the second quarter,

which ended with a cash and cash equivalents balance

of $845 million, an increase of $307 million from the

end of the first quarter of 2014, reflecting our

continued emphasis on optimising working capital.

The Group has now completed the $200 million share

repurchase programme announced in October 2013. In

the light of continued strong performance, the

strength of the balance sheet and confidence in our

business, the Board of Directors has authorised a

further share repurchase programme of up to $200

million. This decision reaffirms our policy of

returning excess cash to shareholders both in the

form of share repurchases and dividends.

Operational highlights for the second quarter of 2014

Significant progress was achieved offshore on the

OFON 2 and Block 31 GES projects in West Africa,

while Erha North and TEN projects moved forward with

fabrication. The CLOV project also progressed well

with first oil being achieved in June, ahead of the

client's schedule.

In the Gulf of Mexico, the Line 60 and 67 projects

remained challenging and further costs were

recognised in the second quarter, caused in part by

the breakdown of a third-party vessel, which has

since been replaced with the Seven Polaris.

Commercial discussions with the client in order to

recover costs are expected to be protracted.

In Australia, the Gorgon Heavy Lift and Tie-ins

project was in its offshore phase and contributed

substantially to revenue in the APME Territory in the

period. Also in offshore phase in the Territory was

the ONGC G1 project, offshore India.

In Brazil, good operational performance on the Guará-

Lula NE project enabled us to complete the

installation of the fourth and final submerged buoy

system in the second quarter, allowing us to re-

deploy the Seven Polaris and the Aker Wayfarer on

other Subsea 7 projects. Riser installation

progressed well and 14 of the 27 risers were

installed by the end of the quarter. The PLSVs under

long-term contract achieved high levels of

utilisation in the quarter and the new-build, the

Seven Waves, commenced operations in mid-May.

In the North Sea, favourable weather conditions

further aided what is normally a strong quarter for

offshore execution. The main projects that progressed

well in the second quarter included Martin Linge,

Delta S2 and Knarr in Norway, and Western Isles in

the UK. In addition, Life-of-Field activity levels

were high, particularly in the UK sector, with an

increased level of vessel utilisation in the quarter

compared to the prior year period.

Outlook

The guidance we have previously provided for the full

year 2014 remains unchanged. We expect Group revenue

to increase and Adjusted EBITDA to increase

moderately from the level achieved in 2013 after

adding back the $355 million full-life project loss

provision recognised on the Guará-Lula NE project

that year.

Tendering activity remains high in many areas where

we operate, which suggests a positive medium- and

long-term outlook for our business. However, given

the continuing uncertainty over the timing of market

awards for a number of large SURF projects, as well

as for our Conventional business, it is premature to

offer guidance beyond the current year.'