Subsea 7 — Earnings Release 2014

Mar 4, 2015

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2014 Results

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2014 Results

Luxembourg - 4 March 2015 - Subsea 7 S.A. (the

Group) (Oslo Børs: SUBC) announced today results

for the fourth quarter and the full year which

ended on 31 December 2014.

Jean Cahuzac, Chief Executive Officer, said:

Full year 2014

'Our strong overall performance in 2014 was

achieved against a backdrop of a progressive

deterioration in business conditions and the

environment for our industry continues to be

challenging. We achieved strong underlying

financial results in 2014 with record revenue and

Adjusted EBITDA driven by high levels of project

activity across all four Territories and vessel

utilisation of 82%. Our operational performance

reflected, overall, good project execution

delivered by our experienced teams both onshore and

offshore.

Revenue for the full year 2014 was $6.9 billion, 9%

higher than in 2013. Adjusted EBITDA of $1,439

million reflected positive contributions from all

four Territories and included a $100 million

reduction in the full-life project loss on the

Guará-Lula NE project in Brazil.

The Group's reported net loss for the year of $381

million included a non-recurring, non-cash charge

of $1,183 million related to an impairment of

goodwill recognised in the fourth quarter following

a downward revision of forecast activity levels,

driven by challenging market conditions. Excluding

the goodwill impairment charge, net income was $802

million.

Adjusted diluted earnings per share of $2.32 was

helped by a reduced diluted share count as we

repurchased shares and redeemed and repurchased

convertible bonds during the year.

Subsea 7 is positioned competitively for new market

awards and reported 2014 order intake of $3.3

billion. This comprised $2.1 billion of new awards,

including the Catcher development in the North Sea

for Premier Oil, and $1.6 billion of escalations,

partly offset by a $0.4 billion adverse foreign

exchange impact. Market awards for large SURF

contracts slowed in the latter half of the year as

a number of potential projects were delayed. As a

result our backlog decreased to $8.2 billion at the

end of 2014, of which $4.1 billion is expected to

be executed in 2015.

We finished the year with net debt of $6 million,

down by $220 million from the prior year as a

result of strong net cash generation from operating

activities, which included a $268 million decrease

in net operating assets.

Reflecting challenges facing the oil and gas

industry in the near to medium-term, and in order

to preserve the Group's financial flexibility so

that it can benefit from opportunities that may

arise during the downturn, the board of directors

will not recommend a dividend in respect of 2014 to

the shareholders at the Annual General Meeting.

Fourth quarter 2014

The Group's revenue in the fourth quarter of 2014

was $1.4 billion and Adjusted EBITDA was $297

million, driven by good progress on major projects

and a $16 million reduction in the full-life

project loss on the Guará-Lula NE project. Net

operating loss of $1,082 million reflected the

goodwill impairment charge of $1,183 million and an

$89 million impairment charge, mainly associated

with Seven Polaris and mobile equipment. Excluding

the goodwill impairment charge, all four

Territories were profitable in the quarter, with

margin growth in Brazil, NSC and APME offsetting

margin declines in AFGOM.

The challenging industry environment for new awards

intensified in the fourth quarter as the price of

oil continued to fall. This impacted the already

cost sensitive final investment decision on some

major projects causing further delays to market

awards. New awards and escalations in the quarter

totalled $0.6 billion. This was partly offset by an

adverse $0.4 billion foreign exchange impact due to

the strengthening of the US dollar. Significant

project awards included an installation project for

Shell and the Stampede project for Hess, both

located in the US Gulf of Mexico.

Operational highlights for the fourth quarter 2014

Good execution on various large and technology-rich

projects worldwide drove a strong operational

performance.

In AFGOM significant progress was made on the OFON

2 and the Erha North projects offshore Nigeria and

the Line 67 project offshore Mexico. The CLOV

project, offshore Angola, was successfully

completed.

Within the NSC Territory, a number of projects were

substantially completed in the UK and there was

significant progress on the Knarr project in

Norway. Life of Field activity was sustained under

the Shell, BP and Statoil multi-year frame

agreements.

In Brazil the offshore phase of the Guará-Lula NE

project was successfully executed with all 27

risers installed by the year end leaving some low-

risk pre-commissioning work to be completed early

in 2015. Pipelay Support Vessels (PLSVs) under long-

term contract with Petrobras achieved high

utilisation.

In APME there was continued good progress on the

Gorgon Heavy Lift and Tie-ins project, offshore

Australia. Activity for our SapuraAcergy joint

venture remained low compared to the elevated

levels reported in 2013.

Outlook

The level of tendering activity for new SURF awards

remains subdued as oil companies continue to delay

final investment decisions and although there are

potential projects expected to be awarded to the

market in 2015, the timing remains highly

uncertain.

Notwithstanding this, we are competitively

positioned to win new awards and we have a solid

backlog for execution in 2015, a robust PLSV

business in Brazil and long-term Life of Field

projects that extend into 2016 and beyond. This

backlog underpins our revenue in 2015, which is

expected to be significantly lower than the record

revenue reported in 2014.

We took steps in early 2014 to prepare the Group

for the downturn, implementing cost reduction

programmes and other efficiency improvements. This

focus will continue in 2015 as we further reduce

the size of our cost base to align the business

more closely with market conditions. Nevertheless

we expect Adjusted EBITDA margin to decrease in

2015 as a consequence of lower activity levels and

pricing pressure.

Despite the near-term challenges the fundamental

long-term outlook for deepwater subsea field

developments remains intact and Subsea 7 is well

positioned to benefit from future improvements in

the market.

It is our expertise and experience that make us a

top tier service provider and we will protect our

core strengths to remain differentiated and support

excellent execution.'

****************************************************

***************************

Subsea 7 S.A. is a leading global contractor in

seabed-to-surface engineering, construction and

services to the offshore energy industry. We

provide technical solutions to enable the delivery

of complex projects in all water depths and

challenging environments.

****************************************************

***************************

Contact for investment community enquiries:

Isabel Green

Investor Relations Director

Tel +44 (0)20 8210 5568

isabel.green@subsea7.com

www.subsea7.com