Subsea 7 — Earnings Release 2016

Jul 28, 2016

Subsea 7 S.A. Announces Second Quarter and Half Year 2016 Results

Subsea 7 S.A. Announces Second Quarter and Half Year 2016 Results

Luxembourg - 28 July 2016 - Subsea 7 S.A. (the Group)

(Oslo Børs: SUBC, ADR: SUBCY) announced today results

for the second quarter and first half of 2016 which

ended 30 June 2016.

Jean Cahuzac, Chief Executive Officer, said:

'Subsea 7 delivered a good operational performance in

the second quarter, maintaining its track record of

safe and reliable project execution. Financial

performance continued to be impacted by the industry

downturn with diminishing activity levels as planned

work was completed and client investment in oil and

gas production remained low.

Second quarter revenue of $961 million was down 29% on

the prior year's quarter. Adjusted EBITDA of $280

million and margin of 29% reflected good execution and

reduced risk profiles and costs on certain projects as

offshore phases progressed. Adjusted EBITDA included a

$53 million restructuring charge related to the

Group's global resizing and cost reduction measures.

The restructuring charge for the full year is expected

to be less than $100 million.

Active vessel utilisation increased to 82% in the

second quarter from 71% in the prior quarter as

offshore phases of several projects progressed and

seasonal work in the North Sea increased as

anticipated. Two vessels, Seven Waves and Seven

Antares, which were stacked previously, resumed

activities on a temporary basis contributing to an

increase in total vessel utilisation to 67%.

In June, Subsea 7 announced a further global resizing

and cost reduction programme commensurate with the

lower levels of activity and more efficient ways of

working. The workforce of 9,200 people as at the end

of May will be reduced to approximately 8,000 by early

2017 and up to five vessels will leave the active

fleet. The resizing is expected to deliver annualised

savings of approximately $350 million.

Subsea 7's order intake was $1.6 billion, including

approximately $1.3 billion related to the Beatrice

wind farm project and a Pipeline Bundle solution for

the Callater project, both offshore UK. Order backlog

at the end of June was $7.1 billion, $0.6 billion

higher than at the start of the quarter, this included

adverse foreign exchange impacts of approximately $50

million.

The delivery dates for the new-build vessels were

rescheduled in line with revised operational

requirements; Seven Sun and Seven Cruzeiro will be

delivered at the back end of the contracted delivery

windows agreed with the client. Seven Arctic and Seven

Kestrel will be delivered in the first half 2017. The

overall cost of the new-build programme is expected to

be within original estimates.

The Group's financial and liquidity position remains

strong. Cash and cash equivalents was $1.2 billion as

at 30 June and net cash was $728 million.

In the Northern Hemisphere and Life of Field Business

Unit significant progress was made on the Catcher

project, offshore UK, with the tow-out and

installation of all three Pipeline Bundles. The Aasta

Hansteen project progressed with the first Steel

Catenary Riser installed in Norwegian waters,

completed by Seven Oceans. Offshore Norway, the Martin

Linge and Maria projects progressed well. The Holstein

Deep and Stones projects in the Gulf of Mexico were

substantially completed, as was the Montrose project,

offshore UK. Subsea 7 reorganised its operations to

combine Life of Field with the i-Tech division to

create i-Tech Services, which provides a comprehensive

service offering across the whole lifecycle of oil and

gas fields to clients worldwide.

In the Southern Hemisphere and Global Projects

Business Unit the TEN project, offshore Ghana, was

substantially completed with all Subsea 7 offshore

activities concluded in the quarter. Offshore Angola

the Lianzi Topside project was substantially completed

as was the Baobab project, offshore Ivory Coast.

Operations offshore Egypt progressed well with first

gas achieved in May on the Ha'py field on the East

Nile Delta project with fabrication and testing

underway on the West Nile Delta phase one project.

Offshore Brazil the contract for Pipelay Support

Vessel (PLSV) Seven Mar was cancelled due to Brazilian

maritime law that prioritises Brazilian-flagged

vessels over international vessels of a similar

specification. The owned PLSV Seven Mar was

subsequently substituted for the chartered PLSV

Normand Seven in the contract for Normand Seven with

no other significant changes to the contractual terms

and conditions. Subsea 7's PLSVs on long-term

contracts offshore Brazil delivered another quarter of

high utilisation.

Subsea 7 reorganised its operational and reporting

segments effective 1 July 2016. The three new segments

comprise: SURF and Conventional, i-Tech Services and

Corporate (including Renewables and Heavy-lift). These

will replace the 'Southern Hemisphere and Global

Projects' and 'Northern Hemisphere and Life of Field'

Business Units and Corporate segments previously

reported.

The sustained downturn in oil company expenditure

continues to result in low industry activity and the

timing of new awards to market is still uncertain. The

reduction in Subsea 7's workforce and active vessel

capacity will enable the business to adapt to the

lower levels of activity expected in the foreseeable

future. Early discussions with clients are taking

place more frequently on solutions to offset decline

rates in production of existing fields through

extended tieback and marginal field developments in

various locations worldwide.

Subsea 7 remains focused on commercial and long-term

strategic priorities, enhanced by its new organisation

structure and new ways of working. The fundamental

long-term outlook for subsea field developments

remains positive and the Group is committed to

maintaining its core capabilities and remaining a

leading global subsea engineering and construction

service provider.'

Conference Call Information

Date: 28 July 2016, 12:00 UK Time

Conference ID: 59158977#

United Kingdom: 020 3139 4830; United States: 718 873

9077; Norway: 23 50 05 59; International Dial In: +44

20 3139 4830

For further information, please contact:

Isabel Green, Investor Relations Director; email:

isabel.green@subsea7.com; Telephone: +44 (0) 20 8210

5568