Subsea 7 — Earnings Release 2020

Feb 25, 2021

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2020 Results

Subsea 7 S.A. Announces Fourth Quarter and Full Year 2020 Results

Luxembourg - 25 February 2021 - Subsea 7 S.A. (the Group) (Oslo Børs: SUBC, ADR:

SUBCY, ISIN: LU0075646355) announced today results for the fourth quarter and

full year which ended 31 December 2020. Unless otherwise stated the comparative

period is the full year which ended 31 December 2019.

Fourth Quarter and Full Year 2020 highlights

* Adjusted EBITDA of $165 million in the quarter after incurring net costs of

approximately $5 million relating to Covid-19, equating to a margin of 16%

* Adjusted EBITDA of $337 million in the full year after incurring net costs

of approximately $70 million relating to Covid-19 and $86 million charges

relating to restructuring, equating to a margin of 10%

* Net cash generated from operations of $24 million in the quarter and $447

million in the full year

* Cash and cash equivalents of $512 million at year end with net cash of $49

million, including lease liabilities of $254 million

* Resilient backlog of $6.2 billion, up 20% year-on-year, of which 32% in

Renewables, with $4.0 billion expected to be executed in 2021

* Special dividend of NOK 2.00 per share to be recommended for shareholder

approval at the AGM, marking the Board's confidence in the financial

position and outlook for the Group

Fourth Quarter Full Year

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For the period (in $ millions,

except Adjusted EBITDA margin Q4 2020 2020 2019

and per share data)  Unaudited Q4 2019 Unaudited Audited  Audited

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Revenue 1,014 889 3,466 3,657

Adjusted EBITDA((a), (b)

)(unaudited) 165 168 337 631

Adjusted EBITDA margin((a), (b)

)(unaudited) 16% 19% 10% 17%

Net operating (loss)/income

excluding goodwill impairment

charges (35) (16) (428) 77

Goodwill impairment charges (27) (100) (605) (100)

Net operating loss (62) (116) (1,034)  (23)

Net (loss)/income excluding

goodwill impairment charges (76) (29) (500) 18

Net loss (103) (129) (1,105) (82)

Earnings per share - in $ per

share

Basic (0.35) (0.45) (3.67) (0.27)

Diluted((c)) (0.35) (0.45) (3.67) (0.27)

Adjusted diluted((c)) (0.25) (0.12) (1.64) 0.05

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2020 2019

At (in $ millions)     31 Dec 31 Dec

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Backlog - unaudited((d))     6,214 5,187

Cash and cash equivalents     512 398

Borrowings     (209) (234)

Net cash excluding lease

liabilities((e))     303 164

Net cash/(debt) including lease

liabilities((e))     49 (181)

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(a) For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA

margin refer to Note 8 'Adjusted EBITDA and Adjusted EBITDA margin' to the

Condensed Consolidated Financial Statements.

(b) During the year ended 31 December 2020 restructuring charges of $86 million

were recognised (2019: $nil), adversely impacting Adjusted EBITDA and Adjusted

EBITDA margin.

(c) For the explanation and a reconciliation of diluted earnings per share and

Adjusted diluted earnings per share, which excludes the impact of the goodwill

impairment charges, refer to Note 7 'Earnings per share' to the Condensed

Consolidated Financial Statements.

(d) Backlog at 31 December 2020 and 31 December 2019 is unaudited and is a non-

IFRS measure.

(e) Net cash is a non-IFRS measure and is defined as cash and cash equivalents

less borrowings.

John Evans, Chief Executive Officer, said:

In a challenging twelve months Subsea 7 responded well. The Covid-19 pandemic

required radical changes to operations and had an adverse effect on the market

for our oil and gas businesses. In response, we booked incremental operating

costs, restructured our cost base, and recognised material impairments to

goodwill and asset values. Yet, we continued to deliver projects to our clients,

generated positive cash flow, reduced debt and increased our backlog.

As a result of the efforts and dedication of our employees, we completed 20

projects in the year for 15 clients in 10 countries. Although we incurred net

costs of approximately $70 million associated with the Covid-19 pandemic and

restructuring charges of $86 million, Subsea 7 generated Adjusted EBITDA of $337

million in 2020, equating to a margin of approximately 10%. Despite the

uncertain environment, we experienced no contract cancellations. Instead, Subsea

7's backlog of work grew by 20% to $6.2 billion a result of a strong presence in

the growing offshore renewables market and our focus on parts of the oil and gas

market with advantaged economics.

Among Subsea 7's key attributes, its strong cash generation, commitment to

capital discipline and prudent balance sheet management proved vital in

navigating the complexities of 2020. Over the course of the year, cash and cash

equivalents increased by $114 million, resulting in a year end balance of $512

million and net cash of $49 million after including lease liabilities of $254

million. Liquidity remained strong with a revolving credit facility of $656

million and a Euro Commercial Paper programme equivalent to $800 million, both

of which were unutilised at year end.

Given the improvement in the stability and visibility of our markets over the

past six months, a special dividend payment of NOK 2.00 per share, equivalent to

approximately $70 million, is to be recommended by the Board for approval by

shareholders at the AGM. Subsea 7 has returned $2 billion of excess capital to

shareholders over the past decade, and this latest dividend recommendation marks

the Board's confidence in the financial position and outlook for the Group.

Fourth quarter operational review

The SURF and Conventional business unit made good progress on several projects

in the fourth quarter. In Angola, Seven Borealis completed its scope of work on

Zinia, alongside Seven Arctic and Simar Esperanca, which continued operations

into the first quarter of 2021. In the Gulf of Mexico, Seven Oceans and Seven

Pacific continued our offshore activities on Mad Dog 2, while in Brazil, Seven

Seas completed its scope on Lapa NE and the PLSVs continued to achieve high

utilisation. We were also active on several projects in the UK North Sea, with

tie-in activity on Arran, the completion of bundle fabrication for Penguins, and

the completion of pipelay operations at Blythe. Good progress continues to be

made in the engineering and procurement phases of Sangomar in Senegal, as well

as Anchor, King's Quay and Jack St Malo in the Gulf of Mexico. During the

quarter, FEED and engineering activities were completed on the Bacalhau project

in Brazil. Life of Field achieved high vessel utilisation in the fourth quarter

with work in the Gulf of Mexico and the North Sea, as well as continued activity

on the three long-term contracts in the Caspian and the North Sea.

In the Renewables and Heavy Lifting business unit we continued work on the

Seagreen project, with fabrication of the jackets and inner array cables well

underway. In Taiwan, progress on the Yunlin project was delayed due to

restricted site access and environmental constraints. The issues have been

resolved by the Client and operations will recommence in the second quarter,

with agreement reached on the approach to scheduling the balance of the scope in

2021. Seaway Yudin was also on standby in Taiwan during the quarter on the

Formosa II project due to adverse weather conditions.

Overall, utilisation of Subsea 7's active fleet was 82% in the fourth quarter,

compared to 71% in the prior year period, driven by high utilisation of Life of

Field vessels and the PLSVs in Brazil. At 31 December 2020, the active fleet

comprised 30 vessels.

Fourth quarter financial review

Fourth quarter revenue of $1.0 billion increased 14% compared to the prior year

period, reflecting higher activity in Renewables and Heavy Lifting, partially

offset by reduced activity in SURF and Conventional. Renewables and Heavy

Lifting benefitted from progress on the Seagreen project as well as standby

revenue relating to vessels in Taiwan. The decrease in SURF and Conventional

revenue was mainly due to lower Conventional activity in West Africa and the

Middle East.

Adjusted EBITDA of $165 million was flat year-on-year and benefited from the

close-out of certain projects in SURF and Conventional, partially offset by the

impact of net costs associated with Covid-19 of approximately $5 million. During

the quarter the Group recorded goodwill impairment charges of $27 million and

other asset impairment charges of $94 million, resulting in a net operating loss

of $62 million. After a tax charge of $14 million, the net loss for the quarter

was $103 million. During the quarter, net cash generated from operations was $24

million including a $97 million adverse movement in net working capital partly

due to the timing of payments by clients around the year end. Capital

expenditure was approximately $36 million, contributing to an overall decrease

in cash and cash equivalents of $30 million during the quarter.

Full year financial review

In the full year 2020, revenue was $3.5 billion representing a decrease of 5%

compared to the prior year driven by lower activity in SURF and Conventional in

West Africa and the Middle East, partly offset by higher activity in Renewables

and Heavy Lifting. Adjusted EBITDA was $337 million, a reduction of 47% year-on-

year mainly due to the adverse impact of restructuring charges of $86 million,

approximately $70 million of net costs relating to Covid-19, as well as a

reduction in SURF and Conventional activity. The Adjusted EBITDA margin was

10%, down from 17% in the prior year. After goodwill impairment charges of $605

million, other asset impairment charges of $323 million and a tax charge of $33

million, the net loss for the year was $1.1 billion. During the year, net cash

generated from operations was $447 million including a $192 million improvement

in working capital due to active working capital management as well as the

timing of milestone payments on certain projects. Capital expenditure was $183

million, slightly lower than expected due to a strong focus on cash

preservation. Cash and cash equivalents increased by $114 million and the Group

ended the year with net cash, including leases liabilities, of $49 million.

In the full year 2020, Subsea 7 booked new orders of approximately $3.7 billion

and escalations of approximately $0.7 billion. The backlog at the end of

December 2020 was $6.2 billion, of which $4.0 billion is expected to be executed

in 2021.

Streamlining our business units

To align with our strategic focus area "subsea field of the future - systems and

delivery", we have combined our SURF and Conventional and Life of Field business

units. Since January 2021 one business unit, named Subsea and Conventional, has

encompassed our full portfolio of services and products dedicated to the oil and

gas industry, allowing us to streamline the organisation and maximise potential

synergies between the two areas. This includes greater integration of IRM and

well intervention into the integrated field development solutions created by

Subsea Integration Alliance to provide a holistic offering across the life cycle

of our clients' fields. It will also enable us to accelerate our drive to

digitalise field developments. Also from January 2021, the Renewables and Heavy

Lifting business unit has been renamed Renewables and excludes activities

relating to the oil and gas industry. In 2020, oil and gas activity represented

under $1 million of Renewables and Heavy Lifting revenues.

Outlook for full year 2021

After a brief pause in the first half of the year, tendering for oil and gas

projects recommenced at a lower level during the second half of 2020 and

continues at this pace in 2021. Regions with greater activity include Norway,

where fiscal incentives have stimulated an increase in early-stage engineering

activity, the Gulf of Mexico, predominantly focused on low-cost tie-backs, and

Brazil, where the large, pre-salt fields have low oil price break-evens that

continue to attract capital. In addition, Subsea 7 has been selected as

preferred supplier for several projects, including Bacalhau, Scarborough, Pecan

and Rovuma and we are optimistic that some of these will progress to award

during the year.

Tendering in Renewables remains active for projects expected to be awarded to

the industry in nine to twelve months' time, including in Asia, Europe and the

US. While the market for wind turbine installation work remains competitive,

Subsea 7 continues to differentiate itself through its integrated and EPCI

contract offerings, leveraging a strong track record in the management of large,

complex projects across the globe.

Subsea 7's full year 2021 results are likely to be adversely impacted by costs

associated with the Covid-19 pandemic, including more contagious, new variants

of the virus. We currently anticipate that revenue in 2021 will exceed the prior

year level, predominantly driven by greater activity in Renewables. Revenue in

Subsea and Conventional should increase due to the re-phasing of some work from

2020 into 2021. While it is difficult to predict the operational and financial

impact of Covid-19 in 2021, Adjusted EBITDA is expected to improve year-on-year

and we forecast net operating income to be positive.

Conference Call Information

Date: 25 February 2021

Time: 12:00 UK Time

Access the webcast at subsea7.com (https://edge.media-server.com/mmc/p/sdhad4b2)

or register for the conference call at

http://emea.directeventreg.com/registration/4154356. Advance registration is

required.

For further information, please contact:

Katherine Tonks

Head of Investor Relations

email: katherine.tonks@subsea7.com (mailto:katherine.tonks@subsea7.com)

Telephone: +44 20 8210 5568

Special Note Regarding Forward-Looking Statements

Certain statements made in this announcement may contain 'forward-looking

statements' (within the meaning of the safe harbour provisions of the U.S.

Private Securities Litigation Reform Act of 1995). These statements relate to

our current expectations, beliefs, intentions, assumptions or strategies

regarding the future and are subject to known and unknown risks that could cause

actual results, performance or events to differ materially from those expressed

or implied in these statements. Forward-looking statements may be identified by

the use of words such as 'anticipate', 'believe', 'estimate', 'expect',

'future', 'goal', 'intend', 'likely' 'may', 'plan', 'project', 'seek', 'should',

'strategy' 'will', and similar expressions. The principal risks which could

affect future operations of the Group are described in the 'Risk Management'

section of the Group's Annual Report and Consolidated Financial Statements for

the year ended 31 December 2019. Factors that may cause actual and future

results and trends to differ materially from our forward-looking statements

include (but are not limited to): (i) our ability to deliver fixed price

projects in accordance with client expectations and within the parameters of our

bids, and to avoid cost overruns; (ii) our ability to collect receivables,

negotiate variation orders and collect the related revenue; (iii) our ability to

recover costs on significant projects; (iv) capital expenditure by oil and gas

companies, which is affected by fluctuations in the price of, and demand for,

crude oil and natural gas; (v) unanticipated delays or cancellation of projects

included in our backlog; (vi) competition and price fluctuations in the markets

and businesses in which we operate; (vii) the loss of, or deterioration in our

relationship with, any significant clients; (viii) the outcome of legal

proceedings or governmental inquiries; (ix) uncertainties inherent in operating

internationally, including economic, political and social instability, boycotts

or embargoes, labour unrest, changes in foreign governmental regulations,

corruption and currency fluctuations; (x) the effects of a pandemic or epidemic

or a natural disaster; (xi) liability to third parties for the failure of our

joint venture partners to fulfil their obligations; (xii) changes in, or our

failure to comply with, applicable laws and regulations (including regulatory

measures addressing climate change); (xiii) operating hazards, including spills,

environmental damage, personal or property damage and business interruptions

caused by adverse weather; (xiv) equipment or mechanical failures, which could

increase costs, impair revenue and result in penalties for failure to meet

project completion requirements; (xv) the timely delivery of vessels on order

and the timely completion of ship conversion programmes; (xvi) our ability to

keep pace with technological changes and the impact of potential information

technology, cyber security or data security breaches; and (xvii) the

effectiveness of our disclosure controls and procedures and internal control

over financial reporting;. Many of these factors are beyond our ability to

control or predict. Given these uncertainties, you should not place undue

reliance on the forward-looking statements. Each forward-looking statement

speaks only as of the date of this announcement. We undertake no obligation to

update publicly or revise any forward-looking statements, whether as a result of

new information, future events or otherwise.