* Sees significant adverse impact on year results
* Hit stems from ongoing dispute over Yme platform
* CFO to step down in May, follows change of CEO
* Results due on March 2
* Shares down 7.5 percent
By Sara Webb
AMSTERDAM, Jan 24 Dutch maritime oil and
gas engineer SBM Offshore said a dispute with a client
would lead to "a significant additional adverse impact" on its
2011 results, and that its chief financial officer would quit,
driving shares down 7.5 percent.
The world's largest supplier of floating production, storage
and offloading (FPSO) platforms had already shocked investors in
July with the announcement of a $450 million impairment charge,
which resulted in a first-half operating loss and led to a
shake-up at the top when its chief executive stepped down.
The charge resulted from a row with two clients, Canadian
group Encana, which is working on the Deep Panuke gas
project off the coast of Nova Scotia, and Talisman Energy
, which is developing the Yme oilfield, offshore Norway.
As recently as Nov. 17, SBM Offshore gave an upbeat outlook
for the sector in its third-quarter trading update, reiterating
it expected to break even in the full year after taking the
impairment charge, and to see a 5 percent increase in sales.
But SBM Offshore, which is due to report 2011 results on
March 2, warned on Tuesday it was facing increased challenges
with the hook-up and commissioning of the Yme Mopustor platform.
"Continuing intransigence and unreasonable client demands,
which are being aggressively resisted, are contributing
significantly to the very low productivity and increased scope
of work, all of which are the subject of arbitration proceedings
with the client," it said in a statement.
"This is further exacerbated by continuing bad weather."
SBM Offshore said it would give details of the revised
financial impact as soon as feasible, but that it was expected
to lead to a significant additional adverse impact on the 2011
results. The eventual outcome is dependent upon resolution of
ongoing disputes with the client, it added.
The cost overruns could reach $250 million to $350 million
on top of the $450 milllion already announced, Rabobank said in
a research note.
Mopustor "is turning into the mother of all setbacks,"
analyst Michael Roeg of KBC Securities said in a research note.
With the departure of the CFO close on the heels of former
CEO Tony Mace, Roeg added, the Mopustor units "now claim their
second victim ... The damage to SBM's risk profile could be more
sizable, counterbalancing the positive impact from solid trends
in the bread-and-butter FPSO business."
SBM Offshore said chief financial officer Mark Miles would
step down in May, but gave no reason.
Former chief executive Tony Mace resigned last year
following the surprise impairment and was replaced by chief
operating officer Bruno Chabas with effect from this
"I cannot recall such a huge write-off being taken on a
single project, and it only seems to get worse," Jos Versteeg,
analyst at Theodoor Gilissen, said, although he added that the
outlook for SBM's other businesses was still rosy.
"Most pain related to the write-offs is over now, and I see
a lot of FPSO possibilities in Australia and Brazil on the