* Shares rise more than 20 percent
* Total Yme charges rise to nearly $1.4 bln
* Focus to return to core business after failed project
(Recasts, adds background, details)
By Gilbert Kreijger
AMSTERDAM, March 12 Dutch maritime services
group SBM Offshore has settled a long and costly
dispute over a Norwegian project, taking a new charge of $270
million and paving the way for a much-needed fundraising.
Shares in SBM surged over 20 percent to a 10-month high on
Tuesday, after the firm settled one of two disputes over its
failed move into so-called mobile offshore production
The company, whose main business is floating production,
storage and offloading (FPSOs) in the oil and gas sector, said
its total settlement costs with Canadian oil company Talisman
Energy and its partners over the Norwegian Yme project
were $470 million, including $200 million set aside in December.
The latest $270 million charge is largely to cover
decommissioning the abandoned Norwegian Yme oil platform. Total
provisions and costs related to the project now total nearly
$1.4 billion over three years.
SBM has also had to write off millions in losses at the Deep
Panuke natural gas platform off Canada's Nova Scotia, the future
of which has yet to be settled, and has scrapped dividend
payments for three years through 2013.
Analysts welcomed the company's plans to refocus on FPSOs
and drop MOPUs, in which SBM had no prior experience.
"Resolving one of the two legacy issues that plagued the
company for some four years is important, but certainly comes at
a price," analyst Andre Mulder wrote in a note.
The Yme deal and a planned rights issue of 10 percent of
share capital - which was dependant on a Yme settlement - will
help restore financial health, "but more needs to be done here,"
SBM was building the Yme platform for Talisman and its
partners but faced technical difficulties to complete the
project, which was evacuated last summer due to safety concerns.
SBM's previous chief executive and finance officer both resigned
over the problem.
"Today we have resolved the legacy difficulties of Yme at an
agreed cost, bringing an end to a period of significant
uncertainty for the company," SBM board member Sietze Hepkema,
who was appointed in April as chief governance and compliance
officer, said in a statement.
SBM is also investigating alleged improper sales practices
at third parties. Hepkema said he would report back on that
Thanks to the settlement, Talisman and its joint venture
partner would continue to evaluate options for the Yme field,
Paul Warwick, Talisman's executive vice president for
Europe-Atlantic, said in a statement.
Polish oil firm Lotos is Talisman's partner in the
At 1245 GMT SBM shares, which are trading at less than half
of the highs they achieved in 2007, were up 20.3 percent at
(Additional reporting by Anthony Deutsch; Editing by Jane
Merriman and Mark Potter)