July 25, 2018 / 6:58 AM / a month ago

UPDATE 1-Saipem eyeing engineering acquisitions in shift away from drilling

(Recasts, adds detail)

By Stephen Jewkes

MILAN, July 25 (Reuters) - Italian oil services company Saipem said it is considering acquisitions in engineering and construction as it shifts its business away from drilling activity, which has dragged on earnings.

The company said it may make “targeted investments” in the engineering and construction sector to maintain its leadership, while at the same time considering “strategic options” for its drilling business.

The shift in strategy came as the company reported a net loss of 321 million euros ($375 million) in the second quarter after booking costs of 316 million euros relating to writedowns, reorganisation costs and a tax settlement of 202 million euros.

Saipem, controlled by oil major Eni and state lender CDP, is looking to develop new lines of business to boost order books as the sector struggles to recover from years of falling margins.

The recent uptick in oil prices has not yet prompted oil service company clients to speed up investments despite a few signs of recovery in some areas.

The company said in the first six months of the year its order intake almost doubled on the year to 4 billion euros. “We expect commercial activity to maintain this trend in the second half of the year too,” CEO Stefano Cao said.

The company reported ($1 = 0.8561 euros) (Reporting by Stephen Jewkes, editing by Louise Heavens)

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