Bloomberg News

Aker Solutions Boosts Norway Focus as Brazil Lessons Learned

December 06, 2012

Aker Solutions ASA (AKSO), the oil services provider controlled by billionaire Kjell Inge Roekke, is applying lessons learned after missteps in Brazil to its business in Norway as part of plans to double revenue by 2017.

“We’ll operate in much more of a co-ordinated way in the future,” Chief Executive Officer Oeyvind Eriksen said yesterday in an interview. The company will put one person in charge of its nine business units, “which is a prerequisite for doubling the size in Norway.”

Aker Solutions, based in Lysaker near Oslo, implemented changes to the way it manages key markets after cost overruns from delays to deliveries of subsea systems to Petroleo Brasileiro SA (PBR:US) in Brazil. It appointed regional managers for Brazil and the U.S. in November last year and is now following up in Norway, where it got 45 percent of its sales in 2011.

Then company targets doubling sales by 2017 and is seeking to boost its earnings before interest, tax, depreciation and amortization margin to 15 percent from about 10 percent. Aker Solutions plans to position itself to become Statoil (STL) ASA’s “preferred partner,” it said yesterday. Statoil, Norway’s largest oil and gas company, is responsible for about 55 percent of all spending offshore Norway, Aker Solutions said, citing data from Rystad Energy, an energy consultant.

‘Booming Market’

“We like the fact that Aker Solutions is allocating significant time to discussing its booming home market,” Goeran Andreassen, an analyst at RS Platou Markets AS, said in a note yesterday. The company plans to increase market share and double revenue from the region within the next five years, it said.

Aker Solutions Chief Operating Officer Per Harald Kongelf will lead the push in Norway, the company said yesterday. The executive has almost 30 years of experience in the oil and gas industry, and helped developed such fields as Snorre and Aasgard, according to the Norwegian group. The company is also increasing its staff numbers in Norway to about 15,000 in 2017 from 11,400 today, it said.

Explorers operating off Norway, spurred by the biggest oil discoveries since the late 1970s, are estimated to increase investment in the country’s oil and gas industry by 15 percent to a record 207.8 billion kroner ($36.9 billion) next year, Statistics Norway said today.

Oil and gas producers operating in the waters off Africa, Norway and South America are boosting spending on exploration amid growing demand for energy.

Ambitious Targets

With established fields maturing and new finds becoming more difficult to develop, demand is rising for the drilling and subsea services offered by companies including Aker Solutions, Subsea 7 SA (SUBC), and Seadrill Ltd. (SDRL)

Aker Solutions rose as much as 1.5 percent to 111.3 kroner, the highest intraday level in a month, and traded 1.4 percent higher as of 10:15 a.m. in the Norwegian capital, giving the company a market value of 30.5 billion kroner.

The company’s new targets are “ambitious but would prompt a re-pricing if achieved,” Nordea Securities analyst Anne Schult Ulriksen said in an e-mailed note yesterday. The confirmation of its 2015 targets will also “be well received,” said Ulriksen, who has a buy recommendation on the stock.

Aker Solutions said it’s keeping its goal of paying out 30 percent to 50 percent of net income, either in the form of dividends or through share buybacks.

“Five years from now Norway could equal the size of the global business of Aker Solutions,” Eriksen said. “It’s a significant upside opportunity in our home market where we already have a strong position.”

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net


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  • PBR
    (Petroleo Brasileiro SA)
    • $17.62 USD
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