Aker Solutions ASA (AKSO) and Statoil ASA (STL) canceled a contract to build a Category-B rig intended to help increase recovery rates at oil and gas fields off the coast of Norway because of difficulties with the unit’s design.
The technology needed to build the rig has “proven to be considerably more demanding” than expected, Aker Solutions said today in a statement. The Fornebu, Norway-based company will book a 375 million-krone ($62 million) charge in the second quarter and reduce its order backlog by 11.2 billion kroner to account for the rig’s charter period, it said. Aker Solutions had an order backlog of 71.7 billion kroner as of March 31.
“Aker Solutions and Statoil have together concluded that the project can’t be realised within the framework of the contract,” Per Harald Kongelf, regional president for Norway at Aker Solutions, said in the statement. “The technological issues weren’t solved in the initial system definition phase of the project. We still believe in the concept of Cat B, but the technology needs more time to be developed.”
The decision on the contract increases clarity and will help a planned spinoff of the company’s oilfield services unit, Aker Solutions said, without elaborating.
“The Cat-B project has been weighing heavily” on the shares “due to the risk of major capex overruns,” RS Platou Markets AS analyst Goeran Andreassen said by e-mail.
Aker Solutions fell 1.7 percent to 85.3 kroner by 11:04 a.m. in Oslo, bringing the gain in the past year to 15 percent.
“We still foresee a need to develop the supply of this kind of service,” Ivar Aasheim, Statoil’s senior vice president for field development, said in a separate statement. “Statoil will now evaluate the project and consider alternative solutions.”
To contact the reporters on this story: Jonas Bergman in Oslo on at email@example.com; Alastair Reed in Oslo on at firstname.lastname@example.org