Oceaneering International, Inc. reported record fourth quarter and annual earnings for the periods ended December 31, 2011.
For the fourth quarter of 2011, on revenue of $574.2 million, Oceaneering generated net income of $58.3 million, or $0.54 per share. During the corresponding period in 2010, Oceaneering reported revenue of $501.3 million and net income of $47.8 million, or $0.44 per share. For the year 2011, Oceaneering reported net income of $235.7 million, or $2.16 per share, on revenue of $2.2 billion.
Net income for 2010 was $200.5 million, or $1.82 per share, on revenue of $1.9 billion.
Annual and quarterly net income increased from 2010 on the strength of higher operating income from Subsea Products and Remotely Operated Vehicles (ROV) and a lower tax rate.
Effective with the fourth quarter of 2011, the Inspection segment has been renamed Asset Integrity to more appropriately describe the services we are performing, especially in light of our recent acquisition of AGR Field Operations Holdings AS (AGR FO). These services are directed at improving the reliability and safety of facilities onshore and offshore, both topside and subsea, while reducing unplanned maintenance and repair costs, and complying with regulatory requirements.
M. Kevin McEvoy, President and Chief Executive Officer, stated, “Our annual earnings of over $235 million and EPS of $2.16 were the highest in Oceaneering’s history. These were notable accomplishments, particularly in light of regulatory-constrained activity in the U.S. Gulf of Mexico (GOM). This performance was largely attributable to our global focus on deepwater and subsea completion activity.
“We achieved record ROV operating income for the eighth consecutive year on higher international demand for our services and expansion of our fleet. Year over year, we earned more ROV operating income by increasing our days on hire to nearly 73,000. During 2011 we put 24 new ROVs into service, retired 16, and transferred the use of one vehicle to Advanced Technologies (AdTech) for non oil field use. At year end we had 267 vehicles in our ROV fleet.
“Subsea Products operating income increased to a record level. This growth was broad-based, led by better umbilical plant throughput, higher Installation and Workover Control System services, and growth in demand for our subsea hardware and tooling. Products backlog at the end of 2011 was $382 million, nearly the same as at the end of 2010.
“Asset Integrity operating income improved in 2011 on the strength of higher service demand in Europe and Central Asia. AdTech results were similar to those of 2010. Subsea Projects profit decreased due to lower demand for our services in the GOM.
“During 2011 we continued to fund organic growth and acquisition opportunities at a record-setting pace. Our annual capital expenditures of about $525 million were almost two-and-a-half times what we invested on average during each of the previous five years. Our investment in acquisitions of around $290 million was three times what we spent in total on acquisitions during the 2006 through 2010 period.
“Our acquisitions included $220 million in late December to purchase AGR FO, a provider of asset integrity, maintenance, subsea engineering, and field operations services, primarily to the oil and gas industry. This acquisition is expected to significantly increase our Asset Integrity business, particularly in Norway, and provides us subsea inspection tooling we can offer in other geographic markets. Our organic growth investments included upgrading and expanding our ROV fleet and completing the conversion of the Ocean Patriot to a dynamically positioned saturation diving vessel.
“We are forecasting our 2012 EPS to be in the range of $2.45 to $2.65, as we expect another record earnings year. For our services and products, we anticipate continued international demand growth and a moderate rebound in overall activity in the GOM. Consistent with our historical seasonal earnings pattern, we are forecasting first quarter EPS of $0.44 to $0.46.
“Compared to 2011, we expect all of our operating business segments will achieve higher operating income in 2012: ROVs on greater service demand off West Africa and in the GOM; Subsea Products on the strength of higher tooling sales and increased throughput at our umbilical plants; Subsea Projects on an international expansion of our deepwater vessel project capabilities to work for BP offshore Angola and a gradual demand recovery in the GOM; Asset Integrity on the contribution of the newly acquired operations and increased use of associated subsea technology and tools; and, AdTech on an increase in entertainment projects and improved execution on U.S. Navy vessel service work.
“For 2012 we anticipate generating over $550 million of EBITDA. Our projected cash flow and balance sheet provide us with ample resources to invest in Oceaneering’s growth. At the end of 2011 our balance sheet remained conservatively capitalized. We had approximately $100 million of cash, $120 million of debt, $180 million available under our revolving credit facility, and $1.6 billion of equity.
“Looking beyond 2012, our belief that the oil and gas industry will continue to invest in deepwater projects remains unchanged. Deepwater remains one of the best frontiers for adding large hydrocarbon reserves with high production flow rates at relatively low finding and development costs. With our existing assets, we are well positioned to supply a wide range of the services and products required to support safe deepwater efforts of our customers.”
Oceaneering is a global oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications. Through the use of its applied technology expertise, Oceaneering also serves the defense and aerospace industries.
Subsea World News Staff , February 16, 2012; Image: Oceaneering