The marine construction services segment of McDermott International, Inc., consisting of J. Ray McDermott, S.A. ("J. Ray"), is expected to report fourth quarter 2003 revenues of approximately $430 million and an operating loss in the range of $55-$60 million, the company said today.
J. Ray said that certain projects previously disclosed by management are expected to be included in J. Ray's fourth quarter 2003 operating loss, including anticipated losses on the Front Runner spar, the Carina Aries project in Argentina, and the Belanak FPSO project in Batam Island, aggregating approximately $59 million. In addition, J. Ray and its insurers resolved certain claims by a customer, which resulted in a charge to J. Ray of approximately $5 million. The company said it believes it has an opportunity to recover up to $25 million of the losses incurred during 2003 through customer change orders, negotiated settlements, or legal proceedings.
McDermott's management said it expects that its 2004 financial results will continue to reflect J. Ray's turnaround process. J. Ray's backlog at Dec. 31, 2003 was approximately $1.4 billion and is expected to produce 2004 revenues of approximately $0.9 billion, not including additional contracts that may be awarded during the year. Approximately $0.2 billion of this amount is expected to remain in a loss position.
J. Ray has bids for new contracts outstanding in the $1.9-billion range, and it expects to book additional work during 2004 that would contribute to revenue and operating income.