Vessel issues slow McDermott’s progress

McDermott International (NYSE: MDR) says its Middle East segment’s financial results have been impacted by a $38-million charge to one project offshore Saudi Arabia.

Offshore staff

HOUSTONMcDermott International (NYSE: MDR) says its Middle East segment’s financial results have been impacted by a $38-million charge to one project offshore Saudi Arabia.

The charge reflects an estimated increase in vessel mobilization costs to complete an extended offshore hookup campaign.

In the Asia/Pacific region, the contractor has increased its loss estimates by $62 million following delays on a deepwater pipelay project offshore Malaysia.

Late deliveries from suppliers and an extended reconfiguration of one of the company’s marine vessels have pushed the project’s installation schedule into the monsoon season.

McDermott now plans to execute the offshore work in two separate campaigns in 2013 and 2014, and will engage further third-party support vessels. All work is expected to be completed in 2Q 2014.

In North America, the company has started restructuring its Atlantic operations. This involves personnel reductions in Houston and New Orleans, and relocation of fabrication and marine activities from Morgan City, Louisiana, to Altamira, Mexico. It estimates the cost of the restructuring in the $45-60 million range including severance, asset impairment and relocation expenses, and future Morgan City lease costs.

8/6/2013

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