Subsea 7 S.A. Announces Third Quarter 2012 Results

Luxembourg - 19 November 2012 - Subsea 7 S.A.
(the "Group") (Oslo Børs: SUBC) announced today
results for the third quarter which ended on 30
September 2012. Unless otherwise stated, the
comparative period is the three and ten months ended
30 September 2011 for Subsea 7 S.A. and the results
of Subsea 7 Inc. following the date of combination.
The nature of the Group's operations and its
principal activities are set out in Note 5 "Segment
information".

Jean Cahuzac, Chief Executive Officer, said:

We have delivered a good quarter in line with our
expectations. These results reflect high offshore
activity in West Africa, and high vessel utilisation
in the North Sea. We are on track to deliver full
year Adjusted EBITDA in line with consensus
expectations.
We have not seen an impact from macro-economic
uncertainties on our clients‟ plans, and
tendering
levels remain high, in particular in the North Sea,
Africa and Brazil. We see significant growth
prospects ahead which our strong balance sheet should
help capture.

Outlook:

We remain positive about medium and long term market
prospects but we expect that the outlook in 2013 will
be tempered by delays in project awards in 2012 and
by some of the supply chain bottlenecks affecting the
industry.
We expect West Africa to move through a period of
lower offshore activity in 2013 as delays to SURF
contract awards mean offshore execution of these new
awards is projected to start in 2014 and beyond.
In the North and Norwegian Seas levels of tendering
remain strong with improved pricing. It is still too
early to be definitive about 2013. A number of
factors may temper the rate of progress. Q1 2012
benefited from unusually high vessel utilisation as
clients sought to progress projects in spite of the
risk of bad weather, it remains to be seen if Q1 2013
will enjoy similarly high utilisation. Some of our
backlog was awarded late in 2012, meaning that
associated offshore activity will largely be in 2014.
In Brazil, we expect Petrobras‟ demand for
pipelay
vessels (PLSVs) to remain strong. Four Subsea 7
vessel contracts are due to complete in late 2013,
and we are currently in discussions for their
renewal. In addition we have participated in the
recently announced Petrobras tender for new build
PLSVs. Petrobras is expected to make further contract
awards to the industry in 2013 for the development of
the pre-salt fields. We will continue to be
disciplined in our approach to tendering for these
opportunities.
In Asia Pacific, tendering levels are slowly
improving and we expect projects to come to market
award during 2013, with associated offshore activity
in 2014 and beyond.
In the Gulf of Mexico we see an increased number of
prospects as our clients‟ activity slowly picks
up.
In this growing worldwide market, the key challenges
for the industry continue to be the availability of
qualified and experienced personnel, and the need to
manage an increasingly tight supply chain and assure
reliability in complex project delivery. We are well
positioned to manage these challenges. Our
engineering and project management capabilities, the
size of our fleet and our financial strength,
position Subsea 7 well for long-term profitable
growth.


Conference Call Information
Lines will open 15 minutes prior to conference call.
Date: 19 November 2012
Time: 12:00 UK Time
Conference ID: 49178379
Conference Dial In Numbers
United Kingdom
0800 694 0257
United States
1 631 510 7498
France
01 76 74 24 28
Norway
80 01 94 14
Germany
06922 224918
International Dial In
+44 (0) 1452 555 566
Replay Facility Details
A replay facility (same Conference ID as above) will
be available for the following period:
Date: 19 November 2012
Time: 14:00 UK Time
Date: 30 November 2012
Time: 14:00 UK Time
Conference Replay Dial In Numbers
International Dial In
+44 (0) 1452 550 000
Alternatively, a live webcast and a playback facility
will be available on our website www.subsea7.com
For further information, please contact:
Paul Gooden
Subsea 7 S.A. e-mail: paul.gooden@subsea7.com T: +44
(0) 20 8210 5568


Third Quarter 2012

Revenue for the quarter was $1,744 million (Q3 2011:
$1,432 million) reflecting high activity levels in
the North and Norwegian Seas, West Africa and Brazil.
Vessel utilisation improved to 88% in Q3 2012 from
83% in Q3 2011.
Gross profit was $314 million (Q3 2011: $243 million)
at a gross profit margin of 18.0% (Q3 2011: 16.9%).
The increase in gross profit was due to higher levels
of project and offshore activity in NSC and AFGoM
compared to Q3 2011. AFGoM benefitted from several
projects nearing completion of offshore execution
phases. Although Brazil recognised significantly
higher levels of revenue compared to Q3 2011, gross
profit was adversely affected by the execution of the
Guara Lula project with no margin. APME profitability
was adversely affected by unplanned vessel downtime
in the quarter.
Administrative expenses were $98 million (Q3 2011:
$95 million) which included a $12 million settlement
charge on the buy-out of a defined benefit pension
scheme in the UK. Integration and restructuring costs
were $5 million (Q3 2011: $15 million).
The Group‟s share of results of associates and
joint
ventures was $12 million (Q3 2011: $52 million)
mainly consisting of contributions from Seaway Heavy
Lifting and SapuraAcergy. The reduction compared to
Q3 2011 was primarily due to the disposal of NKT
Flexibles in Q2 2012.
Adjusted EBITDA for the quarter was $318 million (Q3
2011: $279 million) resulting in an Adjusted EBITDA
margin of 18.2% (Q3 2011: 19.5%).
During the quarter, other gains and losses resulted
in a net gain of $26 million (Q3 2011: $46 million).
This included a gain of $23 million related to the
completion of the sale of the Group‟s interest
in NKT
Flexibles, the sale transaction took place in Q2
2012. Also included within other gains and losses was
a $6 million gain recognised on the spin-off, in the
form of a dividend-in-kind, of Veripos Inc. Foreign
exchange losses in the quarter were $3 million (Q3
2011: $51 million exchange gains) reflecting the
weakening of the US Dollar against major trading
currencies of the Group.
Finance costs were $9 million and in line with Q3
2011.
Net income before taxes for the quarter was $248
million (Q3 2011: $242 million).
Excluding the impact of the gain on sale of NKT
Flexibles and the gain on distribution of Veripos
Inc., the effective tax rate for the quarter was 24%
(Q3 2011: 29%). The tax charge for the quarter was
$53 million (Q3 2011: $69 million).
Net income for the quarter was $194 million (Q3 2011:
$173 million).

Nine months ended 30 September 2012

The comparative period ("2011‟) is the ten-month
period from 1 December 2010 to 30 September 2011.
Revenue for the period was $4,686 million (2011:
$4,059 million) primarily reflecting improved
activity levels in the North and Norwegian Seas, West
Africa and Brazil.
Gross profit was $852 million (2011: $704 million) at
a gross profit margin of 18.2% (2011: 17.3%). The
increase in gross profit resulted from higher levels
of project and offshore activity in all Territories
and improved vessel utilisation compared to 2011.
Administrative expenses were $267 million (2011: $303
million). This has reduced compared to 2011 due to
lower integration and restructuring spend in 2012
partially offset by a pension scheme settlement
charge of $12 million.
The Group‟s share of results of associates and joint
ventures was $43 million (2011: $103 million). The
year-on-year reduction was mainly due to the disposal
of NKT Flexibles in Q2 2012 and lower contributions
from Seaway Heavy Lifting.
Adjusted EBITDA for the period was $869 million
(2011: $776 million) resulting in an Adjusted EBITDA
margin for the period of 18.5% (2011: 19.1%).
During the period, other gains and losses resulted in
a net gain of $287 million (2011: $15 million),
primarily due to a $244 million gain recognised on
the sale of the Group‟s interest in NKT Flexibles.
Finance costs were $26 million (2011: $31 million).
Net income before taxes for the period was $898
million (2011: $502 million).
Excluding the impact of the gain on sale of NKT
Flexibles and the gain on distribution of Veripos
Inc., the effective tax rate for the period was 31%
(2011: 31%) and the tax charge was $200 million
(2011: $157 million).
Net income for the period was $698 million (2011:
$344 million).

Interim Management Report: Operating Review

Third Quarter 2012

Africa & Gulf of Mexico (AFGoM)
Revenue for the third quarter was $506 million (Q3
2011: $599 million). Net operating income was $125
million (Q3 2011: $109 million). While revenue was
lower in Q3 2012 compared to Q3 2011, good progress
was achieved on a number of projects, including CLOV
and Block 31 PSVM, offshore Angola, and MPN Satellite
Field Development, offshore Nigeria. Sonamet
delivered a good contribution in the quarter.
Asia Pacific & Middle East (APME)
Revenue for the third quarter was $52 million (Q3
2011: $38 million). Progress continued on the Lan Do
project, offshore Vietnam. Net operating loss was $2
million (Q3 2011: net operating income $13 million).
The loss in the quarter was mainly due to costs
associated with unplanned vessel downtime.
Brazil (BRAZIL)
Revenue for the third quarter was $338 million (Q3
2011: $155 million). Procurement, engineering and
project management progressed on the Guara Lula
project. The seven vessels on long-term service
agreements to Petrobras achieved high levels of
utilisation. Net operating income was $1 million (Q3
2011: $13 million). Execution of the Guara Lula
project continued with no margin in the quarter.
North Sea & Canada (NSC)
Revenue for the third quarter was $847 million (Q3
2011: $637 million) driven by high activity levels on
a number of projects including Laggan Tormore, Skuld,
and Alta in the North Sea and Terra Nova in Canada.
Life-of-Field operations under the Shell, BP and
Statoil Frame Agreements performed well during the
quarter. Net operating income was $105 million (Q3
2011: $44 million) reflecting increased project
activity and high vessel utilisation compared to Q3
2011.
Corporate (CORP)
Revenue for the third quarter was $1 million (Q3
2011: $3 million). Net operating loss was $1 million
(Q3 2011: net operating income $21 million) due to a
$12 million settlement charge relating to the buy-out
of a defined benefit pension scheme in the UK
partially offset by the contribution from Seaway
Heavy Lifting.

Nine months ended 30 September 2012

The comparative period, ("2011‟), is the ten-month
period from 1 December 2010 to 30 September 2011.
Africa & Gulf of Mexico (AFGoM)
Revenue for the period was $1,572 million (2011:
$1,938 million). Revenue decreased in 2012 compared
to the equivalent period in 2011 due to the phasing
of the offshore execution on major projects. In the
first three quarters of 2012 there was significant
progress on Block 31 PSVM, CLOV, offshore Angola, and
MPN Satellite Field Development, offshore Nigeria.
OSO Re and EGP3B, offshore Nigeria, were
substantially completed during the period and Sonamet
continued to make a significant contribution. Net
operating income was $332 million (2011: $378
million).
Asia Pacific & Middle East (APME)
Revenue for the period was $223 million (2011: $143
million). Revenue was generated mainly from
continuing activities on ONGC G1, offshore India and
Lan Do, offshore Vietnam and the completion of
Montara, offshore Australia, and Lihua-4, offshore
China. The SapuraAcergy joint venture continued to
contribute to the results for the period. Net
operating income was $28 million (2011: $25 million).
Brazil (BRAZIL)
Revenue for the period was $746 million (2011: $500
million). Procurement, engineering and project
management activities continued on the Guara Lula
project. The GSNC Shallow project was substantially
completed in 2012. The seven vessels on long-term
service agreements to Petrobras continued to operate
at high levels of utilisation. Net operating income
was $4 million (2011: $34 million).
North Sea & Canada (NSC)
Revenue for the period was $2,139 million (2011:
$1,468 million). Operating activities continued on
Skuld, Dong Caisson, Ormen Lange, Suncor Terra Nova,
Laggan Tormore and Alta projects. Life-of-Field
operations under the Shell, BP and Statoil Frame
Agreements performed well during 2012. Net operating
income was $276 million (2011: $82 million).
Corporate (CORP)
Revenue for the period was $7 million (2011: $10
million). Net operating loss was $12 million (2011:
$15 million). Seaway Heavy Lifting continued to
contribute well during the period. The Group‟s
interest in NKT Flexibles, which was recognised in
the Corporate segment, was divested in Q2 2012.
Administrative expenses include a $12 million
settlement charge relating to the buy-out of a
defined benefit pension scheme in the UK.

Asset Development and Activities

Third Quarter 2012

The Sonamet investment remained fully consolidated in
the period ended 30 September 2012 although it
continues to be classified as "Assets held for sale‟.
After the completion of the sale and transfer of
shares, the business will be deconsolidated from the
Group‟s financial statements and its future results
will be reported as "Share of results of associates
and joint ventures‟.
The final commissioning of Seven Borealis continued
throughout the quarter. Work remains on track for
final completion and operational delivery in Q4 2012
when the vessel is expected to commence operations on
the CLOV project, offshore Angola.
Vessel utilisation during the third quarter was 88%
(Q3 2011: 83%). There was high utilisation of vessels
across all Territories. Acergy Polaris, in AFGoM, was
in planned dry-dock for a significant part of the
quarter.

Backlog

Backlog was $8.1 billion as at 30 September 2012, of
which approximately $1.5 billion is expected to be
executed in the remainder of 2012 and approximately
$3.8 billion is expected to be executed in 2013.
Reported backlog refers to expected future revenue
under signed contracts which are determined likely to
be performed but does not include backlog related to
non-consolidated associates and joint ventures.