SINGAPORE – A wind farm contract awarded to Seatrium and valued at more than $250 million was cancelled by Empire Offshore Wind, a joint venture between Norwegian state-owned energy company Equinor and oil giant BP.
On Jan 4, Seatrium announced that Empire Offshore Wind decided to cancel the contract for the 1,260MW Offshore Substation Platform due to “significant macroeconomic conditions” impacting the Empire Wind 2 project.
Shares of Seatrium fell after the news, with the stock ending 0.2 cent, or 1.7 per cent, down at 11.3 cents on Jan 4.
The counter topped in volume trading, with 249.8 million shares changing hands.
The cancelled award for the Empire Wind 2 project was part of a larger $500 million contract inked in May 2023 to develop platforms for two offshore wind farms, Empire Wind 1 and 2. They are located off the coast of Long Island in the United States.
The Empire Wind 1 project contract remains unaffected, said Seatrium.
The offshore and marine engineering group noted that construction work on the Empire Wind 2 platform was expected to commence in June 2024, with minimal engineering work performed.
“Seatrium will avail construction capacity set aside for this project to other projects in the pipeline,” said the group, noting that progressive payment of the project has been made.
Construction work on the Empire Wind 1 platform commenced in the fourth quarter of 2023.
Empire Offshore Wind confirmed that the project contract “remains unaffected and continues as planned”, said Seatrium.
“The cancellation of (the Empire Wind 2 project) contract is not expected to have material financial impact on the earnings per share and net tangible asset per share of the group for the current financial year,” Seatrium said.
DBS Group Research highlighted that the affected contract value is relatively small, at less than 1.5 per cent of the group’s order book.
“We believe the longer-term prospects for offshore wind (sector) remain constructive,” said the research house, adding that Seatrium’s other ongoing projects are unaffected.
DBS continues to like Seatrium for its turnaround story, reiterating a “buy” call and target price of 18 cents. THE BUSINESS TIMES
