A WIND farm contract awarded to Seatrium : S51 0% was cancelled by Empire Offshore Wind, a joint venture between Norwegian state-owned energy company Equinor and oil giant BP.

The offshore and marine engineering group was informed that the cancellation was a result of “significant macroeconomic conditions” impacting the Empire Wind 2 project, Seatrium said on Thursday (Jan 4).

The cancelled agreement, valued at more than S$250 million, was part of a S$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 US.

Seatrium noted that the 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 the 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.”

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DBS Group Research highlighted that the affected contract value is relatively small, at less than 1.5 per cent of the group’s orderbook.

“We believe the longer-term prospects for offshore wind (sector) remains 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 S$0.18.

Its shares closed Wednesday down S$0.005 or 4.2 per cent at S$0.115.