Offshore costs charged to Fluor’s third-quarter results

Fluor’s third-quarter results are to include a charge of approximately $163m (£102m), or $0.90 per share, for estimated cost increases on the Greater Gabbard Offshore Wind Project.

During the third quarter, the project experienced difficulties, including material and equipment delivery issues, primarily relating to the installation of wind turbine generators and subsea cabling.

Following an evaluation of third-quarter events, the company said in a statement that it has revised estimates to include substantial costs for additional marine vessels and other subcontractor costs associated with equipment installation, equipment repairs and the estimated schedule impact, which has been exacerbated by weather-related delays.

In 2008, the company was awarded a $1.8bn fixed-price contract to construct the 500MW wind farm approximately 25km off the east coast of Britain.

To date, all 140 monopiles and tower transition pieces have been installed and 53 of 140 wind turbine generators are in place. Installation and commissioning of the remaining wind turbine generators, subsea inter-array cabling and grid substations are expected to continue through the latter part of 2011. The overall project is expected to be completed in early 2012.

Through the second quarter of 2010, the company had recorded $202m in claim revenue relating to costs incurred on a dispute with the client regarding specifications for monopiles and transition pieces required under the contract.

Additional costs arising from this dispute are expected to be incurred in future quarters. The company says it will continue pursuing claims for costs recoverable under the contract.