Technip raised targets for its subsea division on Oct. 27 after the French oil services company beat third-quarter expectations helped by cost cuts.

CEO Thierry Pilenko said the company was seeing pockets of growth in the North Sea with a number of final investment decisions in new fields and sustained activity in Brazil, which had enabled it to raise its outlook.

Technip’s clients include oil majors that have cut spending in recent years due to weak oil prices.

In the third quarter Technip beat forecasts with adjusted net income up 12.4% at 184 million euros (US$204 million), topping the 148 million euros (US$164 million) expected by analysts polled by Reuters.

Adjusted revenue fell 6.1% to 2.9 billion euros (US$3.2 billion), but that was higher than the 2.7 billion euros (US$2.9 billion) expected by analysts.

“We expect to enter 2017 with a good backlog and promising prospects, and intend to continue to drive our costs down and focus on solid project execution,” Technip said in a statement.

The company said it now expects adjusted operating income from recurring activities of about 700 million euros (US$777 million), up from about 680 million euros (US$755 million). It also raised its forecast for 2016 adjusted revenue to more than 5 billion euros (US$5.5 billion) from a range of 4.7 billion to 5 billion euros (US$5.2 billion to 5.5 billion).

It kept its guidance for the onshore/offshore segment unchanged.

Technip said project completion was ahead of schedule in the Ghana TEN project and delivery of all 78 modules for Phase 1 of the Yamal LNG project in Russia had boosted vessel utilization.

The company’s shares surged as investors cheered the results. Technip was the top gainer on the blue chip CAC 40, up 3% at 60.9 euros (US$67.6) and outperformed the broader European oil and gas index, which was down 0.29%.

“Profits were better than expectations and the balance sheet is strong but backlog continues to fall,” said analysts at Liberum, who have a hold recommendation on the stock with a target price of 45 euros (US$50).

The company said its merger with FMC Technologies was on track and major milestones had been reached over the past three months.

“Along with obtaining anti-trust (clearance) in most countries, we have foreign investment approvals both in the U.S. and in France as well as Securities and Exchange Commission support,” Pilenko said, adding that the pairing had recorded a first project win.

The two companies will hold shareholders’ meetings on Dec. 5 aiming to close the merger in January, which is earlier than originally planned, Technip said in a statement.

—Reuters

Offshore