Good morning. Welcome to Aker Solutions presentation of First Quarter Results for 2020. My name is Tove Røskaft. I'm Head of Communications at Aker Solutions. With me here today is our Chief Executive Officer, Luís Araújo. Our Chief Financial Officer, Ole Martin Grimsrud. They will go through the main developments of the quarter and give you some insight to the current situation. We will also have time for some live questions after their presentations. Luis, I will now hand it over to you.
Thank you, Tove. Good morning, and thank you for joining us on this call today. I hope you are healthy and safe wherever you are. The first quarter of 2020 was unlike anything we have previously experienced in the industry. The COVID-19 pandemic, together with the sharp drop in oil prices, caused significant disruption to the global economy. The global energy sector was hit particularly hard. In the first phase, the pandemic led countries around the world to introduce travel bans and close down societies, which impacted our supply chain and our project execution. Some offshore work was suspended, as operators reduced money to a bare minimum to protect their people and facilities. As the oil price collapsed, our customers responded, announcing CapEx reductions by around 20%-30% for 2020 and beyond.
Under these extreme circumstances, after protecting the health and safety of our people, our main priority is to safeguard the financial strength of our company. At Aker Solutions, we immediately implemented actions to address both these issues. We are doing our utmost to mitigate the effects for our employees, customers, shareholders, and other stakeholders around the world. At the same time, I'm very proud that we have managed to maintain productivity and complete key deliveries to our clients during very difficult times. The measures that were implemented around the world to stop the spread of the virus caused challenges for both Aker Solutions and our customers' operations. They affected the entire value chain and led to lower activity levels than planned.
In Norway, we experienced a decline in Brownfield work towards the end of the quarter as operators postponed jobs and demobilized personnel to reduce the risk of spreading the virus. Aker Solutions has been following national health authority guidelines and requirements for office and non-office locations. We also closed down some manufacturing locations temporarily. These have today reopened under certain health controls. Most of our office-based employees are still working from home. I'm pleased to see that we have managed to maintain high levels of productivity. We demobilized about 3,300 contractors, including 700 non-Nordic contractors in Norway to comply with new national and customer restrictions. We have temporarily laid off more than 850 employees in Norway, the U.K., and the U.S., benefiting from local government schemes to support the industry during this current turmoil.
This helps mitigate the negative impact of postponed work. Despite these difficult conditions, we have managed to keep productivity levels high in many locations and key projects, and we continue delivering to our clients around the globe. The picture you see in the bottom right of the slide was taken in Egersund last week. We completed deliveries of 11 manifolds, four templates, and two satellites to Equinor, Askeladd, Troll, and Johan Castberg projects according to the agreed schedule. During the quarter, we achieved some important milestone for CNOOC. The first two subsea trees and tools were delivered for the Lingshui project, which is their first deepwater subsea project. We also performed the first phase of umbilical load outs in Norway and the U.S. for the Lingshui and Liuhua subsea developments in the South China Sea.
The second phase for the same projects were completed after the end of the quarter. All load outs were completed ahead of schedule. These are just a few examples of how we managed to move quickly and adapt in order to deliver critical equipment and service to our clients. They demonstrate the resilience of our people, and we are thankful for their commitment. Now, let's go to the key numbers for the quarter. Overall operating revenue for the first quarter was NOK 6.5 billion, down 10% from the same period last year. Our first quarter EBITDA was NOK 149 million. Excluding special items, EBITDA was NOK 314 million, down from NOK 636 million a year earlier. This was equal to an underlying margin of 4.8%. Order intake was NOK 6.6 billion in the quarter.
As shown in the graph, our order intake rose for the third quarter in a row. The order backlog increased slightly to NOK 26.4 billion at the end of the first quarter. We ended the quarter with a liquidity buffer of NOK 5.8 billion. Afterwards, Ole Martin will take you through the numbers in more details. Now to the orders. We secured two strategically important contracts during the first quarter. Last month, we signed a five-year agreement to provide offshore maintenance and modification services to Brunei Shell Petroleum. This is a renewal of the work we have done in Brunei over the last several years. The scope of work covers maintenance and upgrades to maintain production levels for more than 200 offshore assets. In March, we signed a 20-year exclusive agreement to provide umbilicals for Chevron-operated oil and gas fields in the Gulf of Mexico.
We also created the first work order. We received that first order under this new agreement to provide 24 kilometers of umbilicals for Chevron Anchor project. Other wins during the quarter included the FEED for the electrification of the Troll B and C platforms, which I briefly mentioned in February. This is an important contract that confirms our strategic ambition towards the energy transition and reducing CO2 emissions. Our global front-end team secured another 42 new studies and projects in the quarter. This is up from 31 last year. We also saw seven studies become FEEDs, which usually indicates more work coming our way. Under the current market conditions, we would expect the number of studies to remain robust with more uncertainty around the timing of conversions.
Like in previous downturns, I believe our strong position front end will be a key differentiator in our relationships with key clients. We use our deep knowledge of the key individual projects we work on to prioritize and allocate our resources on the right projects. In March, oil prices dropped from above $50 to less than $30 and continued to fall recently. Oil companies responded by cutting their CapEx plans for 2020 by between 20% and 30%. U.S. shale is probably hit the hardest, but investments in offshore projects where Aker Solutions is focused seem to be more resilient. However, our clients are still prioritizing and reviewing their CapEx plans. We expect several offshore greenfield projects to be delayed. We believe there will be some exceptions when decisions are motivated by very low break-even costs or national interests.
As I mentioned earlier, our main financial priority is to protect our balance sheet and financial performance. At the same time, we will structure the company to meet future demand in terms of capacity and competence. We have cut our CapEx investment level in 2020 to about NOK 500 million, down 40% from the 2019 level. We will focus future investments on supporting our 2025, 30 strategy. Renewable energy and low carbon solutions will have priority. At the start of April, we share plans to reduce our fixed cost level by at least NOK 750 million on an annualized basis. This target has now been raised to about NOK 1 billion. In addition to removing our flexible capacity of contractors, the cost reduction measures and actions include consolidating subsea tree production to Brazil and Malaysia.
This means that our site in Norway will no longer produce subsea trees after 2020. This is effectively removing market capacity of about 60 subsea trees per year. We will also reduce manning at our plants in Malaysia and Brazil to strengthen the plant's competitive position and adapt to forecasted market demand. We will also close our yard in Sandnessjøen after we have delivered the ongoing projects to Aker BP and Equinor this summer. With the expected volume of projects we see coming, we can no longer justify keeping the yard open. We already decided to freeze salaries and cancel all variable pay schemes for 2020. Finally, we have started a process to reduce overhead personnel and costs across all regions. This includes reviewing our global footprint and adjusting for the expected capacity.
It is too early to give a final number of people who will be affected by this process. It's important to highlight that to date, we have reduced our head count by about 5,000 people in total compared to the end of 2019. All in all, we have been taking swift and decisive action to reduce cost and adapt to the new market conditions. Given the significant market volatility, the outlook is difficult to predict. Short-term, it is clear that the second quarter is likely to be uncertain and disruptive to our industry. Our main focus is to continue the duty care of protecting the health and safety of our people and securing business continuity. We will continue to deliver on our NOK 1 billion cost reduction program as detailed on previous slides.
When we look at the medium to long term, we see 2020 revenue down about 30% from 2019 levels. This is due to low activity in brownfield and delayed sanction of greenfield projects, while we expect subsea service to remain more resilient. At the same time, we optimize our footprint, structure, and capacity to position Aker Solutions to meet future market demand. Long-term, our 2025 search strategy remains firm. We will continue to support the energy transition and use our capabilities in leading position in segments such as offshore electrification, subsea gas compression, carbon capture, and offshore floating wind. In this environment, our front expertise will be a key differentiator as it strengthens our key client partnerships. To sum up, we expect the near-term conditions to remain volatile and the full year to be challenging.
I believe that Aker Solutions has taken the right actions to manage current market conditions and also position our company to come through this downturn as a strong and competitive player. Thank you for listening, and now Ole Martin will take you through the numbers in more details.
Thank you, Luís. Good morning. I will now take you through the key financial highlights of the first quarter of our segment performance and run through our financial guidance before moving to Q&A. As always, all numbers mentioned are in Norwegian Kroner. Let's start with the income statement. Overall operating revenue for the first quarter was NOK 6.5 billion, down 10% year-on-year. The revenue decline was driven by the field design segment following the record activity level last year. Revenue in the subsea segment and in services remained more stable year-on-year. Our reported first quarter EBITDA was NOK 149 million. Excluding special items, EBITDA was NOK 314 million, down from NOK 636 million a year earlier.
This was equal to an underlying margin of 4.8% compared to 8.8% in the same period last year, reflecting the lower activity level and a subsea backlog won in a very competitive market. In addition, we started to experience slowdown in brownfield activities towards the end of the quarter, driven by the COVID-19 and the lower oil price. As guided, we have included restructuring cost of NOK 155 million in the quarter. This is related to our improvement efforts to optimize our footprint and organization to match activity where necessary, including lowering headcounts and closing certain facilities as mentioned by Luís. Further restructuring costs may occur in later quarters. First quarter depreciation included impairments of NOK 548 million, as previously guided, mainly related to non-cash impairments of intangible assets, goodwill, and other long-lived assets.
This charge was driven by the significant decline in market valuations during the quarter, driven by the COVID-19 and the lower oil price. Excluding the effects of impairments, the depreciation was NOK 302 million, in line with our previous guidance. We continue to expect underlying depreciation, including the effects of IFRS 16, to be around NOK 1.2 billion per year. Our reported first quarter EBIT or operating profit decreased year on year to minus NOK 701 million. From NOK 325 million last year. Excluding special items and impairments, EBIT was NOK 12 million and the margin was at 0.2% versus 4.5% in the previous year. Net financial items were negative NOK 141 million in the quarter, excluding a minor unrealized hedging gain of NOK 13 million.
We continue to see our net financial items around NOK 100 million per quarter going forward. Our P&L tax charge was equal to a rate of 12% in the quarter, related to the negative income before tax. We continue to expect average P&L tax rates to be in the low-to-mid 30% range over time. We ended the quarter with a net income of negative NOK 730 million. Excluding special items, the net income was negative NOK 162 million, and the earnings per share minus NOK 0.64, down from NOK 0.58 last year. Now, moving to our balance sheet and cash flow performance. Our working capital or net current operating assets ended the first quarter at NOK 1.1 billion.
In the current market environment, we have a strong focus on cash collection in addition to other measures to improve working capital performance. It is challenging to provide guidance in this environment. Following the normalization of our working capital during last year, it is expected that working capital will continue to trend around NOK 1 billion-1.3 billion going forward. Our cash flow from operations in the first quarter was -NOK 299 million, reflecting the working capital outflow. Our investing cash flows totaled a net negative NOK 261 million. This was related to the finalization of project-related investments, such as tooling for the Mero projects and a few other already committed investments. As communicated, CapEx and R&D will be significantly reduced to about NOK 500 million for this year, which is about 40% lower than last year.
Excluding IFRS 16, we have the net interest-bearing debt of NOK 2.1 billion at the end of the first quarter, up from NOK 1.6 billion at the end of fourth quarter. Our net interest-bearing debt to EBITDA ended at 1.4x . As a reminder, the leverage covenants on both bonds and the revolving credit facility are at 3.5x pre-IFRS 16. As a precautionary measure related to the coronavirus and the low oil price, we drew an additional NOK 1.4 billion on our revolving credit facility during the first quarter. Our total liquidity buffer at the end of the quarter was at NOK 5.8 billion, including the revolving credit facility. In the current environment, our main financial priority is cash flow performance and protecting the company's balance sheet.
Now on to projects, where first quarter revenue was down 14% year-on-year, mainly driven by the field design sub-segment following the record activity within brownfield projects last year. This resulted in an underlying project EBITDA of NOK 305 million with a margin of 6% for the quarter, down from 8% last year. EBIT excluding special items was NOK 101 million with a margin of 2%, down from 4.7% last year. The margins in the first quarter reflect the lower activity level and the Subsea backlog won in a very competitive market. First quarter order intake in projects was NOK 2.7 billion with a book-to-bill at 0.5x . Now, some further details for Subsea and Field Design within the projects reporting segment.
Revenue from Subsea projects remained stable from the same period last year and sequentially, driven by continued progress on ongoing projects. Revenue from Field Design projects decreased 21% year-on-year and 18% sequentially, a normalization we guided for at Q4 following the record activity last year driven by brownfield modification and hookup projects in the North Sea. First quarter order intake in projects overall was NOK 2.7 billion. With NOK 1.4 billion in Subsea and NOK 1.3 billion in Field Design. The backlog in projects ended the quarter at NOK 14.2 billion. In services, activity increased year-on-year in the subsea life cycle services sub-segment. While the production asset services sub-segment experienced some adverse impacts of the coronavirus and the low oil price in the last month of the quarter.
We are now experiencing that the customers are postponing some of their planned spending within production asset services, particularly in Brazil and in the North Sea. This will impact activity level in this sub-segment over the next quarters. Underlying EBITDA in services was NOK 78 million, with a margin of 6% down from 14% in the same quarter last year. This was driven by the lower activity level within production asset services, in particular in Brazil and the North Sea, and one-off adjustments of about NOK 60 million related to the coronavirus and some contract-related adjustments in Brazil, not included in the special items. This resulted in an EBIT of NOK 50 million with a margin of 1% versus 9% a year ago. First quarter order intake in services was strong at NOK 4 billion, with a book-to-bill of 2.8x .
As a reminder, in addition, a part of the services order intake is short cycled or book-and-turn in nature. The backlog in services ended the quarter at NOK 12 billion. Over to the order intake and backlog performance for the group overall. We had a good order intake in the first quarter of NOK 6.6 billion, equal to a book-to-bill of 1x . Our backlog increased to NOK 26.4 billion. The backlog for execution during the rest of 2020 is now at NOK 11.4 billion. Due to the significant impacts of the coronavirus and the steep decline in oil prices, the expectation is that the order intake in our industry and for Aker Solutions will be limited during the second quarter.
The duration of the crisis remain uncertain, as the situation might stabilize more over the summer, we see the possibility for an improved order intake during the second half of the year. We are currently tendering for projects and services with a total value of around NOK 45 billion. Very few of the main prospects have been outright canceled, rather pushed out in time. We have not experienced any backlog cancellations as of now. Finally, over to our guidance. Our overall revenues have grown 30% over the two last years. As guided previously, we expect revenues now for 2020 to decline by around 30% versus last year, driven by the coronavirus and the low oil price, as well as the normalization of the record high activity level within field design.
Secured 2020 revenues in the backlog at the moment is about 80%-90%, excluding the book-and-turn revenue in services. The activity level in Q2 will be significantly impacted for our industry. Customers are cutting planned spending and sanctioning of new projects. We experienced already in March, lower activity within brownfield maintenance services in Brazil and the North Sea. This will impact activity level more severe over the next quarters. Given the significant market uncertainty, it is challenging to provide an EBITDA margin guidance at this stage. As mentioned by Luís, we have initiated and implemented decisive short-term and long-term cost reduction measures. However, it is too early to say if these will fully mitigate the impacts of the coronavirus and the low oil price in 2020.
Our main focus in this environment is strict cost and capital discipline, including substantial cost reductions in capital expenditures, and strong working capital performance in order to protect the balance sheet of Aker Solutions. We have cut our expectations for CapEx by 40% from last year. Have started to execute on a restructuring plan where the target is increased from $750 million to around $1 billion in analyzed fixed cost savings across the organization. We target this to be achieved during the second half of the year. These cost savings include reduction in our headcount, manufacturing footprint and overhead costs. The cost out initiatives respond to near-term activity declines as well as anticipated longer-term structural changes for our industry. With that, I would like to thank you for listening. That was the end of our presentation, and we will now open for Q&A.
Moderator, we are now ready for some Q&A. each questioner can ask a question with a follow-up question. It would be good if you state your name and the company you represent before your question.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's star one to ask a question. We will now take our first question from Amy Wang from UBS. Please go ahead.
Hi, good morning. A couple of questions. It's Amy Wang from UBS. A couple of questions from me. The first one is just to pick up on some of your, like, closing comments you had there about reviewing the industry for structural changes, and you've taken some impairments as well. Could you talk about, you know, how you see your end market structurally changing as a result of COVID, or any other circumstances? That's my first question. My second question is just then on your services margin. You know, your volumes are very, very good this quarter, but the margin was very, very low. Can you just talk about the dynamics there of what drove that, those moves? Thank you.
Hi. Thank you, Amy. Nice to hear from you. First question is structural changes. I mean, I think it's absolutely normal to consider that such a shock as we've seen in the market recently, you know, with COVID-19 and the sharp drop in oil price, excess supply and so forth that we see right now. Of course, I don't think the industry will be the same after we're done, after we're completed, and things are returning to some sort of normality. I would expect, of course, to have to see less players on both ends, the customer side as well as the supplier side.
And again, in terms of capacity, I would expect to see far less capacity in the industry, going forward with, if we don't take care of that, it might be a concern when things go back to production. From our end, we know that also by dialogue with our clients, and we have spoken to all of them, personally spoke with last week with all our clients at senior level, and they know how important we are for them, especially considering what we have delivered recently. We do believe, they do believe we have to be around to service them when they need us again.
Of course, right now it's tough to sanction any greenfield projects, but there are a lot of facilities to be maintained and so forth, and we are involved with them, as I said, on the subsea side as well as on the field end. We are a relevant provider in most of the markets, deeper markets, offshore markets, and I think the clients want to have us there. How the competition will look like at the end is very hard to predict. At our side, we are taking all the precautions to make sure that, one, we adjust our capacity to demand we foresee. At the same time, we also maintain our track to deliver our strategy of, you know, reducing CO2 with the clients.
Because there's no question that when it is all done and we'll get back to production and so forth, and the CO2 agenda and global warming is still gonna be there. You're gonna need more energy. We are continue on that path. In terms of, I think you're gonna be here, and you're gonna be continue to be a relevant player in the industry. That's what I can say about the market in the future. Of course, in terms of M&A and so forth, we never comment on that. I'll jump on that one.
In terms of margins, I'll let Ole Martin go into more details, but certainly we had some one-offs in certain projects we are closing down, and we also had some COVID-19 impact. The underlying margins are basically in line with what we have seen in previous quarter. Ole Martin, can you put some color on it?
Will do. Good morning, Amy. Our EBITDA within services, excluding special items, was NOK 78 million. As we said, we have some one-off adjustments of NOK 60 million related to the coronavirus and some contract-related adjustments in Brazil related to the assumed lower activity level going forward. If you add the one-off adjustments, not in special items, then you are at EBITDA at NOK 138, and then we have a similar margin like the previous quarter.
It's also important to add that we have changed the mix a little bit with some brownfield that usually, as we forecasted. We see some resilience on the, on the SLS, as you call it, on the subsea services, which is very good going forward.
All right. Thank you, and good luck. I'll turn it over.
Just as a reminder, it is star one to ask a question. We'll now take our next question from Håkon Amundsen from ABG. Please go ahead.
Yes, good morning, guys. two questions from me, please. Obviously, I understand that visibility now is very low, you are talking about cost reductions also kind of from a structural change in the market. My question is, if you look beyond 2020, you have a backlog of below NOK 8 billion for execution in 2021. In your cost reduction plans, are you planning for lower activity in 2021 than in 2020? That's kind of my first question. The second question is that, at least on some forecast there could be a risk of you coming in violation of the loan covenant on leverage.
I'm just wondering if that is also the case on your projections, and how, if that is the case, what is your strategy to address that, please? Thanks.
Thank you, Håkon. Good to hear. Good questions. The first one, you're absolutely right. It's at the current moment, it's almost impossible to predict, as our clients are reviewing what they're gonna do in terms of CapEx. Very, very, unprecedented circumstances in terms of price, cash flow and so on. We know that some of the green field projects have been moved to the right. There's no question about that. We also see that some, I would say some low cost oil and some tiebacks, will remain.
But I think going forward, at least the next couple of years with, especially in Subsea, which is where we have to watch because we have plants, and that's why we took capacity out of Norway, as I mentioned in the presentation, 63 is less. And again, we are probably the last one to take one of the plants out of the secret compared to the competitors. We foresee less activity for sure in 2021 and so forth. Early days to say, and I think there might be measures taken in some places. I think I mentioned that in some countries it might be important for countries and governments to maintain activity. We expect that things will change.
Also, I think when it comes to carbon capture, and some of the green projects that we've been involved on, we believe they will progress, because it's important and the agenda for CO2 won't go away. Basically, we're, in terms of how much capacity we're adjusting, we are adjusting as we see. Of course, we have backlog to deliver in 2020 and some in 2021. Like everybody else, we need more projects. We adjust capacity if we need to. We will take more capacity out. Again, we have two plants, after closing down, making threes, right? After closing down, the production line in Norway.
Those plants are also gonna be reduced in terms of people and to cope with the demands in those locations. We have to, I guess, navigate as you go. In terms of confidence, I would hand that to Ole Martin.
Sure. Good morning, Håkon. Maybe, you know, for me also to add on the first part of the question. I would say that we experienced that several potential clients are now waiting for stimuli package from governments in order to sanction prospects we already are involved in. Hence that decision from for instance, the Norwegian government regarding tax incentives for the oil and gas companies would support our order intake in the second half of the year and also revenues into 2021. Second part of the questions. You know, Håkon, markets are still uncertain. It's too early to say how deep and how long.
We have already implemented drastic measures to reduce cost, reduce investments, improve our working capital in addition to other measures to protect the balance sheet. As we said, too early to say if we, these measures will fully mitigate the impacts of the coronavirus and low oil price, given the very quick decline in the market. Our main focus is to continue to focus on measures to improve cash flow and protect the balance sheet.
Yeah. I guess in short, Håkon, we are working things we can work on and of course, watching the market closely.
All right, guys. Thank you for the color. That's it for me.
Just as a reminder, it is star one to ask a question.
Well. Okay, while we wait for more callers to call in, we have a couple of questions that is written in. This is from Bostrom at Tromsø Skysstrafikk. Ask if we would give any numbers related to the revenue backlog for CCUS and offshore floating wind.
Okay. We usually don't report backlogs separate for these units. But it's fair to say that we have some projects ongoing on CCUS, like Twence in Holland. We're expecting, of course, some decision on larger projects in Norway this year. We don't provide this kind of information separate. When it comes to offshore floating wind, is, I guess, is a little early. The projects are. We have several projects we mentioned before, California, Korea, and there are other prospects coming into the market. We have some tenders for other pilot projects ongoing.
It's very early days, most of the projects are still on the study or development phase, so we don't see revenues on those projects until 2021, at the earliest.
Thank you, Luís. There's also a question from Fredrik Lunde at Carnegie. It's a bit more specific to what Amy asked. Do you consider more structural capacity adjustment this year, such as evaluating leaving geographics with weak market positions or profitability?
That's a good question. It's exactly what we are doing. I think when I mentioned in my presentation that we are reviewing, reducing overheads, we are basically looking to every location. Of course, if they are not, if they don't have a future and are profitable, we're gonna exit. We have mentioned a couple already in my presentation today. That's what we're gonna be doing. We know which one's important, for clients, for future, so that's our goal.
Thank you.
Maybe I'll to Luís, you know, on the cost reduction program, we presented earlier. You know, on the fixed cost reduction program of NOK 1 million, a substantial part of that is related to closure of plants and offices, and we mentioned certain locations earlier. In addition, you know, we have a significant part of the cost reductions is also related to overhead staff functions, as well as other fixed cost in the group. Certainly footprint would be a component of the cost reductions in the group over the next quarters.
Okay, thank you. The last question, typed in is from Jonas Shum at SEB. CapEx guidance for 2020 has been reduced by 40% to around NOK 500 million. Does this mean that already-made commitments have been pushed into 2021, or do you have the flexibility to reduce CapEx further in 2021?
I can start and then Ole Martin can put some more color, certainly we have flexibility in 2021. We'll be certainly lower, as you see today, than we see today in 2020. Since in 2020, a large part of the CapEx was committed. I think Ole Martin mentioned, for example, the mero tooling in Brazil that are required for leasing into Petrobras. That's being concluded now in the first quarter, and there are other commitments as well that we need to finish to deliver on projects that, and they'll bring revenues on projects that we have on the backlog. There are some investments that we are maintaining for the future on 2020, 2025, 2030. We have very little flexibility in 2020.
Good morning, Jonas. CapEx NOK 500 million for this year. Key investments at the moment is, as we say, related to commitments back in 2018. We currently invest in, you know, investments like rental equipment, technology related to subsea project. Most of these investments were finalized in the first quarter. If you look into the numbers, NOK 275 million of the NOK 500 million came in first quarter. Hence, the capital expenditures for remaining of 2020 will be very limited. Into 2021, we also expect low and limited investments. We are not guiding on 2021 investments yet, but it will be considerably lower than our previous CapEx guidance.
Thank you. Moderator, if there's more callers on the line, you can let some new questions come through.
There are currently no questions queued, but just as a reminder, it is star one to ask a question.
I have a few more here. Then we'll take a few more written questions. We'll start with Erik Christian Pedersen at Nordea. Do you see a risk that projects that are in the current backlog are canceled given the current oil prices? If so, do you have cancellation compensation in all the contracts?
Yeah, good question. I think we mentioned that in the presentation that we have had no cancellations so far, which is very positive because we have seen in the market a few projects being canceled. At the moment, we have no cancellations. That's the current status. And I think most contracts have cancellation clauses, that's for sure. And also some of the, most of the projects we have, they're quite well advanced. It becomes just like our CapEx, becomes quite hard for clients to cancel. That's the stage for us on cancellations.
Okay, thank you. We have a question from Sahar Islam. What is the outlook for integrated projects and the partnership with Saipem? The second question, do you expect more M&A this downturn in the industry?
Okay. When it comes to integrated offers, we still work with Saipem, and that's the goal. We definitely believe in the relationship. We also believe that we were close to awards before the downturn, but as I said, those partnerships are for greenfield projects and, a good majority of them have been pushed in time at least a decision due to the current oil price. The long term, I think Saipem and Aker Solutions are a good combination, especially the technical ground, and very strong in some locations. When the clients want an integrated offer, that's our route to the market, and we are committed to that.
Thank you.
The second part, I think it was about M&A, and I'd say that we never comment on M&A. I mean, it's that's a pretty pretty standard answer, I would say. Of course, we always look to see what's best for our company, and that's not gonna be different now in the downturn, so.
Thank you. That is the last question we have. I will thank you all for calling in and listening to us today, and we'll talk to you then next time.
Thank you.
Have a good day.
Stay safe.