Good day. Welcome to the Aker Solutions ASA quarter three conference call. Today's conference is being recorded. At this time, I would like to turn the conference call over to Bunny. Please go ahead.
This is a great day for the industry and a great day for Aker Solutions. To achieve the ultimate production is almost more science fiction. We're very proud today in the forefront of the development. North Sea building is important for our society and staff and our license partners to give to our suppliers and Aker Solutions has created an ultimate combination system creating value for our society. Sky is basically a gap platform that you put onto the Sea floor. The challenge with that is that you are not able to- Go in there with operators, that can do maintenance. That means that we have to design the system in pieces, modules we call them, just like a Lego system. You need to split it off in pieces that you can actually install and that you clean individually.
There are no technical authorities on this matter. There is no subsea compression encyclopedia. How do we make sure that the connections don't leak when we fire test them? How do we make sure that the lifting frame won't jam? How do we make sure that the pump won't over pressurize the system? All these topics which might raise an uncertainty, which might detect a risk leads to the gate activity. That means that we need to go all the way ensuring that we have sufficient confidence which special projects deserve.
Very early on, we were able to get a good cooperation with Fast4ward. Fast4ward helped companies and us with this project and by being supportive throughout all the way. We've been able to work together across all the business areas in such a very good way. If you look upon the confidence that people have contributed in this project, I think here, of course, if you look at the Subsea part of the business area of the business, I think we have a unique portfolio of products as well as the experience that is very important, of course. Also when you look at the engineering business area, we have contributed with process technology, compressor technology, and control systems, for instance. That has been very important for the success of the project.
The fact that we've been able to do all the construction work in our own yard in the region, and also to do all the testing there, that is part of the success story for this project. Like to congratulate all the employees of the company because that's a real landmark for the company and for the industry. I think we only managed to achieve that by using all the capabilities we have in our company. I don't think any other company is better suited to do this in the market. We know also that how important technology, new technology is to move the industry forward. I think we can capture the opportunity with clients to use our technology even further. Onwards is a milestone, is also the beginning of a new journey using more technology where it is best.
Good morning. Welcome to Aker Solutions third-quarter earnings. New the agent forward matter delivery of the Aker Subsea Gas Compression System. I will have more to say about that later. My name is Bunny Nooryani. I'm the Chief Communications Officer at Aker Solutions. With me here today are Luis Araujo, our CEO, and Svein Oskar Stoknes, CFO. They will go through the elements in the quarter. After that, we have time for Q&A, and then we have one-on-one sessions. Before we start, I'd like to point the emergency exits, which is on your right-hand side out in the door and the word exit above it. If there should be any fire drill. Thank you very much.
Thanks, Bunny. Good morning, thank you for joining us here today. I'm pleased to be here today with Svein to go through our results for the third quarter, which was another quarter with strong operational performance. We all know the market environment, I want to emphasize the consistently strong execution Aker Solutions has shown over the past quarters with good progress with major projects from Africa to Norway and Brazil. We are making every effort to deliver projects on time, on budget, with the highest quality. In the third quarter, this included deliveries of equipment to facilitate first oil at Total Moho field in Congo, as well as components essential to start drilling at Total and OVO developments in Norway. We also continue to push our continual push for operations and bring down costs across the whole company, we have seen the benefits.
Yet, the third quarter saw a continuation of the market slowdown that's affecting our entire industry. Our revenue decreased, compared with the year earlier as our oil companies scale back spending. Our margin is narrowed amid lower activity, particularly in the Norwegian market for Subsea services, Modifications, and Operations. We also saw some decrease in activity in our engineering business division. In response to this, we are reducing our global workforce this year by more than 10% to adjust for overcapacity. The majority of this is in our Subsea business, followed by the most in engineering. These adjustments are in line with previous announcements and come in addition to workforce reduction in the second half of last year in the field operations and oil business. This will bring the total capacity reduction since last summer to 15%.
It goes without saying that we'll continue to be vigilant with capacity in all parts of our. Ensure the best fit for current market conditions while protecting our core competence. Our third quarter order intake was higher than a year earlier. It included a contract to deliver subsea production systems for Louis Development Offshore Malaysia, as well as an order to supply a pressurizer system to test production of methane hydrates. This is our first contract offshore in Japan. It was secured because of our work with the Subsea Production Alliance we formed last year with Baker Hughes. We continue to see strong interest in our front-end capabilities. We won about 20 awards in the quarter, including for strategically important projects in Norway, the Caspian Sea, and Australia.
This is a strong indication of our abilities in the front-end conceptual engineering, and illustrates the desire to drive down costs to get cross-function. Our clients trust our ability to help them achieve this. We ended the quarter with a solid order backlog with more than NOK 40 billion . The lion's share of 37% was for work in West Africa, where we have expanded over the past years. To help oversee this expansion and support operations in key markets outside Norway, we have named David Currie Regional President of U.K. and Africa. David joined us in September from Subsea 7. He has broad international experience in our industry, will have special focus in Africa.
To sum up, we face the current market uncertainty with a position of strength, underpinned by a solid backlog, consistently strong execution, and continuous effort to drive down costs for ourselves and for our clients. We have a robust financial position with liquidity buffer of NOK 6.7 billion at the end of the quarter. This provides good flexibility moving forward. For the main numbers. Third quarter revenue was NOK 7.5 billion, EBIT was NOK 329 million, and the EBIT margin was 4.4%. Excluding special items, the margin was 6%. Earnings per share were NOK 0.75. The order intake was NOK 4 billion, bringing the backlog to a healthy NOK 14.7 billion. We passed some key milestones this quarter. We completed the delivery of the world's first subsea gas compression system.
It went on stream in September at Statoil's Åsgard field in the Norwegian Sea. We are immensely proud to have been part of this achievement. The close collaboration we have had with Statoil and our suppliers was essential to ensure success delivery of this breakthrough technology, which is a major milestone for our industry. Placing the compressor on the seabed near the wellhead, rather than on a platform, improves recovery rate and reduce capital and operating costs. Subsea compression also leaves a smaller environmental footprint and is safer to operate than a traditional platform. The compression system at Åsgard will enable recovery of an additional 260 million barrels of oil equivalent. It is designed to allow large flow rates, built to be reliable, efficient, and flexible. This versatile technology is of particular value for development in deeper water and harsh environment areas.
Going forward, we intend to build on this technology with new future versions and deliver slimmer and more cost-effective solutions. As part of this, we have formed an alliance with MAN Diesel and Turbo, which we announced in October, combining our subsea expertise with MAN's turbomachinery machining technology. We worked with MAN on Åsgard's compression system. Now we will build on this cooperation to jointly develop the next generation of subsea compression systems. The goal is to develop cost-effective technologies for high-capacity compression systems that can be used as needed towards oil and gas fields. Basically, we will take the Åsgard technology further to provide compression systems that are smaller, lighter, and cheaper without compromising on techniques. Our efforts to improve operations and bring down costs continue with undiminished vigor.
We made steady progress across the different third quarters, and we are actually intensifying using lean principles to strengthen work methods and process at key projects. The program now has more than 20 projects up from 4 last year, and is showing promising results. As an example, just within MMO, projects where we have applied the lean principles have reduced the number of man hours by more than 60%, reduced execution time by more than 50% in some cases. Also reduced customer costs by 25%-30%. These are just examples of some of the improvements we have achieved at selected projects. We are now in the process of rolling this initiative out while it's now on scale across the organization. I expect to see more on this when we release our full year earnings for 2020.
Of course, our improvement, our improvement agenda is not just focused on internal efforts. We also work steadily with our customers to achieve operational and cost savings improvements at projects. I'm pleased to see that our clients recognize and value the efforts. Just as an example, the Aker Solutions team that won 100 modifications for Statoil in Norway has in the last two quarters got the top score in the Statoil customer satisfaction survey of its clients. At the same time, on another example, our engineering business has been working with Statoil on the Ormen Lange development to lower costs through more efficient solutions, standardization across the field, simplification of technical requirements, and reduced supply chain costs.
Last week, you may have noticed that Statoil announced it was pleased with the development we on Ormen Lange, with cost estimates having come down 7% on this major field development. These strong results show the relentless focus our teams across the company have on strengthening operations to become more efficient and create value for our customers and ultimately, also our shareholders. Now let's look ahead. We are in historic times for our industry. The sustained decline in oil prices and oil companies' capital constraints are having a significant impact. There is still steadfastness in our main markets, and we are currently bidding for contracts totaling well over $60 billion, with more than half in the Middle East. Still, some projects are being postponed, and we see tougher commercial discussions.
There is no question there is mounting pressure in our industry to bring down price further. Activity in Norway, offshore Norway, our largest regional market, is expected to be sluggish over the next year or two. This has been somewhat offset by Ormen Lange development, where we have an engineering framework agreement for at least 10 years. As I said earlier, we have adjusted our workforce capacity, and we will continue to keep a close eye on market development and make further adjustments if necessary. We see the biggest growth potential outside of Norway, where we have been expanding, helped by major projects in West Africa. In this third quarter, 67% of our revenues were generated outside our home market, up from 48% a year earlier, and 40% at the end of 2013.
Our international function, solid order backlog, strong financial position, and continuous effort to boost operational and financial performance, we will stand us well as we face near-term market uncertainty. Long term, we are positive. User demands are becoming more complex, we have the capabilities needed for our customers to cope with these challenges. At the same time, the leading global energy needs support a positive long-term outlook for offshore in deep water or in gas development, where we are well-positioned through our technology, projects, and strong customer relationships. We are ready for a lower prolonged oil price environment. The current level of investment is sustainable to ensure sufficient reserves are produced to meet forecasted demand, global demand. We are also preparing for market recovery and taking the necessary steps to emerge stronger when that time comes. Thank you for listening. Svein will take you through the numbers in more detail.
Thank you, Luis . Good morning. I will now take you through the key financial highlights of the third quarter of 2015, our traditional performance, and run through our financial guidance before we move on to Q&A. I won't take too long. I'll just point out a few numbers mentioned for each component. Starting with the income statement. Overall operating revenue for the third quarter was slightly lower year-on-year, driven by higher activity levels and good progress on a number of key projects, offset by a slowdown primarily in our North Sea fields activities. Our reported third quarter EBITDA was NOK 521 million. This included a number of special items, of which a cost of NOK 40 million for onerous leases as a result of capacity-Norway, Malaysia, and the U.K.
The cost of NOK 4 million related to separation of pipe business following the demerger last year, negative NOK 0.5 million related to non-qualifying currency hedges, and a restructuring cost of NOK 40 million related to Subsea and engineering. Our EBITDA excluding all special items was NOK 630 million, equivalent to a margin of 8.5%. On an equivalent basis in the same period last year, EBITDA was NOK 656 million, with a margin of 8%. For reference, we have set out a table in the appendix that shows all these specialized items by quarter and year to date. Depreciation was higher than last year, reflecting recent investments, in particular in Subsea. We continue to expect depreciation to be within NOK 700 million-NOK 750 million this year.
Our third quarter EBIT was down year-on-year to NOK 329 million. This also included NOK 11 million of impairments, primarily related to Subsea technology. Excluding all non-recurring items, EBIT was NOK 449 million and a margin of 6% versus 6.1 last year. Excluding an unrealized hedging gain of NOK 15 million, net financial items, NOK 1,430 million, which included some currency translation effects. Excluding these effects, the underlying net financial cost was in line with our expectation for around NOK 60 million-NOK 70 million per quarter. Our tax charge this quarter was equivalent to an overall rate of 34.9%. Our tax guide is unchanged. We still see average P&L tax rate in the mid 30% range going forward.
All in all, we ended the quarter with an unadjusted net profit of NOK 205 million, equivalent to EPS of NOK 0.75. Normalizing for all special items, our underlying EPS was NOK 1.47 in Q3 and NOK 3 year-to-date. Moving to our balance sheet. Our net interest-bearing debt decreased to NOK 0.9 billion at the end of the quarter, primarily helped by a positive working capital development. Our leverage and gearing levels continue to reflect a robust financial position with leverage at 0.4 times and gearing at 15%. These levels continue to be below our conservative balance sheet policy, which targets around 1 times net debt to EBITDA and less than 50% gearing. We do expect to end this year slightly below these target levels of leverage and gearing.
Our total liquidity buffer remains robust at NOK 6.7 billion. Since the end of the quarter, we have agreed with our lenders to expand our revolver to NOK 5 billion from NOK 4 billion, still at attractive terms and with a higher leverage covenant, now at 3.5x net debt to EBITDA versus 3 x previously. This gives us good financial headroom and flexibility going forward. As of the third quarter, our return on average capital employed performance for the group overall reached 14% versus 17.8% in the year earlier period. This decrease versus last year reflects some effects from the expected unwinding of our low working capital position as we progress with major projects and our ongoing capital investment.
To put this into some context for you, our group capital employed was NOK 9.2 billion at the end of Q3. Of this around NOK 2.4 billion was linked to facilities and technologies that are yet to come online and contribute to earnings. Now let's move to our cash flow performance. Our cash flow from operations in the third quarter was NOK 832 million, helped by a positive move in working capital. Our reported net current operating assets remained somewhat lower than normal, but we continue to expect our low working capital position to unwind as our major projects progress through this year and next, and we continue to see a more normal level of working capital to be in the range of NOK 1.5 billion-NOK 2 billion.
Our investing cash flows totaled NOK 261 million in Q3 and around NOK 900 million year to date in 2015, mainly related to fixed asset and technology development. We expect our total spend for this year to be slightly below the low end of our indicated NOK 1.5 billion-NOK 2 billion range. This reflects our tight control on capital in the current environment, in addition to the phasing of some spend into 2016. The net effect of these operating and investing cash flows brought our net interest-bearing debt to NOK 943 million at the end of the quarter. Before I start to discuss our different area of performance, I want to highlight a change in our reporting structure. As of Q4 this year, we will not report MMO and engineering, the two areas of Field Design separately.
Our two reporting segments moving forward will be Subsea and Field Design. This move reflects a number of commercial features, including the increasing closeness with which these disciplines have been working given their strong similarities in customers, financial characteristics, KPI, markets, and dynamics, as well as our desire to continue to simplify the way Aker Solutions operate and reduce costs. Now on to Subsea, where third-quarter revenues were down 12% year-on-year due to lower activity levels in parts of the business area and somewhat lower volumes from Subsea Services. Excluding NOK 30 million of restructuring costs and NOK 8 million of primarily technology-related impairment, our underlying Subsea EBIT margin reached 7.1%, similar to that of the previous quarter. Most important, our major projects are progressing as according to plan, and we continue to benefit accruing from our improvement programs.
We do continue to face market headwinds in addition to the expected effect of higher depreciation. Due to these headwinds, in particular, a challenging market in the North Sea, it has been necessary to adjust our workforce by around 20% overall and more than 10% for permanent employees versus staff at the end of 2014. With this market headwinds unlikely to decrease and in some cases likely to increase, our outlook for Subsea this year remains a flat progression in revenue and clearly no improvement in margin when compared with 2014. As we stated at the recent conference, in the near term, we expect to see underlying Subsea margins roughly around current levels, with a whole significant operational improvement offset by market headwinds. Our Subsea return on average capital employed reached 21% in the quarter.
This reflected a number of factors, including our performance and also the low level of working capital, which affects our calculation of capital employed. We expect this to normalize over the next 2 quarters as our working capital sees an expected outflow on project progress. We know our medium-term target for Subsea remains for a return on average capital employed of between 20% and 25%. Our Q3 order intake in Subsea was up versus last year with a book-to-bill of 0.6. Our backlog remains substantial at NOK 25.5 billion. This is equivalent to around 15 months of Subsea revenue and gives us good visibility into 2016 and also quite good visibility in the medium term. The current market remains active.
In Subsea, we are currently tendering for roughly NOK 25 billion of work. The number of new ITTs in recent months is at a good level. MMO revenues were down 11% year-on-year due to an ongoing tough environment in the Norwegian market that was only partially offset by international growth. Capacity costs are still impacting our margins, we did see a gradual improvement versus Q2 as our capacity adjustments started to have some effect, although at a somewhat slower pace than initially anticipated. Despite this tough market, tendering activity is tight, with total volume of work of tender above NOK 40 billion. This reflects potential new MMO frame agreement in Norway and the U.K. Order intake for the quarter was NOK 1 billion, equivalent to a book-to-bill of 0.5, mainly driven by projects outside Norway.
The MMO market in Norway remains challenging, and we continue to expect little, if any, near-term recovery, and we now see the full effect of lower modification activity. Due to international growth and some favorable currency translation effects, we now see overall revenues for 2015 around 10% lower than last year versus the 15% decline we previously communicated. EBITDA margins are likely to remain under significant pressure. Previously, we saw a gradual improvement towards the mid-single digit level by year-end, but greater market headwinds and capacity costs now lead us to believe this will be a somewhat more gradual recovery through 2016. We have announced significant capacity adjustments in MMO versus our position halfway through 2014. Our MMO business globally has seen a 15% decrease in permanent employees and closer to 20% decrease overall.
MMO is positioned to recover when the market improves. We continue to assess our capacity position, both versus the current market and also to accommodate the likely outcome from the major frame agreements that are up for tender. Engineering showed a good top-line performance, with revenue up just over 5% from the same quarter in the previous year. This was driven by good progress on all major projects in Norway, the UK, and in Asia. Our EBITDA margins were unchanged versus last year at 12%. This reflected good utilization of our capacity and strong operational performance, as well as a moderate positive timing effect linked to previous projects that offset restructuring costs. For Engineering is largely unchanged. We continue to keep EBITDA margin on a similar level to 2014, although the revenue is similar to 2014 versus our previous view for moderate top-line growth.
Utilization is likely to continue for some regions, but as we have stated previously, we do see risk in certain regions that lower order intake could cause lower near-term utilization until our workload recovers. We have already made some adjustments in anticipation of this in regions outside Norway. Order intake was slightly down year-over-year to NOK 555 million, equivalent to book-to-bill of around 0.6. One good sign for the future remains engineering's almost record high order backlog, which was up year-over-year to NOK 4.5 billion. The order intake and backlog performance for the group as a whole. Our group backlog at the end of Q3 was NOK 41 billion, equivalent to around 1.3x our annual revenues. Our backlog remains at high level despite lower order intake in the quarter.
This continues to give us good visibility for 2016 and also quite good visibility in the medium term. At NOK 4 billion, the overall order intake was up compared to this time last year and equivalent to 0.53 times book-to-bill. It is also worth noting that despite the current market conditions, our year-to-date book-to-bill was 0.7 times. Tendering activity for the group continues to be at good levels, although as we have commented before, delays in project awards are common. Just to give you a rough picture, the group overall is now engaged in well over $60 billion worth of tenders and is sitting at over 2x this value in terms of opportunities. As expected, you will also note our Q3 backlog base in chart is different from that of Q2.
The totals for 2016 and 2017 are slightly higher, reflecting both new work and project rebasing. As you can see, we have also called out the split between Subsea and Field Design, as some of you have requested. As a reminder, our backlog does not include the majority of service business or potential growth or options on existing contracts. Finally, I would like to again summarize our medium-term financial guidance. Our three key medium-term guidance themes are as follows: We aim to at least keep our market share in our core Field Design and Subsea markets. We aim to move towards peer group margin levels in our Subsea segment. We expect stable margins in engineering and a gradual recovery in MMO. We aim to improve our return on average capital employed in Subsea to a level of 20%-25%.
Our other financial policies remain unchanged, although I would note the timing of our major CapEx plan has been more stretched out. Some of this work will now be completed over this year and next, not just in 2015 as previously communicated. That's all for our presentation today. We will now open up for questions.
As Svein said, we do have time for some questions now. We plan to end the session by 10 at the latest. We will start with some questions in this room. However, we also have a webcast audience. Today, because of the technical issues that we've had, we're unable to take questions via the dial-in number. We do ask that people who are following via the webcast please send their questions by email using that system. We'll start with questions in here. We do have microphones on the side there. Please do use those. We also ask that you limit yourself to one question and one follow-up.
Quick question on Brazil. Have your discussions with Petrobras changed or has your view on Brazil changed since the Q2 presentation in one direction or another?
Okay. I can start there. No, it's not. The long-term view of Brazil has not changed. Our discussions with Petrobras, like any other client, over this, we currently run at, towards reducing costs. In fact, our relationship with Petrobras is quite good, and we are looking for cost savings like we do with other clients, benefit the fields and also specify our results and our performance. Our backlog in Brazil is remaining intact. We have not changed anything. I like that our backlog reduces all phase-outs. All the specific equipment we have in Brazil for Petrobras, which is the line that I'm glad that 10% of the backlog, 80% increase. Our backlog is all in phase-out.
That has been maintained somehow. As I told you, the second quarter, no change from second quarter to now. We have, in fact, for second quarter, adjusted backlog, which is good for us because, you know, we bring a new plant now and start moving the old plant, close the old plant and move to the new plant between now and January. We need some, some pace in the backlog is good for us. So far for us. Also our performance, just highlighting, last year we had rapid deliveries to Petrobras, 31 equipment systems, so 12 systems. This year we are planning to do 35. It's steady progress, and our backlog is fresh because, beyond 2017, we stay good considering the short-term uncertainty.
Yeah. I think what is the thing in markets? I guess with the high volume of in the multi years is reflecting the fact that operators are trying to lock in low prices for many years. I guess Statoil is talking about 10-year framework agreements. What kind of mechanisms are you building into the contract structures to make sure that you don't lock in low margins for the next 10 years?
That's actually a very good question. Thank you. Appraisal for lower costs. Our view of this is not that we have to lower our margins or price. You see our margins are not that large. The spend business in a way, low risk, you know, we get some good capital. Basically what I have to do to reduce cost of modifications in London is what I said, methodization. We have to change the way we work. Statoil and other clients are very open to that. They can see what we're doing, implementing these systems. I give some examples. We see modifications coming down by 30% in terms of overall cost.
It's true we're presenting to them, we're protecting, of course, the results, with the leading commercial business. We are putting some management in place to guarantee that we're gonna execute the modifications cheaper for our clients. That's the approach we're taking. It's being well received by clients.
The risk profile contract, the operators fund, which more or less covered here.
I think that's. It always happens currently sometimes, we know that contractual conditions. Again, we have a very prudent way of looking at this. We want to put our company at risk, not on any more, any other business. That's, we're not here for the short term. This company is here for the long term. Certainly, we don't know what orders we'll do. We also know that we have the best performance. We just had two quarters in a row. I'm so proud of what my people are doing with the current conditions. We've never had not only the volume, but we certainly see energy, such a good execution in this company. That's a very good sign for the moment. We don't know what orders we'll do.
I think our clients know what we can do and what we can deliver as a company. That's where strong foundation for our offer.
That's the belief in our ability to deliver and making sure that we get the capability to implement that, is introducing the balance between offshore and onshore. That the CapEx guidance for next year can you provide us? As you've seen, I know I'm guiding that we will be focused below our previously guided range of NOK 13.5 billion-NOK 2 billion this year. It's related to two factors. One is, of course, an extreme capital discipline at the moment. Secondly is that some of the spend that's being taken out some of the time, some of it is sliding into 2016.
In terms of the, of the nominal, relative CapEx guidance levels for next year, we would make it through our guidance which set at about 50% maintenance and R&D and long-term CapEx moving forward. Expansion of CapEx means we've got some expansion development here, but some of the ongoing expansion programs will slide into next year versus that. We're looking to capital for the ongoing program. Okay. Thank you.
Are there any additional questions in here? Much better than standing by microphone. We have a question here from Tammy Mayer at Barclays. Can we have more color on the decision to combine MMO and engineering? There is a closeness that MMO is under pressure and subject to significant cost cutting, whereas engineering is robust and working on one graduate. Not being able to see the difference brings a lot more guesswork to forecasting in terms of balance. Why?
I think I can start it and Svein can talk about things in details of the financial side. I think since we split the company, and I think we've been telling the market why we did that back last year to simplify Aker Solutions. I think we've done that in an excellent time when oil price was at $110 a barrel, and the market was positive. We've been trying to do that constantly, and you can imagine that pieces are very close to each other. We are bringing those units very close to each other. We are trying to reduce the amount of internal work and so on. Also, these are, as you can imagine, the business clients are saying, we talk about green fields, we talk about brown fields.
We sometimes they combine in CapEx and so on. There's a lot of intercompany work, and people are moving on between divisions, so on. It's easy for us to control the costs, control this, and also reduce the complexity of the company. We judged that was a good thing to do. Team life of clients, team life of work methods, think back of business structure. We thought it was good to do it. Don't think now it's the same.
Our, as you've seen since the final split, it has always been our intent to move to a reporting structure along the lines of Subsea and Field Design, and we have to continue to disclose the details of MMO and engineering, given the how MMO developed immediately sort of following the split, given the market situation second half of last year. We continued to disclose due to the pretty dissimilar sort of development pattern in the short term. The Field Design and Subsea in terms of, you know, characteristics, Field Design is capital light. It's a utilization-driven business. It's a reimbursable business. Subsea is more capital intensive. It's more fixed price type contract.
There are a lot of similarities and general characteristics of which, you know, Luis mentioned several clients, market, and financial characteristics which leads us to now implement the intended simplification that we already launched at the time of the split.
Question from Frederik Lunde at Carnegie. Are there dividend restrictions under the amended credit facility? That's his question 1. Question 2: What should we expect in terms of restructuring costs and onerous leases in 4Q and in 2016?
Onerous leases and?
Restructuring costs.
Yeah. I mean, we will continue to be, you know, vigilant related to capacity. We have adjusted our capacity to the volumes that we see as needed in the short term. As mentioned, there's a huge volume of tenders ongoing at the moment, which we are hopeful that some of these will materialize, be concluded and move forward over the next 3-6 months. Of course, given that uncertainty, we continuously monitoring some sort of spots within our portfolio where utilization is sort of below ideal levels. You know, if further right-sizing is necessary, there will be further restructuring costs. As you can see, so far the restructuring costs have been pretty marginal in terms of size.
On the onerous lease side, given if we need further capacity adjustments, there will be further access and office capacity. As we free that up and put that on the market, there will be a need for further onerous lease positions. So far we have the work to-
I guess to cross that bridge and get there.
A question from Philip Lindsay, HSBC. We understand another supplier on Cambo is having problems. There's a risk that a Total item could be late. In this scenario, does your own margin expectation change? Will there be pain shared?
No, it's, I can do that quickly. I go for a call with cooperation in Total a couple of week days that the corporate rep just came down and they met the people sitting here in the office. It's difficult to comment on other people's performance. I will try to concentrate on the stuff that we are doing for Total. Very large project, the largest Subsea project ever awarded to any company in history. Very proud and also think it was motivated for Aker Solutions. In addition to the presentation, we have delivered the three equipment, so three stacks. We don't have visibility into the item, nor exactly what item should refer to. For us, the process is moving according to plan, and Total is quite happy with us.
We also started at the beginning of second quarter working on Nyhamna. We just did it a little event. We start manufacturing the manifolds and piping and substructures in Sana Met in Lobito. For us, the process is progressing according to plan, and we're very concentrated delivering what we have to deliver to Total.
A second question from Philip: Talk about medium-term planning assumptions for the business. We've heard others today talk of a lower for much longer scenario. Is this in your thinking? Would you assume recovery from 2017?
Well, we're trying, I think like everybody else, not to predict the timeframe. The market concern is there. As I mentioned to you, my presentation, it's very encouraging that we have, you know, awarded 20 new conceptual studies in brownfield, greenfield, you know, areas that we operate. It shows the clients are looking to see what we can do to reduce costs, essential products. It's pretty clear, and I heard some very the same very key clients who are saying that probably have more projects than they have capital. There are two things here. One is the break-even cost of the fields. The other one is capital. We keep challenges to predict because they go a long way.
We are basically working very hard with clients to reduce those costs and to make this company actually cost-efficient for longer. That's what we have to do. That's what we as a supplier can concentrate. To look for the solutions and look for the ways of keeping the cost down and working very hard like we are doing. We are doing that now over. We are playing our part to win the game.
Philip has a third question, which is very similar to the question from Target department , so I'm going to combine them. Can you talk about the prospects for order intake within MMO? The competitive intensity around these prospects and what this might imply for your medium-term margins, and any indication of timing of awards would be useful. What Katja said is, what are your latest thoughts on timing of awards for MMO tenders in Q4 to.
Okay. As I said, in the presentation, we have half of the current tenders in the book. I think I answered some of these questions early on from James Maccan about everything coming out. We have tenders out for all the major clients in North Sea at the moment, small and largest. We are tending, clarifications ongoing, negotiations ongoing. We see some coming out potentially still this quarter, but more likely in the first quarter next year. In terms of price pressure, no doubt there's price pressure everywhere. It is natural, and that's how it should be. How we are competitive business, but of course, in the current environment becomes even harder. For us, it's all about discipline. We want to lead this company to something that we want to deliver the margins that we believe by keeping the best performance and the more we are entitled to get.
We have an additional question from Morten Imsgard at Nordea. We had one question on restructuring charges and other creativity outlook, but that we've already answered that. The second question is on the backlog. The backlog for 2016 stands at NOK 17.8 billion. This excludes, as you said, service revenue and contract extension. What is typically the number and how should we think about it?
Okay. As I said, the backlog we have is quite good for this time of the year. It's being that compared to previous years is gives a very good solid base for next year. We believe that, as it happens, the services in the Subsea, especially North Five North Sea, will remain strong because we are delivering equipment, so we have to get involved. We have to install it, maintain it and so on. We see also to drive companies to drive monthly production, so they have to invest on the downfield sector. Basically, I think we, that's how we see it. We see it still good to say to begin, but I'm sure it's there for being few new awards.
Very pleased to see that, despite the very hard conditions for the oil industry as a whole, our backlog is still remains above NOK 14 billion, which is 1.5 x the best of our spending. That's quite good for this to me. We see that we're gonna be working. We're working hard, lowering our costs to be competitive.
Those are our questions. Thank you very much for joining us here today.
Thank you.
Ladies and gentlemen, this now concludes today's conference call. Thank you for your participation.