By Kyunghee Park and Jonathan Burgos

(Bloomberg) — Sembcorp Marine Ltd., the world’s second- largest builder of oil rigs, posted its first quarterly loss in at the least 12 years after it took a one-time cost and as plunging oil costs pushed clients to delay or cancel orders for offshore drilling initiatives.

The internet loss within the fourth quarter totaled S$537 million ($384 million), the Singapore-based firm mentioned in an announcement Monday. The firm took impairment prices and provisions of S$609 million for initiatives of its shopper Sete Brasil Participacoes SA and others. It’s the primary quarterly loss for the reason that firm began reporting knowledge in 2003, based on Sembcorp Marine’s web site.

Builders of floating services for drilling and manufacturing have reported losses in current quarters as oil plunged greater than 40 % prior to now yr, main firms to chop spending and cancel orders. Sembcorp Marine’s larger rival Keppel Corp. was additionally hit as Sete Brasil, a significant buyer for the 2 Singaporean firms, is working out of funds and hasn’t paid each rigbuilders for greater than a yr. Keppel mentioned in January it took a cost of S$230 million due to Sete Brasil.

“This downcycle is expected to be more protracted than previous cycles,” Sembcorp Marine mentioned within the assertion.

Shares of Sembcorp Marine gained 2.8 % to shut at S$1.46 earlier than the earnings announcement. The inventory has fallen 52 % prior to now 12 months, the second-worst performer on Singapore’s Straits Times Index.

Keppel and Sembcorp Marine face the danger that purchasers will ask for additional supply delays or cancellations and that new orders will dry up. Crude oil is buying and selling at ranges not seen in additional than a decade. The commodity traded at $29.43 as of 5:45 p.m. in Singapore.

Keppel mentioned final month it halted work within the fourth quarter on initiatives for Sete Brasil. The Brazilian shopper has $10.5 billion of orders positioned with Keppel and Sembcorp however hasn’t paid both firm since November 2014.

More than half of the S$609 million put aside as impairment and provisions within the final quarter was for Sete Brasil’s orders, Sembcorp Marine mentioned.

Sete Brasil ordered six semi-submersibles from Keppel and 7 drillships from Sembcorp Marine in 2011 and 2012, most of which had been to be constructed at their yards in Brazil. These account for about 40 % of the businesses’ orderbooks, based on Nomura Holdings Inc. and DBS Vickers Securities. The first items from every builder are scheduled to be delivered within the first quarter of this yr, based on a Jan. 5 report from Macquarie Group Ltd.

Sete Brasil fell into monetary misery after it was unable to safe long-term financing amid allegations of kickbacks to its solely shopper, state-run oil producer Petroleo Brasileiro SA, or Petrobras. Creditors have repeatedly rolled over Sete Brasil’s loans since October 2014 to assist it keep afloat, based on folks accustomed to the matter. Sete Brasil is amongst greater than a dozen firms which have been crippled by the Petrobras corruption probe.

Other Sembcorp Marine purchasers are also canceling orders. Sembcorp Marine is in a dispute over an order its subsidiary PPL Shipyard Pte obtained to construct a jack-up rig for $214.3 million in February 2014. A unit of Marco Polo Marine Ltd. terminated the contract after it discovered cracks on all three legs of the rig, and is looking for a refund from PPL of about $21.4 million. The rig builder filed a case in opposition to Marco Polo within the Singapore High Court.

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