Boa Offshore: North Sea AHTS spot market remains challenging and outlook uncertain

Norwegian offshore supply vessel owner Boa Offshore has said that the short-term picture in the offshore sector remains challenging as demand is recovering from a very low level. The situation in the North Sea AHTS spot market also remains challenging and the outlook uncertain. Boa has two AHTS vessels in lay-up.

Boa Offshore AS is the parent company of the Boa Offshore Group. The company invests in shipping and offshore related companies. The group is comprised of several ship owning companies within the following segments; tugboats, barges, and offshore vessels.

In its 1Q 2019 report on Thursday, Boa Offshore said that the medium to long-term outlook has improved during 2018 and 2019 on the back of increasing oil prices over the last 12-24 months, continued lowered hurdle rates for new field developments for oil companies, and increased volume of actual and estimated pending sanctioned offshore field development projects. The latter is expected to further improve in 2019 and 2020, which again will lay basis for higher offshore activity from 2020 onwards.

According to the company, despite modest improvements, the short-term picture remains challenging as demand is recovering from a very low level and needs to catch up with a significant overcapacity of vessels in many offshore segments. The recent oil price volatility and global macro-economic uncertainty represent a certain risk to the magnitude of the recovery in the offshore sector. From an earnings perspective 2019 will most likely not be significantly better than 2018.

Boa Offshore’s Barge and Tug segments are exposed to more industries and demand drivers than oil and gas and these two segments remain stable and robust, with a recent increase in the backlog.

Overhang of idle AHTS vessels

Boa said that the North Sea AHTS spot remains challenging. Despite higher activity in the North Sea in general, the outlook remains uncertain due to the vast overhang of idle/laid-up AHTS vessels and uncertainty regarding the timing of recovery in other regions. The AHTS vessels Boa Jarl and Boa Bison remain in lay-up.

For Boa OCV, Boa Sub C is currently idle in the North Sea after finishing a short/medium term contract in the Offshore Wind Market. The vessel will shortly mobilize for a new medium term contract in West Africa, keeping the vessel occupied minimum until late 2019. The Boa Deep C is currently performing work in the North Sea Offshore Wind Market. Boa Deep C will thereafter in 3Q19 mobilize for a new medium term contract in Asia, with firm commitment most likely into 1Q20.

The number of opportunities for new work in 2020 has improved somewhat over the last 12 months. However, competition for these contracts is still relatively tough and still quite few contracts are of longer term duration.

Boa Offshore’s operating income in the first quarter of 2019 was NOK 396 million compared to NOK 117.4 million in the same period of 2018. The company’s net loss was NOK 33 million compared to a loss of NOK 99 million in the prior-year quarter.

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