Deep Sea Supply looking to expand fleet in weak OSV market

Deep Sea Supply, the Oslo Børs-listed supplier of offshore support vessels, painted a bleak picture when it comes to the sector’s outlook, but it also hinted it was looking around for potential acquisitions.

The vessel supplier reported its net income for the second quarter of the year was $1.2 million, versus $4 million in the second quarter of 2014. Revenues fell to $35.6 million, compared to $39.6 million a year ago.

Providing an insight into the OSV market, Deep Sea Supply said it experienced a continued weakening of the global OSV markets.

“In Brazil, there is an increased uncertainty related to contract awards and extensions of existing contracts with Petrobras. The North Sea spot market still sees weak utilization and rates below operating expenses,” the company said.

Providing the outlook, the company said it didn’t expect the situation would improve in the short to medium term, as the oil prices are low, consequently causing a drop in the industry activity.

As per end of the second quarter of 2015, Deep Sea Supply had 14 AHTS vessels and 25 PSVs in operation, in total 39 vessels, with no vessels under construction.

Stacking and buying?

Talking about challenges, Deep Sea Supply said its main challenge is to secure increased contract coverage for 2016 and onwards.

“As a consequence of the weak market, Deep Sea Supply will consider lay-up of vessels that do not have any activity the next months,” the company said, adding it will also see to reduce operating costs of the vessels in operation. The company currently has three platform supply vessels laid up, with fourth, the Sea Springer, facing the same destiny upon its contract expiration in late 3Q 2015.

While looking to stack vessels in order to cut costs, Deep Sea Supply could also look at its fleet extension.

Namely, the company said that with a continued weak market there could be interesting distressed opportunities for acquisitions of vessels and companies.

“The Board and management will closely monitor such opportunities,” Deep Sea Supply said in a statement.

Offshore Energy Today Staff