Fletcher Shipping goes into administration due to 83% drop in price of leasing PSVs
Fletcher Shipping, a provider of offshore supply vessels to exploration and production firms operating predominately across the North Sea, has been forced into administration.
Alan Brown and Bruce Cartwright of PricewaterhouseCoopers (PwC), a multinational professional services network, have been appointed as joint administrators of the Portlethen-based oil field services firm established in 2007.
Supporting the transportation of goods, tools, equipment and personnel to and from offshore platforms and structures, the vessels were chartered on a day rate basis for both short and long term contracts.
According to PwC, the fall in the global oil price and the subsequent reduction in oil exploration and similar activities in the North Sea has impacted the market for offshore supply vessels, as the UK industry increased its focus on cost reduction. As a result, Fletcher Shipping encountered significant cash flow difficulties in early 2015.
PwC further explained that, against this backdrop, and recognising its cash flow challenge, the firm engaged with its lenders and sought a sale within the trade and financial investor community.
Following the appointment, the administrators confirmed the sale, as a going concern, of Fletcher Shipping Ltd to FS Shipping Ltd, securing the future of the predominantly British crews contracted to operate the vessels.
Alan Brown, PwC director and joint administrator, commented: “The drop in oil price from $110 to a low of $45 a barrel, before rallying at $60 has undoubtedly impacted business confidence across the North Sea basin with the result that the daily vessel supply spot rate has been squeezed down from around £18,000 a day to nearer £3,000 – an 83% drop.
“The last few weeks have seen an intensive period of activity as we worked with Fletcher Shipping Ltd and their stakeholders to find an optimal solution.
“Following our appointment, we are delighted to have achieved immediate completion of an accelerated sales process of the business and assets of Fletcher Shipping Ltd to FS Shipping Ltd, ensuring continued stability for the self-managed crew, suppliers and clients across the oil and gas industry.”
The sale has resulted in four Ulstein-designed and British registered platform supply vessels – FS Aquarius, FS Pegasus, FS Taurus, and FS Pisces – transferring to the new owner alongside associated operating machinery, plant and office equipment. Management were advised by KPMG.