Prosafe: More scrapping needed for offshore accommodation market recovery

  • Business & Finance

Further scrapping and industry restructuring, in addition to activity increase, will be needed for the offshore accommodation market to recover, Prosafe, a provider of offshore accommodation rigs, has said.

In its quarterly report on Thursday, Prosafe said that the market remains generally soft and current accommodation activity is predominantly related to hook-up and commissioning work. Market improvement will require the maintenance and modification part of the market to return, the company said.

After several years of sharp decline in the global E&P spending, the company now sees market expectations of only moderate E&P capex reduction in 2017 and an increase in 2018/2019. Such a development is anticipated to be generally positive for the overall activity within the oil and gas sector as well as for offshore accommodation services beyond 2017. It is however anticipated that further scrapping and industry restructuring will be required in addition to activity increase, for the offshore accommodation market to recover, said Prosafe.

Since summer 2016, the company itself sold off for scrap four of its accommodation units, the latest one being the 1982-built Safe Regency, in order to preserve cash and to increase competitiveness of the fleet.

The company on Thursday posted a bigger net loss for the first quarter 2017 of $19.1 million when compared to a $1.8 million net loss in the same period of 2016.

Operating revenues for the quarter were $75.7 million, a decrease compared to revenues of $103 million in the year-ago quarter.

Fleet utilization was 40 percent in the first quarter of 2017, versus 37 percent in the first quarter of 2016.

According to the company’s quarterly report, its initial target levels for the annual fleet capex were reduced from $20-30 million to $10-15 million. The company expects an increase in capex in 2018.

Initial target levels for headcount reduction were increased from 35-40% onshore to ca. 50% onshore and offshore, pending vessel activity, to 20-35%.

Firm order book at end the first quarter 2017 of approx. $450 million.

Offshore Energy Today Staff

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