Prosafe posts 1Q loss. Expects offshore activity upturn from 2018

Prosafe, world’s largest offshore accommodation rig provider, slumped to loss in the first quarter this year, on low fleet utilization and Mariner delay charge.

Net loss amounted $1.8 million, compared to a net profit of $27 million a year ago.

The company which owns a fleet of semi-submersible accommodation rigs saw its fleet utilization fall to 37 percent in the quarter, down from 80 percent in the same period last year.

During the quarter the company decided to scrap three of its oldest units, respectively Jasminia, Safe Hibernia and Safe Britannia, and to cold stack other units starting with Safe Astoria. Prosafe is preparing Safe Lancia for cold stacking in the U.S. and is mobilising Safe Regency to a lay-up location.

Prosafe’s in the quarter to a $30 million charge as it reached a deal with Statoil  to re-phase the contract for the Mariner Project on the UK Continental Shelf of the North Sea.

To remind, in October 2015, Statoil delayed the start of production from the Mariner field, in the UK sector of the North Sea, from 2017 to the second half of 2018 due to a delay in Mariner platform topside construction.

Prosafe and Statoil then agreed to re-phase the Mariner project contract from 2016 into 2017, and extend the firm hire duration from 8 months to 13 months. According to Prosafe, operations at the Statoil Mariner platform will start within 3Q 2017 and will be performed by either the Safe Zephyrus or Safe Boreas accommodation support vessel. On-site operations were previously scheduled to start in mid-April 2016.

Upturn in 2018

“Despite a recent increase in oil price, general market uncertainty remains and bidding activity is low. Clients remain focused on cost reduction and cash preservation. Prosafe therefore maintains a cautious view in the near and medium term and anticipate a possible upturn from 2018,” Prosafe said in a statement on Thursday.

Prosafe is set to start a recruitment process for a new permanent CEO, after it replaced Karl Ronny Klungvedt by Stig H. Christiansen as the new interim Chief Executive Officer.

The company said it would evaluate both internal and external candidates for the position.

In its quarterly presentation on Thursday the company said its board would announce a plan to secure financing of the company “shortly”.

The plan is likely to involve a combination of one or more different alternatives including but not limited to, renegotiated restrictive covenants and debt restructuring.

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