Reach Subsea buys one vessel and charters another to ‘take advantage of the growing demand’
Norway’s subsea services provider Reach Subsea has inked an agreement to acquire one of the Østensjø Rederi-owned multipurpose ROV support vessels. In addition, the firm has boosted its fleet portfolio with a long-term charter deal for one of Go Marine Group’s vessels.
Reach Subsea disclosed last week that it had secured “significant vessel capacity” for the next four years through an agreement to acquire Østensjø Rederi’s Edda Sun multipurpose ROV support vessel for $29 million and a charter contract for GO Marine Group’s Go Electra multipurpose ROV support vessel.
Jostein Alendal, CEO of Reach Subsea, remarked: “We are currently seeing record high activity and face a market with a solid growth outlook for years to come. Hence, the market for vessel capacity will be very tight, but we are now perfectly positioned to manoeuvre and take advantage of the growing demand for both short-term and multi-year assignments.”
Moreover, the Norwegian subsea player highlights that it now has “a long-term core fleet portfolio” with an estimated 20-30 per cent cost advantage compared to the current market, thanks to “the favourable terms” on these two ROVs, and the existing charters of Havila Subsea and Deep Cygnus vessels.
In addition, the company underlines that this will be further improved with the launch of the Reach Remote unmanned surface vessels (USVs). The USVs will be dedicated to surveying, inspection, and light repair operations and are expected to be delivered in the second half of 2023.
The Norwegian firm points out that the $29 million acquisition of Edda Sun represents “a new development,” since its operations have been based on chartered vessel capacity up to now. However, the implied charter rate derived from the vessel’s purchase price is “well below the charter rates we are offered on other similar vessels in the market.”
According to Reach Subsea, the four-year charter agreement for the Go Electra vessel comes with a one-year extension option along with “a highly competitive fixed charter rate and a profit share arrangement.”
The 2009-built Edda Sun and the 2011-built Go Electra are both highly versatile ROV support vessels, explains Reach Subsea while adding that these vessels are “well fit” for its broad range of subsea survey, inspection and maintenance (IMR) activities as well as construction and decommissioning activities. Additionally, the vessels are fuel efficient and capable of operating in harsh weather conditions with low downtime.
Furthermore, the Edda Sun is expected to be mobilised with one work-class ROV and one high-speed surveyor interceptor in time for the high-activity season in the North Sea. On the other hand, Go Electra will be available for Reach Subsea in early 2023 and will be mobilised with one work-class ROV and one observation ROV.
The settlement of the Edda Sun acquisition is scheduled to take place in March 2023, subject to consent from Reach Subsea’s banks, and satisfactory vessel inspection. Additionally, the execution of the Go Electra charter agreement is also subject to satisfactory vessel inspection. Reach Subsea outlines that it is considering various financing opportunities for the transaction, including debt, equity, partnering, or a combination of these sources.
“In the current market, it is attractive from a cost perspective to own parts of the ROV vessel capacity. Owning the vessel also implies mitigation of any cost inflation risk in the coming years, as well as being able to credibly cater to our clients’ growing need for long-term solutions,” added Alendal.
When it comes to the Norwegian player’s most recent deals, it is worth noting that it secured a conditional Letter of Award (LOA) for a project in West Africa earlier this month, through which it will act as a sub-contractor to a “major tier-one contractor.”
The activities for this project are anticipated to start towards the late first quarter of 2023 and are expected to last well into Q2 2023.