Red ink for Deep Sea Supply as revenues sink over lower vessel utilization
Offshore supply vessel operator Deep Sea Supply posted a net loss for the second quarter of 2016 as revenues experienced a steep decline due to lower vessel utilization.
The vessel operator on Thursday reported a net loss of $30.9 million for 2Q 2016, including extraordinary impairments of book value of vessels of $17.6 million, compared to a profit of $1.02 million in the prior-year quarter.
The company’s revenues for the second quarter 2016 dropped to $11.6 million from $35.6 million in the corresponding period last year.
Comparing 2Q 2016 financial figures with 1Q 2016, revenues decreased by $4.9 million. The company explained that the main reason for this was lower utilization due to vessels coming off long-term charters not being replaced by new contracts and lower rates.
As per end of 2Q 2016, Deep Sea Supply had 12 AHTS vessels and 25 PSVs in the fleet, in total 37 vessels. Of these vessels, 16 are owned 100% by the company and 21 vessels are owned 50% through a Joint Venture with BTG.
During the quarter, Deep Sea Supply laid up one platform supply vessel (PSV) and, as per August 2016, the company laid up in total 17 vessels, of which 12 are PSVs and 5 AHTS.
‘No improvement’ for OSV market
Deep Sea Supply said it expects no improvement of the difficult market situation for offshore supply vessels (OSVs) in the short to medium term. In Brazil, the situation remains challenging, and the company now has only 4 vessels left operating in the country, down from 9 in the first quarter of 2016.
According to the company, the North Sea spot market is challenging with unsustainable rate levels and low utilization for PSVs. Following the sale of two AHTS vessels in February 2016, the company only has one vessel (PSV) in the North Sea spot market.
The contract coverage for 2016 for the company is not satisfactory and the company is currently in advanced contract negotiations for some term opportunities, however the competition is fierce and rate levels are low, Deep Sea Supply stated.
As a consequence of the weak market, Deep Sea Supply will continue to lay up vessels that do not have any fixed activity the next months.
In addition to laying up vessels to reduce cost, the company is working to further reduce operating expenses for the vessels in operation and actively considering alternative use of the fleet which includes use of vessels for aquaculture shipping as well for other sectors.
Offshore Energy Today Staff