Siem Offshore reports increase of vessel revenues in Q1

Siem Offshore Inc has announced results for the first quarter of 2014.

Results and Finance

– First quarter 2014 operating revenue of USD 94.4 million and operating margin of USD 36.9 million (39%), an increase from USD 79.8 million and USD 19.1 million (24%) in first quarter 2013.

– Revenues for Platform Supply Vessels, Anchor Handling Tug Supply Vessels and Offshore Subsea Construction Vessels increased compared to the same period in 2013, influenced by higher charter rates, better utilisation and a larger fleet.

– 42 vessels in operation at the end of the quarter, including partly owned vessels and vessels operated on behalf of a pool member, compared to 36 vessels at end of first quarter 2013.

– Operating expenses for vessels are reduced in 2014 as the result of initiatives implemented in 2013.

– The 2004-built PSV “Siddis Skipper” was sold and delivered in January 2014, resulting in a gain on sale of USD 6.5 million.

– New unsecured bonds of NOK 700 million issued in March 2014.

Contracts and order of new vessels 

– Ordered two well-intervention vessels scheduled for delivery in first and third quarter 2016. The two vessels shall be built at the Flensburger shipyard in Germany. Both vessels shall be chartered to Helix Energy Solutions Group for a firm period of 7 years with options that can extend the charter period up to 22 years.

– Agreed a contract for the PSV “Siem Atlas” for a firm period of 2 years, with options for 2 years to be mutually agreed, for operations offshore Brazil.

Subsequent Events 

– Delivery of the installation support vessel “Siem Moxie” on 7 April. The vessel shall primarily be utilised by SOC for project work within the submarine power cable installation, repair and maintenance segment.

– Entered into a charter agreement with Subsea 7 for the Offshore Subsea Construction Vessel “Siem Stingray”, which is under construction in Norway, for a firm period of three years with two yearly options. The charter shall begin in third quarter 2014 following delivery of the vessel from the yard.

Market Outlook

Current and near term North Sea market:

– During the first quarter, the Company experienced a volatile market for the high-end AHTS vessels in the North Sea.

– The beginning of the quarter was positively influenced by a high number of rig moves coupled with relatively harsh weather conditions resulting in a ‘sold out’ market.

– The latter part of the quarter, included periods where practically the entire high-end AHTS spot fleet remained idle.

– The North Sea market for the rest of 2014 is expected to continue to be volatile.

Long-term global demand for high-end offshore support vessels remains positive:

– The number of rigs working in the North Sea, Brazil, West Africa and the Gulf of Mexico has increased and further rigs are contracted to commence operations.

– Activity in harsh and /or remote areas (Barents Sea, Greenland, Canada, US Alaska, Kara Sea, Santos Basin Brazil) is picking up and will create incremental demand for high-end PSVs and AHTS vessels going forward.

“Oil companies will place more emphasis on reducing their cost which might have implications for the activity level in general and the OSV market. We believe, however, that the activity level will remain high based on stable oil price. We have registered increased demand for OSV in all geographic areas where we today have operations,” said the company.