Vessel impairments drag Siem Offshore deeper into the red

Norway-based offshore and subsea shipping company Siem Offshore sank deeper into the red over the second quarter 2017 period while recording over $70 million in vessel impairments.

According to its financial report on Thursday, Siem Offshore’s operating revenues for this year’s second quarter were $117.7 million compared to $99.6 million in the prior-year quarter.

The net loss attributable to shareholders was $71.4 million in 2Q 2017 compared to $6.6 million in the same period last year.

During this year’s second quarter, Siem Offshore conducted a periodic review of vessel values and recorded aggregated impairments of $70.8 million, which is a result of reduced vessel utilization arising from excess capacity.

At the end of the quarter, Siem Offshore’s fleet totaled 44 vessels compared to 46 vessels last year, including partly-owned vessels. Five vessels were in lay-up at the end of the quarter.

The company had eleven PSVs in the fleet at the end of the quarter, which is two vessels less than in the prior-year period. The utilization in this segment dropped to 76% in 2Q 2017 from 82% in the same period last year. Two vessels were in lay-up at the end of the quarter.

The company had five offshore subsea construction vessels (OSCVs) and two well intervention vessels (WIVs) in the fleet at the end of the quarter, compared to five OSCVs in 2Q 2016. In this segment, the utilization increased to 97% from 96% last year.

At the end of the quarter, the company had ten anchor handling tug supply (AHTS) vessels in the fleet, unchanged from last year. Utilization increased to 48% from 45% last year.

The total backlog at the end of the second quarter was $1.11 billion.

Oversupply lingers

The shipping company said in the report that, despite the North Sea spot market having experienced increased activity due to the reactivation of rigs, the dayrates remained low during the second quarter because of continued excess supply in the market.

The demand side has recently improved, Siem said. However, an oversupply of both AHTS vessels and PSVs still remains.

“We believe the market will remain challenging for the next couple of years as well-based rig contracts expire and vessels continue to arrive from other regions. Many competitors that have a weak balance sheet will struggle to maintain safe and predictable service as cash for operations is reduced,” the shipping company concluded.

Offshore Energy Today Staff