Norwegian marine survey company Electromagnetic Geoservices ASA (EMGS) has signed a firm contract with an oil company in Malaysia.
The signing of the contract follows the provisional agreement announced by EMGS on November 1.
This contract extension is worth approximately $8 million. Under the deal, EMGS will carry out 3D EM data acquisition offshore Sabah, East Malaysia.
The vessel BOA Thalassa vessel will perform the survey which is estimated to take approximately two months with an expected completion date early January 2017.
The contract gives some breathing space to the Norwegian surveyor, which earlier this month reported revenue of 4.5 million in the third quarter of 2016, a drop from $16. 3 million in the same period a year ago. Net loss narrowed, as EMGS reports a loss of $11.4 million, an improvement from a net loss of $25.4 million a year ago.
The company said it expected a rough patch ahead, with a near-term need to steer its shrinking backlog to growth mode.
As of September 30 2016, EMGS’ backlog was at approximately $5 million, compared with a backlog of $9 million at the end of the third quarter in 2015.
EMGS said that the backlog was mainly related to the Pemex contract, however, Pemex and EMGS have yet to agree on when EMGS will start working under the contract again.
Based on the company’s low backlog and the current market situation, EMGS said that there is material uncertainty related to the expeDespite the provisional award in Asia the market continues to be weak during the fourth quarter of 2016.
This puts pressure on the company’s cash position and consequently the bond covenant which requires free cash of $10 million, EMGS added, saying it is dependent upon securing sufficient backlog.
“Should sufficient additional backlog not be forthcoming within the next three to six months, the company may have to consider raising new financing through new capital or debt, sale of assets, a restructuring of existing debt or a combination,” EMGS explained earlier in November.
“In the event that the company does not secure sufficient backlog and solve the resulting liquidity issues that may arise in the coming three to six months, the going concern basis may no longer be valid,” EMGS said.
Offshore Energy Today Staff