Norwegian shipping company Island Offshore posted a loss for the first quarter of the year and reduced revenues which were impacted by vessel lay-up.
In its first quarter 2017 report on Monday, Island Offshore posted fleet revenues of NOK 259 million for 1Q 2017, down from NOK 363 million in 4Q 2016, and lower than the same quarter last year when it amounted to NOK 419 million.
Fleet utilization during the first quarter 2017 was 49% including vessels in lay-up, but has improved in April and May 2017 following mobilization of five vessels for contracted work.
The shipping company noted that revenues this quarter were significantly reduced due to vessels in seasonal lay-up in addition to three vessels sold during the first two months of the year.
Profit before tax for the first quarter of this year was a loss of NOK 37 million versus a loss of NOK 1,048 million in 4Q 2016. The company’s profit before tax for the first quarter of last year was NOK 21 million.
Due to the continued state of the market and the implications for cash flow, the company in November initiated negotiations for a standstill and deferral agreement with all secured creditors. The company said that negotiations with the secured lenders are progressing but establishing a sustainable long-term solution will take more time than initially anticipated. Target closing date is June 30, 2017.
Rates ‘continue to be depressed’
According to the shipping company, overall spot and term rates in the PSV and AHTS markets continue to be depressed by reduced activity and vessel oversupply. However, the company said there are signs of increased activity enabling opportunities to activate selective vessels currently cold stacked.
“We do however not expect to see a more extensive market recovery until a more sustainable oil price is established, inducing increased E&P investment thus market activity,” the company said.
Island further added that short and long-term work across markets is still extremely competitive. Island Offshore’s view on the subsea and LWI market is maintained and the company anticipates an earlier recovery for this market.
Offshore Energy Today Staff