Reach Subsea ASA, a provider of IMR, ROV, survey construction, support and decomissioning services, is considering redundancies and layups of two vessels, Edda Fonn and Stril Explorer, in order to reduce costs.
The rates are still low in a weak market with oversupply of tonnage in most segments, Reach said in its 3Q 2015 report on Tuesday.
To mitigate the lower activity level and margin pressure in the industry, Reach Subsea has initiated several activities to keep its cost base competitive while expanding its business development activity into other regions than the North Sea. Lay up of Edda Fonn and/or Stril Explorer as well as redundancies will be considered for the winter season, the company said in the report.
Reach’s net profit for the third quarter of 2015 dropped to NOK 2.4 million, when compared to NOK 7.4 million in the same period last year.
Revenue for the quarter was NOK 192.7 million compared with NOK 101.7 million for 3Q 2014.
According to the company, the increase in turnover compared to 3Q 2014 was due to the Group’s activity level, reflected by having four vessels in operation compared with three vessels in 3Q 2014.
Operating expense for the quarter was NOK 189.5 million including depreciation. Total operating expense for 3Q 2014 was NOK 94.1 million. The increase in operating expenses from the 3rd quarter of 2014 is primarily due to the increased activity level, from three vessels last year to four as per September 30, 2015.
According to the subsea services provider, the outlook is challenging. Reach concluded that slowdown in offshore oil & gas activity, significant decline in the oil price, and consequent reductions in the spending budgets of the company’s clients would provide a difficult backdrop for subsea service companies.
Offshore Energy Today Staff