Cost reduction, cash management and African focus help Topaz MarineCompany News // August 18, 2015
Topaz Energy and Marine has announced results for the six months ended 30 June 2015.
During the period the company completed a re-financing of US$550 million of debt, significantly improving liquidity, improving covenant terms and smoothing repayment schedule.
The Caspian region delivered robust revenue and EBITDA growth during the period: up 5.9 per cent and 6.1 per cent respectively.
Profit was impacted by strategic investment in long-term growth markets in West Africa and one-off, non-cash US$8m charge associated with debt re-financing.
US$22 million was paid out in dividends to shareholders in the second quarter.
The company said it had embarked ona "rigorous" cash management programme and non-essential capex has been deferred.
A new multipurpose vessel, Topaz Responder, was deployed in May 2015; two vessels currently are under construction (1 MPSV and 1 AHTSV).
The company said vessel utilization in core markets "remains strong" despite challenging conditions.
René Kofod-Olsen, Chief Executive Officer, Topaz Energy and Marine said: "Our robust performance in the Caspian market and the relative stability of our Mena business, which together contribute over 86 per cent to group revenue, was offset by our subsea and Africa operations.
“Our investment in Africa as a long-term growth opportunity is strategic and we expect it to continue to impact profitability for the rest of the year. Some of our subsea vessels were out of contract for the second quarter and are now engaged for the second half of 2015.
“Despite the challenges we face as the market adjusts to a low oil price, Topaz’s model continues to enable us to generate value. Our long-term contracts in the Caspian allow us to invest in long-term growth markets such as Nigeria and Angola as well as build our presence in the Mena region.
Vessel utilization in the Caspian has risen to 98 per cent, up 5 per cent from 1H 2014, and the company’s overall fleet utilization maintaining strong levels at 85%. We continue to see high levels of commercial activity in Qatar and KSA and we are confident of securing additional long-term contracts in these regions.
“As outlined in the first quarter results, we are now fully registered in our key African markets of Nigeria and Angola. This quarter we established a Topaz licensed entity in Angola, received the key operating licenses, appointed a country manager and rented office space for a three year term. This means we can move from spot rate contracts to our proven model of securing medium to long-term contracts. Africa is a long-term strategic investment for Topaz as the offshore market is forecast to grow and clients will increasingly require our services.
“We continue to actively manage our costs by refinancing debt, conserving cash and postponing non-essential fleet upgrades. Our US$550 million refinancing of existing debt in April 2015 on more favourable terms reflects the confidence of the banking industry’s support of our operating model and ensures we have the right capital structure to provide the financing to fund our plans and lower Topaz’s overall debt repayment profile. We will continue to focus on reducing costs for the remainder of 2015 without sacrificing safety or operational quality. Cash preservation is high on the agenda, balanced with a pursuit of growth opportunities, both organic and M&A, and which remain within our covenants.”
“Our prudent cost management program, established relationships with leading industry players, young fleet and continued focus on securing long-term contracts, position Topaz to withstand the market adjustment... We are confident of being able to deliver consistent results for the full year.”