Oceanteam rues effect of oil price - looks at other marketsCompany News // August 28, 2015
Oceanteam says the prolonged downturn and volatility in the oil and gas market has put pressure on the sectors in which it works and has led the company to broaden its focus.
"Recent announcements from major players and clients regarding restructurings, lay-ups and lay-offs have changed the market sentiment significantly and affected asset values," said Oceanteam. "Even though the oil and gas market is challenging, other sectors, like Offshore Wind, show a continuous growth. Our competitors' focus has shifted towards the latter, increasing the general competition in the offshore wind market. The players in our operating markets have an increased focus on reducing costs and increasing their efficiency. This opens up several possibilities for Oceanteam to provide innovative solutions for both new and existing clients."
The company said that, with long term contract coverage, supported by the performance of the engineering and equipment service segment, "Oceanteam continues to deliver solid results in its targeted geographical offshore and onshore markets."
Oceanteam said its diversification strategy had allowed it to expand its services in challenging market conditions while maintaining a solid performance.
In April a US$35 million installment was amortized to the company's bondholders. The transaction is a part of the company's long-term strategy to optimize and strengthen the balance sheet, improve financial ratios and credit ratings. The company said that strict capital and cost discipline combined with reduced leverage will allow the company to replace its high cost of capital with a more flexible capital structure that increases earnings and reduces financial costs going forward.
"To show our strong commitment to Oceanteam's shareholders, the company will retain its capital and cost discipline in order to establish a dividend policy, latest payable in 2018," said the company.
In the second quarter the company has revenues from operations of US$19 million. EBITDA from operations was US$9 million and operating profit was US$6.1 millio. The net result for the quarter was US$3.1 million.
"The prolonged downturn in the oil and gas market is affecting our asset values negatively, but the company is now reaping the benefit of a modern fleet with strong contract coverage," said Oceanteam, which recently acquired the remaining 48 per cent stake in Oceanwind BV. The company was renamed Oceanteam Cable Solutions and will be a full services provider focusing on transport, handling and storage of power and fiber optic cables and umbilicals globally.
To support growth Oceanteam/RentOcean secured a EUR 15 million revolving term loan facility. Oceanteam/RentOcean has been awarded a contract in Germany for the supply and engineering of a cable lay spread in combination with a frame agreement for future equipment, transport and storage services.
The construction of a large offshore construction support vessel for DOT Shipping is progressing as planned and the two newly delivered FSVs are in operation in Mexico. All of the vessels are fully financed and have secured long term time charters upon delivery.
KCI design engineering has been awarded various contracts and maintains a healthy backlog of projects in the oil and gas, offshore renewables and related areas.
Oceanteam Shipping's CSV and FSV fleet is fully operational and all vessels have contract coverage until early 2017 or further.