Siem Offshore says more vessels might need to be laid upNews // October 28, 2016
In a report on its third quarter, Siem offshore said the OSV market continued to decline during the third quarter and more rigs went into lay-up. Furthermore, continued declining activity within the oil service industry lead to reduction in chartering rates and increased idle periods. "Going forward, we believe the market will remain difficult and owners might be forced to put more vessels in to lay-up," said the company.
In contrast, in the renewables market, Siem Offshore Contractos is experiencing a high level of tendering activity for 2018 and 2019 contracts for the installation of both medium- and high-voltage power cables in the offshore wind-farm market and the operations and maintenance service market.
In the third quarter the company received approval from all of its financing banks for a financial platform to position it for the challenging market expected in the coming years. The approvals, which are subject to the restructuring of the two public bonds issued by the company, include a three-year extension of the final bullet payments of all mortgage debt due before 31 December 2019, deferral of instalments for the fleet of AHTS vessels for 2.5 years with a cash sweep mechanism, and the easing of certain debt covenant requirements for the next three years.
In the quarter Siem Offshore also established a stand-alone AHTS vessel company, Siem AHTS Pool AS, holding ownership in 10 AHTS vessels and in which Siem Offshore holds a 78.16 per cent interest.
Secunda, its Canadian subsidiary, was awarded three-year term contracts plus options for two of its PSVs.
The company sold the PSV Siem Carrier and extended a bareboat contract for Hugin Explorer by 15 months to 1 July 2019 and agreed a purchase obligation by the charterer at the end of the period.
The company recorded aggregate backlog for the OSV segment and the industrial segment of US$1.34 billion at 30 September 2016.
More recently it entered into an agreement with Bravo Industries to sell the defence business, Consub Defesa e Tecnologia SA, a 100 per cent-owned subsidiary of Siem Offshore. The sale is scheduled to be concluded in the fourth quarter of 2016.