GulfMark expects difficult market to persist for 'extended period'Company News // November 11, 2016
Quintin Kneen, president and CEO of GulfMark, says the offshore vessel market "remains extremely challenging" and he expects difficult conditions to continue for an extended period of time.
"Global vessel stacking continues to allow for incremental utilization improvements, and we recorded sequential quarterly utilization increases in each of our regions during the third quarter," said Mr Kneen. "Given the significant global oversupply of vessels and the expiration of long-term charters fixed before the downturn, our average day rates will continue to decline. Similar to the previous quarter, we reduced direct operating costs while increasing utilization. Also, we continue to manage working capital carefully, and we reduced days sales outstanding by 10 days during the quarter.
“Each of our operating regions sequentially improved quarterly utilization. During the quarter, we re-activated two stacked vessels to satisfy two new long-term contracts beginning in the fourth quarter. Our Southeast Asia operations increased utilization by almost nine percentage points, resulting in regional utilization of 50 per cent. In the Americas, we secured a long-term contract for our 300 Class Jones Act vessel that was delivered near the end of the second quarter of 2016.
“We continue to dispose of our older vessels. As we disclosed on our previous call, during the quarter, we sold an 11-year-old vessel and a 10-year-old vessel for proceeds of US$3.6 million. In addition we received a deposit on the sale of the oldest vessel in our fleet and we anticipate concluding the sale in November.
“We remain cognizant of the challenges currently facing the offshore oil and gas industry, and as we have done throughout the downturn we will continue to proactively take steps to improve our cash flow and liquidity,” Mr Kneen concluded.
In the third quarter ended 30 September 2016, GulfMark's revenues amounted to US$27.8 million and its net loss was US$24.7 million. Included in the results are certain gains and costs that totaled US$1.8 million. The quarterly loss excluding these items was US$22.9 million.