Lower activity levels and tough market conditions could force Norwegian contractor Reach Subsea to lay up two of its vessels.
Namely, in its third-quarter earnings release, the Oslo-listed company said that, for the winter season, Edda Fonn and/or Stril Explorer, ROV/Survey vessels, could be pulled out from operation, which would also result in workforce adjustment.
The outlook is challenging, the company said in a statement. Slowdown in offshore oil & gas activity, significant decline in the oil price, and consequent reductions in the spending budgets of our clients provides a difficult backdrop for subsea service companies.
In the third quarter 2015, Reach had four vessels in operation, opposed to one less same time last year. This has boosted the company’s turnover by some 90 per cent year-on-year. Nevertheless, quarterly profit was decreased on much higher operating expenses due to the increased activity level from three to four vessels.
Reach generated net profit of NOK 2.4 million, or NOK 0.03 per share, on revenue of NOK 192.7 million, versus net profit of NOK 7.4 million, or NOK 0.10 per share on revenue of NOK 101.7 million in the year-ago quarter.
The company reported order book of close to NOK 180 million, of which approximately NOK 95 million (excluding options) is related to work for the remainder of 2015.
The two vessels will me exposed to the spot market as from end of this month and Reach Subsea is therefore looking to cut costs and also to further restructure charter commitments to gain more flexibility as it enters the challenging winter season.