Axxis Geo Solutions OBN Deal Hits Snag

Axxis Geo Solutions (AGS) said that letter of intent from September this year for a large OBN survey has not been finalized due to contract delays to its client.

Namely, the final contract award is subject to its client obtaining a separate contract award from their partners.

AGS has learned that its client and their partners are discussing a reduced initial scope of work compared to the initial scope of 28 vessel months and that the execution of their contract will be somewhat delayed.

Consequently, the contract award to AGS is also delayed, however, the company said it is still confident it will receive the contract.

AGS has mobilized 4 vessels to Malta in anticipation of the commencement of the work, and is currently negotiating compensation, including stand-by rates, to compensate for further delays.

The projected revenues from the first phase of the contract are expected to be approximately USD 35 million, with a potential for further upside, the company said.

AGS also said that the delay of the contract award has had significant negative impact on the working capital position of the company, and that it is considering various options to strengthen its financial position.

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