Siem Offshore Reports First Quarter Results (Norway)
Siem Offshore, an international supply and subsea shipping company, today announced results for the first quarter of 2011.
The operating revenue for the first quarter was USD 68.9 million compared to USD 49.8 million for the same period of 2010. The operating margin was USD 21.8 million compared to USD 12.0 million for the same period of 2010. Operating margin as a percentage of revenue was 32% compared to 24% for the same period of 2010.
Operating profit was USD 4.6 million com-pared to USD (5.7) million for the same period of 2010. The operating profit includes depre¬ciation and amortisation which amounted to USD 18.7 million, compared to USD 10.9 million for the same period of 2010. Net cur¬rency exchange gains of USD 1.3 million were recorded on forward contracts, due to weaker USD, of which USD 0.2 million is unrealised.
Net financial items were USD (2.2) million (2010: USD (3.9) million) and includes a re-valuation gain (loss) of non-USD currency items of USD 3.9 million (2010: USD (3.5) million) due to the weaker USD. Non-USD currency items are held to match short-and long-term liabilities, including off-bal¬ance sheet liabilities, in similar currencies. The result from associated companies was USD 0.2 million and includes, among others, net results of USD 1.9 million from the 50% owned "JOIDES Resolution" and USD (0.1) million for the 41%-owned well-stimulation vessel "Big Orange XVIII". In addition, an impairment of goodwill in the amount of USD 1.7 million was recorded which related to the equity investment in the limited partnership KS Ocean Com¬mander. KS Ocean Commander owned the vessel "Ocean Commander" which was sold in 2010.
The net profit attributable to shareholders was USD 1.3 million, or USD "nil" per share, compared to a net loss USD 10.2 million, or USD (0.03) per share, in 2010.
The majority of the Company's vessels are employed on long-term contracts. The rest of the fleet has been employed in the North Sea spot market during the quarter. The North Sea spot market has improved compared to fourth quarter 2010 and we expect it will continue to strengthen during the summer season.
The Company had twelve PSVs in operation at the end of first quarter (2010: (eleven). All PSVs operated on long-term contracts, of which one was on a bareboat contract. The PSV fleet earned operating revenue of USD 23.4 mil¬lion and had 98% utilisation (2010: USD 21.1 million and 91%). The operating margin for the PSV fleet was USD 11.7 million (2010: USD 10.5 million). The PSV fleet recorded 17 days off-hire related to dry-dockings or contract demobilisation (2010: 66 days).
The Company had four MRSVs in operation at the end of first quarter (2010: five). All MRSVs operated on long-term contracts, of which one was on a bareboat contract. The MRSV fleet earned operat¬ing revenue of USD 14.2 million and had 100% utilisation (2010: USD 16.3 million and 95%). The operating margin for the MRSV fleet was USD 7.8 million (2010: USD 6.8 million). The MRSV fleet recorded 2 days technical off-hire (2010: 5 days).
The Company had nine AHTS vessels in operation at the end of first quarter (20010: three), of which two are owned by the pool partner. During first quarter, four AHTS vessels have operated on long-term contracts for Petrobras in Brazil, one AHTS vessel has operated for Statoil in the Barents Sea and the remaining four AHTS vessels have operated on short-term contracts in the North Sea spot market. The AHTS fleet earned operating revenue of USD 22 million and had 90% utilisation (2010: USD 1.9 million and 79%). The operating margin for the AHTS fleet was USD 7.2 million (2010: USD (2.3) million). The AHTS fleet recorded 22 days technical off-hire (2010: 0 days). The Company had a fleet of ten Brazilian
vessels at the end of first quarter (2010: nine), of which eight vessels operated on long-term contracts and two vessels were idle. The Brazilian vessels earned operating revenue of USD 6.4 million and had 77% utilisation (2010: USD 6.0 million and 88%). The operating margin for the Brazilian vessels was USD 2.1 million (2010: USD 1.9 million). The Brazilian ves¬sels recorded 17 days off-hire, including dry-dockings (2010: 5 days).
Vessels Under Construction in Norway The eighth and last AHTS vessel "Siem Amethyst" was delivered in April 2011. This delivery completes the series of ten similar AHTS vessels delivered from a Norwegian yard including the two vessels owned by our AHTS pool partner, for operation in the Siem AHTS pool.
Vessels Under Construction in Brazil One fast crew vessel was delivered during first quarter. One additional fast crew vessel and two fast supply vessels are scheduled for delivery in second and third quarter of 2011. Each of these vessels shall commence 8 year firm + 8 year option contracts for Petrobras.
The two oil spill recovery vessels ("OSRVs") are scheduled for delivery in first and second quarter 2012. Both vessels shall commence 8 year firm +8 year option contracts for Petrobras.
The two large-size PSVs are scheduled for delivery in 2012 and 2013 and do not have contracts at this time.
Total future yard instalments for vessels in Brazil were equivalent to USD 176.1 million at end of first quarter Such yard instalments fall due with USD 30 million in 2011, USD 80.8 million in 2012 and USD 65.3 million in 2013.
Financing and Capital Structure
Cash and Equity
Net cash flow from operations during the first quarter was USD 3.4 million and the cash position at 31 March was USD 65.8 million.
Shareholders' equity was USD 749.5 million at 31 March 2011, equivalent to USD 1.89 per share.
The balance sheet included gross interest-bearing debt in the equivalent of USD 821.2 million. The Company made total drawings in the equivalent of USD 72.5 million under credit facilities during the first quarter and paid debt instalments in the equivalent of USD 67.2 million in the same period.
The Company has secured debtfinancing for all vessels under construction in Brazil.
Fleet Employment and Contract Backlog
The majority of the fleet is on long-term contracts. The contract cover at 31 March 2011 for the PSV fleet was 83% for 2011, 40% for 2012 and 13% for 2013. The contract cover for the MRSV fleet was 100% for 2011, 80% for 2012 and 19% for 2013 and for the AHTS fleet 54% for 2011, 40% for 2012 and 40% for 2013. The contract cover for the Brazilian vessels was 78% for 2011, 61% for 2012 and 53% for 2013.
The total backlog of firm contracts for all vessels at the end of March 2011 was USD 841 million, including the 50%-ownership in the "JOIDES Resolution'; the 41%-ownership in the "Big Orange XVIII" and vessels under construction. The backlog is split with USD 210 million for 2011 and USD 631 million for 2012 and thereafter.
The QHSE performance in the first quarter was good and is a result of continuous commitment to and focus on QHSE on board the vessels. The safety records for the first quarter 2011 report one work-related lost time injury and no major discharges to the environment.
Submarine Cable Installation Market
The Company has identified the installation of submarine cables and associated services to be a growing market, both with respect to infield and landfall cables in the offshore oil and gas industry, and with respect to inter-array as well as export cables in the offshore renewable energy market. The company acquired all shares in Five Oceans Services GmbH ("FOS") in April 2011, and invested approximately USD 8 million as consideration for shares and injection of working capital. The amount includes the issue of 200,000 shares by Siem Offshore to the past shareholders of FOS. The transac-tion combines the marine operating capaci-ties of Siem Offshore with the engineering capabilities and project execution expertise of FOS and forms a strong entity to meet the forecasted market growth and customer requirements.
FOS was formed in 2003 and has served the worldwide offshore oil and gas industry as well as the conventional en¬ergy market, with a specific geographical focus on the Middle East, the Eastern Mediterranean Sea and India. FOS has successfully completed more than 20 installation and repair projects of subma¬rine cables. FOS employs approximately 50 people, including a project engineer¬ing and installation team. The manage¬ment team of FOS has more than 20 years experience in the submarine cable installation market.
The main initial asset for the installation of submarine cables will be the vessel "Siem Carrier", which was converted into a state-of-the-art DP2 cable installa¬tion vessel in 2007.
• FOS will be consolidated into Siem Off-shore's accounts on 1 April 2011.
• FOS is not expected to contribute to the operating margin of the Company in 2011, but should improve going forward.
The market outlook for submarine cable installations in the offshore oil and gas sector is expected to grow in the coming years. In addition, the turnkey installa¬tion, repair and maintenance market for submarine power cables in the offshore renewable energy sector is expected to grow.
Siem WIS has successfully completed the qualification of the PCD system to applicable tests in the API 16RCD standard, as requested by Shell. Several oil companies and other third parties have witnessed the test. Extended tests to qualify for high pressure and high temperature wells (HPHT wells) are now being performed and are expected to be completed in second quarter. Siem WIS is discussing commercial contracts with several oil and service companies re-garding the use of the PCD technology.
Source: siemoffshore, May 10, 2011