The Group reports revenue of NOK 259 mill in Q1-17, down from NOK 363 million in Q4-16, and NOK 419 million in Q1-16. Fleet utilization in Q1-17 was 49% including vessels in lay-up, but has improved in April and May 2017 following mobilization of vessels for contracted work. The fleet comprises 25 vessels. Three vessels were divested in January/February 2017 as part of the ongoing restructuring of the Group.
A total of 5 PSV vessels are currently in lay-up, and are expected to remain out of market until sustainable term work can be secured.
Revenue this quarter is significantly reduced due to vessels in seasonal lay-up in addition to vessel sales. All three LWI units were in seasonal lay-up this quarter, in addition to PSVs and SCVs now mobilized for contracted work from Q2-17.
As a result, EBITDA in Q1-17 totals NOK 60 mill versus NOK 116 mill in Q4-16, with the reduction mainly due to low utilization and lay-up.
Cost improvements provide important contributions to earnings, and will be continued but market conditions must improve fundamentally to enable significant earnings improvement.
Due to the continued state of the market and the implications for cash flow, the Group initiated negotiations for a Standstill and Deferral Agreement with all secured creditors effective 22nd November 2016. Negotiations with the secured lenders are progressing but establishing a sustainable long-term solution will take more time than initially anticipated. Target closing date is 30th June 2017.
Important recent contract awards allow for certain vessels to be taken out of lay-up and into operation. Day rates are low but acceptable considering the alternative of continued lay-up. The awards have been secured with strategically important and recurring customers.
Overall spot and term rates in the PSV and AHTS markets continue to be depressed by reduced activity and vessel oversupply. However there are signs of increased activity enabling opportunities for certain vessels. Island Offshore do however not expect to see a more extensive market recovery until a more sustainable oil price is established, inducing increased E&P investment and market activity.
The order backlog excluding charterer’s options totals NOK 2.7 billion at 31.3.2017. Contract coverage for the remainder of 2017 is 55% and has improved following recent awards.
Island Offshore Shipholding, L.P. (the “Company” or “Island Offshore”) is the parent company in the Island Offshore group (the “Group”). At present the Group has 25 vessels in operation within the vessel segments PSV, AHTS, Well Stimulation (WS), Subsea Construction (SCV) and Light Well Intervention (LWI). The fleet operates in Norway, Denmark, UK, Holland, India and Angola. The fleet is modern and versatile and Island Offshore has taken a leading position in attractive market segments. The Group is privately owned.
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Henning Sundet, CFO /Investor relations Tel. (47) 913 65 735