Siem Offshore’s subsidiary Siem Offshore Contractors (SOC) is optimistic about the future, but the company’s supply ship business has been forced to recognise more than US$70M in impairments.
Announcing second quarter 2017 results, Siem Offshore said that, despite the fact that the level of activity in the North Sea spot market has increased following the reactivation of rigs, day rates remain low because of continued excess supply.
“The demand side has recently improved, however, an oversupply of anchor handlers and platform supply vessels remains,” said the company, which believes that the market will remain “challenging” for the next couple of years as rig contracts expire and vessels continue to arrive in the North Sea from other regions.
“Many of our competitors that have a weak balance sheet will struggle to maintain safe and predictable service as cash for operations is reduced,” it predicted.
The good news for the company is that subsidiary SOC continues to experience a high level of tendering activity for EPIC-based contracts for power cables to be laid in the offshore wind market. Much of this work is due to commence in 2019, 2020 and 2021.
The second quarter saw Siem Offshore make a loss, in large part as a result of impairment. It reported a net loss of US$87.6M in the quarter ending in June 2017, compared to US$7.9M in the same period last year. The impairment recognised in its second quarter results amounted to US$70.8 M.