Gulf Marine Services (LSE: GMS), the leading provider of advanced self-propelled self-elevating support vessels (SESVs) serving the offshore oil, gas and renewable energy sectors, provides the following operational update for the period 1 January 2017 to 15 May 2017, ahead of its AGM today.
GMS continues to focus on maximising vessel utilisation1 in the current market environment and has achieved a rate of 56% for Q1 2017, an improving level compared to that seen for Q4 2016 of 46%. The secured backlog (comprising firm and extension options) as at 1 May 2017 has increased to US$ 251.3 million (31 December 2016 US$ 174.8 million).
As previously announced in 2017, a 36month contract (including options) was awarded for one of the Group’s MidSize Class vessels in the MENA region to support well intervention activities for a national oil company and this commenced in Q1 2017. Two new long-term contracts for Large Class vessels in Europe were also announced in 2017 to support wind farm projects for an international energy company. These are scheduled to commence in Q2 2018, one contract has a charter period of 26 months (including options) and the other 15 months (including options).
Development of New Services
The cantilever system on the Group’s new Large Class vessel GMS Evolution is scheduled to be ready for operations in June 2017 following the completion of sea trials. Commissioning is well advanced and progressing as expected. The cantilever system will allow GMS to provide a greater range of well intervention services from the vessel and to compete for well workover activity that was previously only able to be carried out from more expensive and less efficient nonpropelled jackup drilling rigs.
Financial Position
The Group had a net debt level (being bank borrowings less cash) at 1 May 2017 of US$ 369.9 million. Deleveraging is progressing as planned with year end net debt expected to be in line with previous guidance. Our progress in securing contracts and underlying trading are in line with expectations for 2017.
Duncan Anderson, Chief Executive Officer of GMS, said:
“We are encouraged by our recent contract awards and the continued strengthening of tender activity in our core regions of Europe and the Middle East. It is also reassuring to see activity within the European renewable energy market returning, where we have gained a new client following the award of two long-term charters commencing in Q2 2018.
“All of this is helpful as we seek further improvement in vessel utilisation and we are encouraged with the levels being achieved for our Large Class and MidSize Class vessels in this regard. There is clearly more to do, and we are confident that much higher utilisation levels will again be achievable for our fleet. We expect the pace of recovery to build momentum, with utilisation increasing ahead of day rates.
“The strategic expansion of our fleet and services, and the cantilever capability in particular, has ensured we can offer our clients flexible and cost effective support solutions for a diverse range of offshore operations. GMS continues to be very well positioned to maximise new opportunities as the market recovers, while recognising that the actual timing of contract awards, and accordingly the trajectory of improvement, is dependent on our clients’ own operational requirements.”