Singapore-listed offshore services provider Mermaid Maritime posted a loss of USD15.9 million for the first quarter that ended on 31 March, compared with a net profit of USD5.2 million in the same period last year.
The company’s service income fell by 4.6% to USD60.8 million in the first quarter of 2015 from USD63.7 million in the corresponding period last year. Mermaid Maritime also incurred higher expenses for the period. Its administrative expenses soared by 87.99% year on year (y/y) to USD11.06 million, while its rendering cost of services hiked 24.5% y/y to USD71.9 million for the first quarter of 2015.
Mermaid Maritime’s subsea group reported a loss before finance costs and income tax expense in the first quarter, mainly because of the three high-performing vessels that were off-hire for dry docking almost throughout the period and low utilisation of chartered-in vessels.
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Similarly, the company’s drilling group reported a loss before finance costs and income tax expense in first-quarter 2015, mainly owing to its MTR-2 rig’s contract that has been terminated early. Therefore, Mermaid Maritime’s managements decided to cold stack both MTR-1 and MTR-2 rigs and classified them as asset held for sale whereby the potential buyer has been secured for the rigs.
Mermaid Maritime expects a challenging market in the oil and gas industry due to the sharply lower oil price environment. However, the company remains relatively resilient, given its niche service focus on the lower oil cost producing oilfields and production.
In the meantime, Mermaid Maritime is renewing its fleet by replacing MTR-1 and MTR-2 with two newbuild rigs currently under construction in China.
The construction of these newbuild assets in China, which the company expects to partly fund with the proceeds from the sale of MTR-1 and MTR-2, continues to be on-track with delivery expected in 2016. Mermaid Maritime is also intensifying efforts to seek contracts for its newbuilds, MTR-3 and MTR-4, and this includes entering new markets in the region, which prospects remain relatively stronger notwithstanding the fallout in oil price.
In addition, Mermaid Maritime’s drilling business joint venture under Asia Offshore Drilling, with three high-specification jack-up drilling rigs, continues to perform steadily in the Middle East, contributing revenue to the company.