Island Offshore Group, the privately owned Norwegian offshore services vessel owner, and Vard Brevik, the Norwegian unit of the Italian Fincantieri shipbuilding group, have agreed to postpone the delivery of three newbuildings due to weak markets.
Island Offshore has ordered three platform supply vessels and a deep water installation vessel from Vard. It has since agreed with Vard to delay delivery of all the newbuildings with the exception of Island Defender, a UT 717 CDX type PSV, which will be delivered in January 2016 as planned.
The postponed deliveries are two more UT 717 CDX type PSVs, to be known as Island Discoverer and Island Diligence, and a deepwater installation vessel, Island Victory, which is a UT 979 CX design.
The company also has a UT 777-type subsea installation services vessel on order from Kawasaki in Japan in 2017.
“The agreement to defer the newbuilding programme is important to mitigate the negative implications of a weaker market and will improve the short-term cash flow for the group,” Island Offshore said.
The group reported a second quarter 2015 (2Q15) net profit of NOK121 million (USD14.5 million), up from NOk90 million in the same period last year. Revenues rose to NOk693 million from NOK593 million.
In the first half 2015, profit fell to NOK30 million from NOK329 million a year earlier, partly due to rise in net financing costs that leapt to NOK271 million from NOK153 million. Revenues fell slightly, to NOK1.24 billion from NOK1.26 billion.
“Island Offshore has secured additional term contracts for the fleet in 2Q15 adding to the order backlog for the fleet. We expect the spot market for PSV and AHTS to remain soft and volatile in coming months,” said the company.
It had three PSVs laid up in the second quarter and a fourth one joined them at the end of the review period.
Island Offshore, which has a fleet of 29 ships, said its strategy would focus on securing long-term commitment with strategically preferred clients. “The flow of tenders is significantly reduced, however there are still chartering opportunities to explore, especially internationally,” it said.
The company’s order backlog excluding charterer’s options totals NOK5.7 billion at 30 June. “Contract coverage for the remainder of 2015 is approximately 89% [of budgeted revenue] and 58% for 2016,” the company said.