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GulfMark Offshore announces 4Q 2015 operating results

Published by
Oilfield Technology,

Quarterly highlights include

  • Generated cash from operations during the fourth quarter of US$18.1 million.
  • Reduced direct operating expenses before special items by 28% vs. previous quarter.
  • Forecasting an additional decrease in direct operating expenses of approximately 20% from the fourth quarter 2015 to the first quarter 2016 before special items.
  • Reduced general and administrative expenses before special items by 7% vs. previous quarter.
  • Successfully amended revolving credit facilities providing substantial covenant relief through Mid-2017 and continuing covenant relief thereafter.
  • Fully repaid revolving credit facilities by year end.
  • Current liquidity is approximately US$200 million.
  • Deferred committed capital expenditures of approximately US$22 million until 2017 by postponing the delivery of one of three remaining vessels under construction.
  • Continued successful vessel disposition programme and sold last remaining vessel older than 20 Years.
  • Reinvested vessel sale proceeds through the repurchase of company bonds.
  • Significantly curtailing unprofitable Brazilian operation subsequent to year end.
  • For the fourth quarter ended December 31, 2015, revenue was US$50.6 million, and net loss was US$16.6 million, or US$0.67 per diluted share. Included in the results are special items described below that totaled US$7.1 million or US$0.29 per diluted share after tax. Quarterly loss before these special items was US$9.5 million or US$0.38 per diluted share.

    Quintin Kneen, President and CEO, commented

    “Our company continues to generate positive cash flow, sell older assets and reduce debt in a tough market. We again generated substantial cash flow during the quarter and used that cash to fully repay our revolving credit facilities. We continued to high-grade our fleet with the sale of our last vessel that was more than 20 years old, and we used the proceeds to repurchase some of our bonds at a substantial discount, which further reduced our debt. Since the beginning of the downturn, we have been proactive in reducing costs to provide us with sufficient liquidity while decreasing our overall debt. With the recent amendments to our revolving credit facilities, we project strong liquidity for the foreseeable future. We will continue to be innovative and forward-looking in our cost and liability management as we lead the company through this downturn.

    “We continue to benefit from managing our capital expenditure requirements and high-grading our fleet. We successfully deferred approximately US$22 million of committed capital expenditures into early 2017. We sold three of our older vessels during the year, which decreased the average age of our fleet by about a year. We are optimistic that we can sell as many vessels in 2016 as we did in 2015 by continuing our successful vessel disposition programme. “Our franchise position in the North Sea continues to outperform in this environment. As expected, our overall utilisation fell during the fourth quarter due to normal seasonality. Importantly, our marketed utilisation improved to 97% from 94% in the previous quarter, and our fourth-quarter day rate increased due to occasional tightening in the spot market caused by fewer overall active vessels. In addition, we reactivated two stacked vessels subsequent to year-end, which is a sign that the market is finding a bottom and allocating existing work to higher quality tonnage and companies.

    “Overall, consolidated revenue was on the high-end of our guidance, and our operating costs came in at the low-end of our guidance, which demonstrates our continuing ability to reduce operating costs. In 2015, we reduced our full-year direct operating expenses by approximately US$70 million while improving safety metrics, and we should further reduce direct operating expenses by about the same amount in 2016. We continue to accomplish this while maintaining our overall commitment to our customers, safety and reliability.”

    Consolidated fourth-quarter results

    Consolidated revenue for the fourth quarter of 2015 was US$50.6 million, compared with US$60.7 million in the third quarter. Consolidated revenue fell due to a 4% sequential decrease in average day rate to US$14 230 from US$14 810 in the previous quarter, while utilisation fell 11 percentage points to 53% from 64% in the third quarter. Consolidated operating loss was US$11.7 million, compared with US$167.1 million in the third quarter. Excluding special items in both quarters, consolidated operating loss sequentially improved to US$5.2 million from a loss of US$12.8 million in the third quarter, due to lower operating expenses, general and administrative expenses and drydock expense, partially offset by lower revenue.

    The fourth quarter results include four special items totaling US$7.1 million net of tax (US$0.29 per diluted share), of which US$2.5 million (US$0.10 per diluted share) was non-cash. The Company recorded net of tax workforce redundancy and exit charges of US$4.2 million and a loss on the sale of assets of US$1.9 million. Additionally, the company wrote down debt issuance costs of US$1.3 million net of tax associated with the revolving credit facility amendment that took place in December 2015. The fourth special item was a US$0.3 million net of tax gain on extinguishment of debt as a result of repurchasing company bonds at a discount on the open market. A summary of these special charges is provided in the tables at the end of the earnings release.

    Adapted from a press release by Louise Mulhall

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