ONGOING challenges in the offshore oil and gas vessel market has impacted MMA Offshore’s balance sheet, with the company hoping the delivery of new vessels will contribute toward its earnings in 2017.
MMA said it expects earnings before interest, tax, depreciation and amortisation (EBITDA) to be slightly lower than the previously stated guidance for the 2016 financial year of between $75 million and $85 million after redundancy related costs of about $3.5 million and provisions against outstanding debtor balances of about $7 million.
Challenging trading conditions experienced during the second half of the 2016 financial year are expected to continue at least into the first half of the 2017 financial year, the company said.
However, MMA has a number of additional new vessels being added to the fleet which will all contribute towards earnings in second half of the 2017 financial year (FY2017).
These vessels include the MMA Plover, which is contracted to INPEX on a 5 plus 5 year term from second quarter FY2017, the MMA Brewster, which is contracted to INPEX on a 5 plus 5 year term from the third quarter FY2017, and the MMA Privilege, which recently commenced work in Africa as an accommodation support vessel for a marine contractor on a fixed 12 month contract with a further 12 months of options.
Even with the expected contributions from these vessels, MMA said based on the current forecast fleet utilisation and rate levels, the company expects FY2017 EBITDA to be significantly lower than the current broker consensus forecast for the year.
Expected to be delivered in FY2017, the MMA Pinnacle and MMA Prestige are being tendered into a number of potential work scopes, according to the company.
MMA said it would focus on its asset sales program to reduce debt and on streamlining the business through reducing costs, increasing productivity and improving operating performance.
However, asset sales have become increasingly difficult in the prevailing market, the company said.
As a result, vessel sales for FY2016 will be below the $78 million target, MMA said.
As a result, the company is in contact with its banking syndicate in relation to ongoing capital requirements.
Remaining positive, MMA said there is increasing evidence that the fundamentals of the oil and gas market are moving back towards balance and the company remains well positioned to benefit when the market starts to recover.
Although there is a lag between a recovery in the oil price and an increase in demand for MMA’s services, the company said they are seeing some improvement in the core market, which is anticipated to flow through to MMA’s core client base.
MMA said it expects to see some improvement in the market in the 2018 financial year driven by underlying market fundamentals.