A SIGNIFICANT decline in activity and rates has seen leading Australian offshore support company MMA Offshore Ltd return a Net Loss after Tax of $144.0 million for the year ended June 30, 2016.
The loss included the booking of a non-cash impairment charge of $139 million before tax against the carrying value of the company’s vessel, supply base and slipway businesses.
Excluding the impact of the impairment charge, the company recorded a Net Loss after Tax for the year of $20.2 million, significantly down on the previous financial year.
MMA Chairman, Tony Howarth, said the company facef extremely challenging market conditions through FY2016 as oil and gas markets remained under significant pressure.
“Demand for MMA’s services continues to be impacted as oil and gas companies dramatically cut expenditure in the current environment.
“Rates have also come down further, driven by intense competition for available work and ongoing pressure from clients to reduce costs.”
MMA managing director, Jeffrey Weber, reported that the company’s vessel utilisation fell to 59 per cent, down from 75 per cent in FY2015.
However, the company also had some good news during the financial year, when it wsas successful in signing two major new long term production support contracts in Australia with Woodside and ConocoPhillips. MMA also extended a number of its international contracts and secured a contract for up to two years for its newbuild vessel, the MMA Privilege, in Cote d’Ivoire.
“MMA continues to focus on its vessel sales programme to rationalise the fleet and reduce debt. Whilst the sale and purchase market is extremely difficult at present, we have been successful in selling 17 vessels to date for a total of $40 million,” Mr Weber said.
“Activity at the Dampier Supply Base continued to decline with revenue and EBIT down by around 30 per cent.
“The Dampier Slipway also struggled with fewer vessels in the region and increased competition from South East Asia resulting in a loss for the year.
“MMA continues to focus on cost reduction and productivity improvements without compromising the quality of our operations and the safety of our people.
“Whilst there has been some positive sentiment recently around the oil markets returning to balance in 2017, there is a lag between E&P spending commitments and increased activity in the offshore vessel market. On this basis, we expect the current challenging conditions to continue through FY2017.”
Offshore utilisation drops
Mr Weber said the decline in activity had seen offshore vessel utilisation drop significantly, whi le day rates have come down by approximately 50 per cent over the past two years.