Norway's Siem Offshore says it's in negotiations with a potential buyer for its Siem Offshore Contractors cable lay business as it prepares for "an extended downturn in the offshore supply market."
The firm is trying two separate moves to improve its finances, working with its banks and bond holders.
In its Q3 results, Siem said that it believes that the next 12-18 months will "remain a very challenging period for the offshore support vessel (OSV) industry globally due to the excess supply of vessels and relatively low drilling activity."
Siem says there were indications that the tendering activity for drilling contracts was improving, but that unless there was a sharp increase in drilling activity, it was "unlikely that these early signs of improvement will create sufficient demand to absorb enough tonnage to approach a more balanced supplyand-demand market for OSVs. Consequently, low charter rates will continue to pressure the financial stability of vessel owners."
However, the firm's offshore wind focused business Siem Offshore Contractors continues to experience a high level of tendering activity for engineering, procurement, installation and commissioning-based contracts for offshore wind power cables.
"The market trend is for contracts to cover a larger scope of services," says Siem. "The long-term outlook is promising due to reduced LCOE (leveraged cost of energy) as demonstrated by recent OWF development announcements."
Siem Offshore had 43 vessels, at the end of Q3, down from 45 in the same period last year. Six were in lay-up.
The firm's 11 PSVs saw 68% utilization, with four in lay-up. Its five offshore construction vessels and two well intervention vessels saw 95% utilization.
Siem's 10 anchor handlers had 75% utilization rate, with two in lay-up.
The company also has six Brazilian flag vessels working until term contracts in Brazil, and five Canadian owned offshore support vessels working offshore Canada, which had 68% utilization.
Siem Offshore also has 41% ownership in the Big Orange XVIII stimulation vessel.
Siem says it has issued a request to its banks for instalment relief and certain other changes to its bank loan facilities to ensure that it is able to service its debt obligations through the downturn.
The firm is also looking to do a deal with its bondholders, asking them to swap their bonds at 80% of par value for a convertible bond with five and a half years maturity, 2% cash interest and a NOK3 conversion price.
The company says it is considering strategic alternatives for its cable lay business, Siem Offshore Contractors. It says there's no guarantee the outcome of negotiations with a potential buyer will be successful.
Siem Offshore was established as a stand-alone company in July 2005 following a spin-off from Subsea 7.
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