Offshore accommodation provider Prosafe has forecast a tougher year ahead, compared to 2019, expecting a drop in flotel rig fleet utilization and day rates falling.
The company on Thursday reported a quarterly net loss of $13.3 million (compared to a loss of 35.7 million in Q4 2018).
Fleet utilization for the quarter fell to 23% down from 63% in the corresponding quarter of 2018. The rig fleet utilization for the year was 50.9%, which was an increase compared to the utilization levels of full-year 2018 at 47.3%.
Providing the outlook for 2020, Prosafe said that, near term, the company was working to further develop the business outside Norway and the UK as well "as reducing costs to protect values."
Utilization and day rates for 2020 are expected to be below the 2019 level, Prosafe said, adding that it will seek opportunities in new niches for alternative use of vessels to create value in the longer term. It did not say what those new niches would be.
The flotel provider said it would work on the strengthening of its position in Brazil, and re-entering the Mexico market.
Prosafe has been trying to get competition clearances for its proposed merger with Floatel International, to create the world's largest offshore accommodation provider. When the merger proposal was announced last year, it was said that the merged entity would own 14 offshore accommodation rigs.
However, competition authorities in both Norway and the UK have recently said the merger between the two largest players in the market could lead to higher prices for customers. Prosafe expects final decisions on the merger in March.
Low North Sea activity
Commenting on the company's performance in the last quarter Jesper K. Andresen, Prosafe’s CEO says: "The financial results for the fourth quarter of 2019 reflect low North Sea market activity and costs related to merger clearance, lender process and further right-sizing of the organization. We continue our efforts to protect values and create a more robust business."
At the end of the quarter, Prosafe's net interest-bearing debt was around $1,2 billion, an increase from previous years' $1,1 billion.
Prosafe attributed the increase in net interest-bearing debt on taking delivery of the Safe Eurus flotel and a temporary deferral of the last installment of $18.5 million to Cosco relating to Safe Notos’ rig seller's credit.
Prosafe said that its Board of Directors has initiated a process with the lenders to ensure waivers and sufficient financial flexibility for the long term. As part of this process, lenders have granted the company temporary payment deferrals till February 13, 2020, and waivers from an event of default till the end of February.
The company has recently asked for deferrals to be extended until the end of March, while a long-term solution is being sought. The company has said it has sufficient liquidity till early 2021. Prosafe’s firm backlog was $146 million as at the end of Q4 2019.