A revaluation of SD Standard Drilling's (SDSD) fleet of platform supply vessels has caused the company to finish 2019 in profit, despite weak fourth-quarter earnings.
The Cyprus-based company describes itself as an "investment entity" in platform supply vessels (PSVs), which has meant its bottom line has improved in line with the fair value of its assets.
Debt-free SDSD posted net profit of $6.5m for the full year 2019, compared to a $1.2m loss in 2018.
The fair value of the investments as of 31 December 2019 was $76.8m, as appraised by "reputable independent valuers".
The company booked a fair value profit of $6.8m for the full year 2019, of which $6.5m was unrealised, from the sale of two PSVs during the fourth quarter last year.
Standard Provider (built 2010) was sold for $13.5m in October and Standard Supporter (built 2009) was sold for $15m in November.
Martin Nes, SDSD's chairman, said the sales "reduced the risk and future capital expenditures in our PSV fleet while increasing our cash holding significantly".
"This enables the company to pursue other investment opportunities in line with our strategy to exploit market opportunities within oil service and shipping, both by acquisition and sale of assets," he said in the firm's year-end report.
Norwegian businessman Oystein Stray Spetalen is a 21% shareholder in SDSD, which operates a fleet of 13 partly and fully owned vessels PSVs, including one vessel on a bare-boat contract, and in January purchased a stake in a newly delivered VLCC.
Fourth quarter results
SDSD booked a loss after tax of $1.6m during the final quarter of 2019, the same level as in the fourth quarter 2018.
This was largely due depressed earnings from its fleet of PSVs, which made an operating loss of $500,000 during the fourth quarter, which is $200,000 less than in the same period in 2018.
"The operating result from the PSV fleet in the fourth quarter was somewhat disappointing due to a weak winter market, but our full-year results for 2019 show that the market is heading in the right direction," Nes said in the firm's year-end report.
"We expect the rates in the PSV market to improve during the upcoming spring and summer season."
Utilisation of SDSD's four large PSVs was down by 8% year on year and was 82% during the fourth quarter 2019.
The company reactivated two PSVs in the North Sea region during the fourth quarter.
Nine of SDSD's North Sea-specification PSVs remain in lay-up, all of which will be "costly" to reactivate, according to the company's year-end presentation.
Eight of these vessels have already been stacked for three or more years and one is overdue an interim survey.
January saw the company invest $36.5m in a 33.3% stake in a VLCC newbuilding that was delivered that month from Daewoo Shipbuilding in South Korea.
The 300,000-dwt vessel, the Gustavia S (ex-Lady), was purchased for $106m by SDSD, George Economou and Idan Ofer, who are joint equal partners in the Zeta Owners Inc vehicle, as TradeWinds has reported.
The ship will be technically and commercially managed by Economou's TMS Tankers.
The vessel was originally ordered in May 2018 by US private equity fund Hartree Partners for $83.5m.
