Hermitage Offshore is on the ropes.
The Scorpio Group-backed company said it had retained financial advisors to negotiate with lenders after the oil companies it counts as customers slashed their budgets to deal with the spring's rock bottom oil prices and the global economic downturn caused by Covid-19.
"These circumstances give rise to substantial doubt about the company's ability to continue as a going concern," it said in its first quarter earnings statement.
For the quarter, Hermitage posted a $6.8m loss, at least its ninth consecutive quarterly loss, and narrower than the $7.2m loss year-over-year on the back of greater charter revenue.
In January, the company entered into what it described as a restrictive $132.9m refinancing deal with DNB and SEB, backed by its 10 platform supply vessels (PSV) and 11 crew boats. As part of the deal, Hermitage must keep its liquidity above $5m. It currently stands at $8.4m.
The same month, Hermitage took out a $15m line of credit from parent Scorpio Services Holding. It took out $5m of that in March in exchange for 5.6m shares, bringing Scorpio Services position to 17.6m shares, or 56.2% of the company.
In the first quarter, its PSVs earned average effective day rates of $8,370, its anchor handling tug supply (AHTS) vessels $9,000 and its crew boats $1,118.
So far in the second quarter, those figures had slid to $7,200 for PSVs and $1,000 for crew boats while holding steady for the AHTS vessels.
Two of its PSVs remain in warm lay-up, while three crew boats — two earnings $2,734 per day and one $2,400 per day — are set to go to work in West Africa contingent on Covid-19 restrictions being lifted.
Offshore players were confident that things were finally looking up for a sector mired in a six-year downturn brought on by 2014's oil price collapse.
Instead, as Maritime Strategies International analyst Greg Brown put it in April, it fell into the second once-in-a-generation downturn in six years.
Should Hermitage look to reorganize, it would be the second offshore company to do so, after Hornbeck filed for a prepackaged chapter 11 bankruptcy in Houston last month.
The Louisiana over-the-counter traded company is looking to discharge nearly $1bn in debt and emerge from the process by the end of the month.
Thursday, Hermitage shares rose $0.07, or 15.2%, to $0.54.
In after-hours trading, shares jumped further, to $1.12, it's first time trading above $1 since February.
It received with a warning from the New York Stock Exchange that it was trading below the $1 minimum price rule in April.
