Norway's Boa Offshore is ready to fight the termination of a vessel charter in West Africa.
The company said the condition of the oil and gas market since the end of February has changed "dramatically for the worse" as a consequence of the Covid-19 pandemic.
This has left it at risk of contracts potentially being paused, cancelled or renegotiated.
In its annual report, Boa Offshore revealed this month that the one-year contract for its 12,100-dwt multipurpose offshore support vessel Boa Sub C (built 2007) was cancelled by an unnamed client.
"Boa has disputed the validity of this," the company said.
The offshore shipowner's Boa OCV subsidiary owns two of the world’s most high-specification offshore construction vessels.
The other, the 9,000-dwt Boa Deep C (built 2003), is currently idle in Norway after finishing a medium-term contract in Asia in the first quarter.
"Despite the current weak market conditions, there are a few short-term contracts out in the market at low day rates," the company said.
Other projects delayed
Deals involving its Boa Barges and Boa Tugs units at the Tortue Field off Senegal and Mauritania have also been delayed by a year.
Boa said it looks likely to receive "a certain compensation" for the postponement.
"The worsened market conditions will also make it more difficult to obtain new contracts," the company said.
"In the longer term, the timing of a potential recovery remains uncertain until more clarity surrounding the Covid-19 situation persists."
The offshore vessel owner said it can lay up vessels to cut costs significantly should weak market conditions prevail.
"Another measure is to pursue work in alternative markets, although these markets are also negatively impacted," Boa said.
All companies in the group should have sufficient liquidity in the short to medium term, it said.
Big cut in budgets
Boa said oil and gas companies' exploration and production budgets are estimated to have dropped around 30% in 2020 compared with 2019 levels.
A number of sanctioned developments will be postponed, new sanctioning will be paused, and brownfield and maintenance activities will also be postponed, the company added.
In March, Boa agreed a $400m restructuring of loans and bonds in a bid to put its business back on an even keel and stop staff leaving.
The owner of 20 OSVs, dredgers and tugs underwent a financial reorganisation in 2017, but had to revisit this agreement in the new downturn.
The shipowner has agreed new terms with certain major financial creditors, and bondholders have agreed to push out maturity dates to 2024.
The refinancing involves more than NOK 1.8bn ($166m) of bonds and NOK 2.5bn in loans and guarantees.
