Norway's DOF has warned of further vessel impairments as layups hit record levels in dire global offshore vessel markets.
The company is reeling from the effects of the coronavirus pandemic and the oil price fall as charterers seek to redraw contracts in the slump.
The Oslo-listed owner said its net loss in the first quarter was NOK 4.11bn ($415m), against NOK 133m in 2019.
Revenue rose to revenue NOK 2.07bn from NOK 1.63bn, but DOF suffered impairments of NOK 1.5bn on its ships in the weaker market, as well as a currency loss of NOK 2.9bn due to the extreme weakening of the Norwegian krone and the Brazilian real.
The book value of the equity is now negative, the company said.
"The market has been challenging in all segments – especially after the effects from Covid-19. Due to a significant drop in activity and contract opportunities within the OSV segment, the group has by end May a historically high number of vessels in lay-up," DOF added.
The shipowner has stacked 18 ships out of its fleet of 67 offshore support and subsea units.
Projects and tenders postponed
Several projects and tenders have been postponed or cancelled, disrupting operations and earnings.
"Several clients have terminated contracts and initiated re-negotiations in rates in existing contracts which again have caused pressure on earnings and utilisation of the group's assets," the company added.
DOF had been working on several tenders for two and three-year contracts with Petrobras in Brazil.
But after the coronavirus outbreak, all tender discussions have been postponed and in addition two contracts have been terminated there.
Bank talks go on
DOF, controlled by major shareholder Helge Mogster, will stick to its strategy of securing term contracts and is actively working on keeping the utilisation of the fleet as high as possible, it said.
The company sees the timing of any market recovery as highly uncertain and further impairments could follow.
"A continuing weak market will, however, increase the risk of reduced earnings from the group’s vessels and put more pressure on the group’s already strained liquidity position if a robust long-term refinancing solution is not achieved," DOF added.
Net debt stands at nearly NOK 24bn.
The offshore vessel owner has entered into a standstill agreement with the majority of its secured lenders and bondholders, giving the group a temporary deferral of payments of interest and instalments until 30 June.
Another debt freeze expected
A further extension is expected as it tries to clinch a long-term refinancing deal.
Despite all the doom and gloom, DOF said the operational result for the group was good in the first three months.
Utilisation was 81% and Ebitda totalled NOK 804m, with improved earnings in all segments compared to the first quarter of 2019.
DOF has a contract backlog of NOK 19bn.
