Norway's Golden Energy Offshore Services (GEOS) has reacted to a "severe" demand drop in the North Sea by laying up three of its ships — in a market described as being like getting hit by a car.
The shipowner, like most in the offshore sector, has been floored by the oil price plunge and coronavirus restrictions.
Is this worse than 2014/15? That was like being hit by a car that gave us some serious wounds, and now they have gone into reverse and hit us one more time just to make sure we are hurt.
Per Ivar Fagervoll
"Is this worse than 2014/15? That was like being hit by a car that gave us some serious wounds, and now they have gone into reverse and hit us one more time just to make sure we are hurt," chief executive Per Ivar Fagervoll told TradeWinds.
"We can laugh, but this is bad."
Almost no activity
He added that there is almost no activity in the spot market. "When there is, everyone is fighting over it and you are way, way down past opex [operating expenses]."
The ships involved are the 4,000-dwt multipurpose platform supply vessels (MPSVs) Energy Empress and Energy Duchess (both built 2019) and the 3,200-dwt PSV Energy Scout (built 2005).
The stacking is described as "temporary" as GEOS chases possible future contracts.
Empress and Duchess had been enjoying fairly good utilisation, with medium term charters, Fagervoll said.
But when Empress came off its last deal, "we took a look at the market, and said we cannot stay," he added.
"We started to think, we have to go the other way, look at reducing the cash strain on the company."
He said that some vessels have been waiting in port for work for weeks.
"It's a black swan event all over," Fagervoll said.
"There have been a flow of vessels going inhouse, but there is still an oversupply. We had a lot of nice things lined up for the summer but the whole world has turned upside down."
Norway is opening up, but it has not helped the offshore sector yet, he said.
"The last couple of months has changed the prospects for the coming high season dramatically and GEOS needs to take these kind of necessary measures to manage the extraordinary situation in the current market conditions," GEOS said in a statement.
Change in prospects
The two MPSVs had found term work last year ahead of the winter, when they secured minimum 90-day contracts from an undisclosed North Sea client.
The deals provided a sustainable positive Ebitda margin, the company said at the time.
GEOS has five other ships still operating. It has been contacted for further information.
At least 16 PSVs have now been laid up in recent weeks, with the total of stacked ships now standing at 46 in the UK and Norway, according to broker Westshore.
Utilisation of the remainder is 68%.
Rock-bottom spot rates for PSVs continue to find new depths to plumb in the North Sea, with Island Offshore's 3,800-dwt Island Dawn (built 2013) booked at just £3,000 ($3,700) per day by Premier Oil for two weeks of supply duties.
This is down from £3,500 previously and as bad an anything seen in the last slump in 2014.
Big owners like Solstad Offshore, DOF, Havila Shipping and Siem Offshore are either entering into new refinancing talks or have pushed out debt again in the slump.
