The world's biggest owner of high-end offshore support vessels faces a comprehensive financial restructuring this year as losses mount.
Norway's Solstad Offshore said its net loss in the fourth quarter was NOK 3.09bn ($355.45m), against NOK 1.29bn in 2017.
Some of this was due to a NOK 2.04bn impairment of vessel values due to significantly adjusted assumptions in its long-term forecast.
Most of the impairments concern the oldest and smallest ships in the fleet, where the company "questions these vessels’ earnings capacity even in a normalised market," it said.
Solstad finished the year with NOK 631m of negative equity, but cash increased by NOK 21m to NOK 1.35bn during the quarter.
The 138 ships brought in revenue of NOK 1.19bn, against NOK 1.09bn in 2017.
The company said the market recovery is slow and charter rates are not at sustainable levels.
It has in place a deal with certain financial creditors to suspend and defer payments of principal and interest until 20 June, while negotiations with financial creditors and other stakeholders continue.
Solution needed
"The implemented measures are temporary in nature, and the existing financing of the Solstad Offshore group is not sustainable in the long run," it said.
It pledged to progress the restructuring process in coming months in close dialogue with its financial creditors.
"A long-term solution is expected to involve a comprehensive restructuring of the company," it said.
"The Solstad Offshore group is in a challenging financial position, and has implemented short-term measures to preserve liquidity.
"The cash position of the group is being monitored closely. The long-term viability of the company will require the establishment of a long-term financial platform.
"The company is in discussions with the financial creditors of the group to secure such a platform, but it is not certain that a solution can be reached."
Demand to increase
Looking ahead, it said the oil price development is expected to increase overall investment in the oil and gas sector and thus demand for Solstad's services.
"Increased drilling and production activity have, to a certain extent, benefited the AHTSs and PSVs in 2018, and might increase demand further in 2019 and onwards," it added.
The company has a large exposure to the North Sea, but compared to the previous winter, a bigger part of the fleet has secured contracts and has remained active.
In other regions such as Australia and Brazil, it expects similar activity levels this year.
The company’s contract backlog for execution in 2019 is NOK 3.1bn.
