Norwegian shipowner SD Standard Drilling has taken a hit as it revalued its VLCC and platform supply vessels (PSVs) in the third quarter.
The Oslo-listed investment company, backed by tycoon Oystein Stray Spetalen, said a change in the fair value of its vessels meant a $6.2m impairment.
Standard Drilling does not report revenue, but said the net loss was $6.14m to 30 September, down from a profit of $569,000 a year ago.
The Ebitda loss was $900,000 in the third quarter from the fleet of 12 PSVs, against a profit of $3.3m in the same period of 2019.
VLCC earning money
Ship utilisation was 66% for the four fully owned large PSVs, down from 95% the year before.
Cash in the bank stood at $38.6m at the end of September, up from $37.4m three months before.
The main reason for this is money earned by the 300,000-dwt VLCC Gustavia S (built 2020), a third share of which Standard Drilling owns through a company called Zeta Owners, which also involves Idan Ofer and George Economou.
The vessel's third voyage will be completed in mid-November.
Its time charter equivalent earnings estimate from delivery in January to the end of September was about $33,000 per day.
"The operating result from the PSV fleet in the third quarter was disappointing but better than the second quarter..." said chairman Martin Nes.
Market comes to a standstill
"Covid-19 still has a material impact on the level of activity. We believe the activity will pick up when the Covid 19 situation is more under control, travel restrictions will ease and the maintenance programmes in the North Sea will go back to normal."
Until then, Nes believes the company is in a strong position and will continue to focus on cash preservation and shareholder value.
Standard Drilling owns a stake in eight mid-sized PSVs through Northern Supply, in which the Spetalen company increased its stake from 25.5% to 28.1% in the fourth quarter for NOK 5.5m ($600,000).
The company, which has zero debt, said the North Sea PSV market continues to experience difficulties through seafarer travel restrictions, implementation of self-distancing, quarantine measures and lockdowns in certain countries.
Delaying, cancelling and postponing of planned drilling projects has resulted in the scrapping of ship contracts and forced several term vessels to return to the spot market.
"The North Sea market in which we operate has rapidly come to a standstill, reversing the potential deficit of vessels required this autumn to an oversupply," Standard Drilling said.
"With the second Covid wave now locking down parts of Europe and the UK, we believe that the uptick we were expecting in Q4 will be delayed to spring 2021."
The shipowner believes that owners surviving the pandemic will have the opportunity to take advantage when rates rebound, as charterers have to play catch-up on delayed projects and non-essential offshore maintenance, which cannot be suspended indefinitely.
