Thailand-based Mermaid Maritime Public Company Limited (Mermaid) reported that the firm announced Feb. 12 first quarter 2014 net profits of $13.3 million with its subsea business leading the recovery and drilling business also doing well. In addition to the financial results and reports released on that date, Mermaid wishes to add the following highlights:
Growing Strong in Both Subsea and Drilling Business
Total revenue of $83.8 million, up 58.2 percent year-on-year, was mainly driven by higher contributions from the subsea business, as more full service contracts were being performed. Its subsea business report a 71 percent growth in revenue backed by higher day rates and utilization rates. It achieved utilization of 85.9 percent in 1Q 2014, up from 50.6 percent utilization in 1Q 2013. Providing wide range of services also resulted in increased direct costs, which increased by 52.8 percent year on year to $67.5 million in 1Q 2014. SG&A grew by 11.5 percent year on year to $6.2 million due to increased personnel in the Middle East region.
The drilling business reported a 25 percent increase in revenue despite a decline in utilization rate. Mermaid Drilling achieved 50 percent utilization rate in 1Q 2014 down from 67 percent in 1Q 2013. MTR-2 was employed at 100 percent utilization and MTR-2 was on standby throughout 1Q 2014 while MTR-2 achieved 45 percent utilization and MTR-1 achieved 100 percent utilization in 1Q 2013. The robust result in drilling business was evidenced in equity income, which jumped from losses of ($0.4 million) in 1Q 2013 to profits of $7.1 million in 1Q 2014. This was due to strong contributions from Mermaid’s 33.76 percent owned associate company Asia Offshore Drilling Limited (AOD) as all three high-specification jackups, AOD I (400' ILC), AOD II (400' ILC) and AOD III (400' ILC), commenced their three-year contracts with Saudi Aramco.
In all, Mermaid saw an increase of 200 percent year on year in EBITDA to $25.9 million.
Outlook Remains Optimistic
Mermaid is optimistic that the outlook in the offshore oil and gas industries will remain positive, given the stable oil price and continued spending by oil and gas companies in exploration and production activities. Mermaid is continuing to see demand for its subsea vessels and related services as evidenced by contract awards secured as well as ongoing additional requirements from existing and potential customers. The tender rig market is a niche market with around 30 units globally, including those under construction. The demand]supply dynamics of the tender rig market appears to remain favorable as indicated by industry day rates and utilization, with customer preference for newer rigs.
The overall demand for jackups has improved globally and the demand for premium jackups has remained strong in all relevant regions, particularly in Asia and the Middle East. Oil and gas companies continue to show their preference for newer rigs such as those owned by Asia Offshore Drilling, an associated company.
New Rig and Vessel Orders
On Jan. 9, Mermaid entered into the agreements to build two new tender rigs and one new Dive Support Vessel (DSV) with China Merchants Industry Holdings Co., Ltd. for an aggregate sum of $436 million ($149 million for each tender rig and $138 million for DSV). The two new]build tender rigs are scheduled to be delivered in 1Q 2016 and 2Q 2016 respectively while the newbuild DSV to be delivered in 3Q 2016.
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