Demand for offshore support vessels has fallen. Source: Wikimedia
The Malaysian offshore support vessel (OSV) provider Icon Offshore has reported first quarter revenue of RM51.83 million (US$12.7 million), a decrease of 18.5 per cent from the RM63.59 million recorded from the same period last year.
Icon also recorded a net year-on-year loss of RM3.26 million, compared to the profit of RM2.71 million last year.
The oil and gas sector is suffering from low activity, resulting in a lower fleet use rate of 45 per cent for the quarter, and a reduction in daily charter rates for several existing and new contracts. It was 56.5 per cent in the corresponding quarter last year.
Icon managing director Amir Hamzah Azizan said the downturn offered a window to reinvigorate its services and reset the firm’s core business activities and operations.
“Icon continues to look towards strengthening and entrenching its position in external markets like Brunei while looking at diversification into new markets as well,” he announced in a statement.
“We will also consider and explore avenues for consolidation through M&A [merger and acquisitions] as and when such opportunities arise.”
Icon’s most recent successful contract was valued at RM42 million from ExxonMobil Exploration and Production Malaysia, for two straight supply vessels. The two-year contract started this month in May with an extension option of one year. The ships will support offshore production platforms as well as provide other services.
“As a result of weak oil prices and the lack of development activities by the oil and gas majors, the market condition for the OSV sector remains highly challenging which has adversely impacted all OSV operators. Nonetheless, we are optimistic that the recent improvement in global oil prices will inevitably serve as a catalyst to restart offshore development activities, thereby bringing much needed demand for support services players,” Hamzah Azizan said.
Leveraging on the firm’s solid core and ability to win contracts, Icon’s short-term focus was to take prudent action to survive the current climate, the managing director said. This included restructuring capital and operational cost structures, updating the fleet and pushing for competitive bidding.
“Icon views the current downturn as a strategic window to recalibrate and reset its core business activities and operations. By exercising financial discipline to conserve cash flow and optimize operational costs, we are confident that Icon will emerge from the current business environment leaner and more nimble to capitalize on improvements in the market when they occur,” he added.