With over €300 million in contracts, Solstad reports highest-ever quarterly order intake

Offshore energy clients have been spoiled over the last 7-8 years with all types of vessels being always available at a low price, however, this could quickly change, Solstad Offshore’s CEO Lars Peder Solstad stated as the company had reported its highest-ever quarterly order intake for the fourth quarter of 2022.

The fourth quarter of 2022 saw high utilization and improved commercial terms across all Solstad’s geographical regions and vessel segments compared to 4Q 2021, with revenues for 4Q increasing by 26 per cent to NOK 1,637 million, compared to NOK 1,303 million in 4Q 2021.

The main revenue drivers are said to be higher day rates and more sales of additional services.

Adjusted EBITDA increased by 56 per cent to NOK 454 million, versus NOK 291 million in 4Q 2021. According to Solstad, Q4 2022 showed the highest quarterly order intake in the company’s history with contracts signed for approximately NOK 3.3 billion. During the quarter, 80 vessels were in operation at an average utilization of 88 per cent.

The overall utilization for the operational fleet in 4Q 2022 was 88 per cent, compared to 86 per cent in 4Q 2021) The CSV fleet had a utilization of 91 per cent (82 per cent), AHTS fleet 79 per cent (85 per cent) and PSV fleet 89 per cent (88 per cent).

“Our order intake was record-high 4Q 2022, bringing our total firm order backlog to MNOK 9,200 – and to MNOK 17,700 if we include options. This provides a solid foundation for 2023 and beyond. It is encouraging to see that our revenues from renewable energy continue to increase,” Solstad said.

“It is not unlikely that we will experience a scenario where oil and gas activity continues to increase, driven by high energy prices and energy security focus, at the same time as renewable energy sources are developed to reduce global emissions. The combined investments into offshore energy production in this transition period could be massive. Solstad’s position as owner of high-end offshore vessels could be highly favorable.”

Full-year revenues for 2022 increased by 20 per cent to NOK 6,493 million, versus NOK 5,418 million in 2021, while adjusted EBITDA increased by 30 per cent to NOK 1,995 million versus NOK 1,534 million in 2021.

In terms of sustainability, the total fleet CO2 emissions decreased from 194 kton in 3Q to 179 kton in 4Q, mainly due to lower AHTS activity during the winter season. The average fleet carbon emissions were 25.2 tons (tCO2/vessel/day), down 5 per cent from 3Q.

Solstad said it is currently working on several pilot projects to investigate the use of new green fuels for fuel cell technology and multi-fuel solutions for internal combustion engines. The company also launched a campaign to target transit fuel consumption on transits. The first vessel out was Normand Leader for the Australia to Norway transit. A total of 29 per cent, or 164 tons, of fuel was saved compared to estimates and earlier transits.

Speaking about this year, Solstad said the demand for its services continues to increase and the company enters 2023 with a good balance between secured backlog and available capacity, and its vessels are in high demand from renewable energy clients and as floating wind continue to develop, it is expected that AHTSs also will be a central part of the installation of offshore wind farms.

There are very few new vessels under construction, meaning that all activity increase will have to be supported by the vessels already in operation. This is expected to give a continued positive effect on utilization and commercial terms for the high-end fleet during the coming year.

“When I meet clients all over the world, many of them are concerned about vessel availability, and they are right to ask such questions. Technology, construction cost, financing and yard capacity are some of the reasons why it will take years to bring a meaningful number of newbuild vessels to the market,” Solstad’s CEO said.

“It is likely that we will see longer contracts at higher rates and a project market where vessels are being mobilized to all corners of the world for shorter work scopes. Clients have been spoiled over the last 7-8 years, with all types of vessels being always available at a low price. This could quickly change.”

So far in 2023, Solstad announced several new contracts and contract extensions for PSVs and AHTS vessels that have a value of approximately NOK 830 million, a combined firm duration of approximately ten vessel years and will be executed by 14 vessels.

The PSV Normand Flipper was delivered to its new owners on 9 February and the CSV Normand Jarl was delivered to its new owners on 15 February.