Increased charter rates and OSV demand lift Siem Offshore up

Siem Offshore has reported operating revenues of $336 million for the fiscal year 2023, an increase from $274.3 million in 2022, and $85.2 million for Q4 2023, compared to $64.3 million in Q4 2022, said to be caused by an uplift in charter rates, generated by increased demand for offshore support vessels (OSVs) and in particular for the anchor-handling tug supply (AHTS) vessels segment.

In its Q4 2023 financial report, Siem said the operating margin was $40.1 million, an increase from $20.8 million in the same period of 2022, and operating profit/(loss) was $90.5 million, compared to $5.5 million in Q4 2022, after depreciation and amortization expenses of $16.4 million (2022: $15.2 million) and after reversal of impairments of $67 million (2022: nil).

According to the company, the fourth quarter was as expected, characterized by reduced activity as the industry moves into the low season for offshore operations. The North Sea spot market was particularly challenging for the AHTS segment in general, with many available vessels, which led to low day rates.

The PSV market was more stable, especially for large, sophisticated vessels which received the best utilization in the segment, and large AHTS vessels in Asia and Australia experienced increased activity and contributed positively to the segment. The subsea segment was tight, with good utilization and high day rates. Demand from both oil and gas, as well as the renewables segment, resulted in a good quarter.

On December 31, 2023, the fleet totaled 26 vessels, including partly owned vessels, following the sale of the fast crew & oil spill recovery vessel Siem Caetes in December, while two vessels were in lay-up. In addition to the owned fleet, Siem performs ship-management services for three vessels. The overall fleet utilization in the quarter was 87%, a slight decrease from 88% in 2022, excluding vessels in lay-up.

Siem had six platform supply vessels (PSVs) in the fleet at the end of the quarter which recorded operating revenues of $11.6 million and had 95% utilization (2022: $9.4 million and 96%). The operating margin before administrative expenses for the PSVs was $3.6 million (2022: $1.8 million).

The company had four offshore subsea construction vessels (OSCVs), two well-intervention vessels (WIVs) and one scientific core-drilling vessel at the end of the quarter. The subsea vessels earned operating revenues of $45.7 million and had 94% utilization (2022: $40.4 million and 95%), an increase said to be due to increased charter rates.

Siem had eight large AHTS vessels and one small AHTS vessel at the end of the quarter (2022: 8 + 1), which earned operating revenues of $23.7 million and had 71% utilization (2022: $10.2 million and 75% excluding vessels in lay-up). The revenues and margin increased from 2022 due to increased charter rates.

In terms of other vessels, the company had four smaller fast crew & oil spill recovery vessels at the end of the quarter and two vessels were in lay-up. The fleet earned operating revenues of $3.7 million and had 100% utilization excluding vessels in lay-up (2022: $3.8 million and 95%). The bareboat charterer of Siem Caetes has exercised its option to purchase the vessel and the vessel was formally sold and delivered in December. The 41%-ownership in the 1984-built well stimulation vessel Big Orange XVIII was sold for green recycling in August 2023.

For fleet emissions, Siem reports on the Carbon Intensity Indicator (CII), a proxy that measures grams of CO2 per vessel-hour in operation. For Q4, the CII was 133.1g/kWh (Q3 2023: 136.6g/kWh), slightly above the target compared to reaching the goal of 50% reduction in 2030 compared to 2008 levels (Scope 1 emissions for the fleet).

According to Siem, the expected increase in activity around the world continues to strengthen, backed by a stable oil price.

“For almost all OSV segments, there is an increase in numbers of multi-year contracts hitting the market, which is a strong signal that charterers are positioning themselves strategically to reduce the risk of not having control over capable assets to carry out already booked projects and planned campaigns in the coming years,” Siem said.

“The long-term outlook for our OSV fleet continues to strengthen due to need for adequate and secure energy supply. The renewable energy segment is also under parallel pressure to increase production, in addition to the longterm transition for a more sustainable energy production perspective.”

The total contract backlog on December 31, 2023, was $320 million, with $208 million to be executive this year, $71 million in 2025 and $41 million in 2026 and onwards.