Prosafe cuts losses despite lower revenues hit by Covid-19 and oil price crash

Offshore accommodation rig provider Prosafe has managed to reduce its quarterly loss despite lower revenues due to lower fleet utilisation and average day rates following the Covid-19 pandemic and oil price crash.

Prosafe said on Thursday that its EBITDA for the third quarter was negative by $1.2 million compared to a positive of $26.3 million in 3Q 2019.

The decrease in EBITDA was mainly due to low utilisation and lower average day rates, resulting in low revenues partially offset by lower operating costs.

Prosafe recorded operating revenues of $11.7 million in 3Q 2020 compared to $56.5 million in the corresponding quarter of 2019.

According to the company, this was due to low utilisation.

Namely, the company’s fleet utilisation in 3Q 2020 dropped to 16.4 per cent from 48.2 per cent in 3Q 2019 due to commercial developments driven by Covid-19 and the oil price collapse.

As a result, Prosafe’s contracts were deferred to 2021.

Net loss equalled $24.2 million compared to the loss of $360.5 million in the same period last year.

The company’s order backlog at the end of the third quarter of 2020 was $114 million.

Prosafe emphasized it remains in constructive discussions with its lenders to agree on a sustainable financial solution that – if approved – is expected to improve the company’s balance sheet position significantly.

However, the company noted it is too early to conclude what eventually will be agreed and as such estimate the effects thereof.

Pending conclusions, the company continues to operate on a business as usual basis to protect and create value through challenging market conditions on the assumption that there is justified hope for a sustainable financial solution.

The company aims to reach an agreement with lenders by the end of 2020.

Despite the fact that the oil price has increased to higher levels compared to early this year following the Covid-19 pandemic and the oil price crash, the long-term outlook is largely unchanged.

The global fleet utilization for offshore accommodation vessels in general remains at a low level.

In the short term, however, Prosafe has been able to protect its business by moving contracts from 2020 to 2021.

Also, prospects and tenders have picked up in the North Sea in the near term between 2021 and 2022.

Although the long-term outlook remains weak, Prosafe continues to operate under the assumption that there will be a need for accommodation units in traditional key regions such as Brazil, the North Sea and Mexico.

In addition, the company remains of the opinion that such a market outlook over time will lead to a gradual rebalancing of the market following the scrapping of older and less competitive vessels.