Oceanteam builds backlog and deals with new realities
During the second quarter of 2016, Oceanteam made excellent progress towards achieving its long-term goals, including sustaining occupancy and the revenues of our shipping business unit under very challenging market circumstances. In addition, the Company opened up new worldwide market opportunities in markets such as the renewable energy and telecom industries, by further diversifying and accelerating our service-driven solutions, including engineering.
Oceanteam's Q2 results were once again solid, continuing the trend seen in the first quarter of 2016. In the second half of 2016, Oceanteam will continue its efforts to find new financial structures to lower the Company's cost of capital employed, freeing up resources to fund future activities and create room for a dividend pay-out to shareholders.
We entered into long-term charter agreements for our vessels CSV Southern Ocean and CSV Bourbon Oceanteam 101. Although at significantly lower rates than usual, due to market circumstances, the management team is very happy that it has been able to secure long-term revenue and charter occupancy.
In addition, Oceanteam Solutions' operations and service mix are growing as expected. In the second quarter, the Company managed to extend a number of existing contracts and was awarded several new contracts. Some of these contracts have attracted worldwide attention, in turn leading to increased traction on new inquiries. This segment of the Company has grown from a small unit into a solid source of revenues for the Company and a significant part of our business strategy. Oceanteam Solutions' operations are growing steadily and this is helping Oceanteam to deal effectively with the harsh environment that is defining both the oil and gas and offshore industries.
Since 2014, Oceanteam Solutions has expanded into four business pillars that are marketed worldwide. In addition to solutions for the renewables and oil and gas industries, Oceanteam has given the recently-launched Wheels division a kick-start. This new unit has already underscored its market presence by carrying out the installation engineering for the heaviest onshore lift in history for Dubai-I, the world's largest Observation Wheel. This is just one of the multiple projects and works in progress within the recently launched Wheels division.
The first half of 2016 saw our entire industry confronted with various obstacles and challenges. Market research still shows that the oil and gas industry will continue to be troubled. This shift in market equilibrium has rocked the boats of most players in the industry, including Oceanteam. While market conditions are throwing numerous barriers and even more hurdles for industry players to overcome, it also offers value-creating opportunities within several niche segments. We identified these opportunities years ago, and Oceanteam's investments and its efforts to open up those niche segments are now paying off. Q2 revenues were up 7 percent compared to Q1, proving that we are moving in the direction we are targeting.
With the renewables market showing strong growth and a positive outlook, Oceanteam is also expanding its geographical focus. Oceanteam Solutions recently signed a long-term agreement for consultancy and market representation in China with a firm that has a unique track record in Chinese offshore oil and gas and renewables activities. The cooperation covers projects related to offshore wind installations and support for power cable projects in China. This is a very exciting opportunity, as we are entering the Chinese market, which has enormous potential.
In addition to strengthening our revenue driven pillars, Oceanteam has also been working continuously to rationalise its operational cost base and structure and therefore the cost of its capital employed. Due to the sentiments in the industry, the financial markets and the Company's structure, Oceanteam is now stepping up its efforts to explore a possible change in its capital structure.
Oceanteam's performance in this second quarter was solid again. However, as communicated in our Q1 report, the Company has been exploring alternatives to refinance its current bond to reduce finance costs, fund future growth and establish a favourable dividend policy. As a consequence of the continued deterioration in market condition in the offshore oil and gas sector, Oceanteam has not yet succeeded in obtaining satisfactory alternative funding sources that will enable the Company to refinance its bond.
The Board of Directors has therefore initiated a process to review all alternatives available to the Company, to secure sustainable financing. Such alternatives may include new debt and/or equity, restructuring the current bond, but we are also exploring other strategic options. The Board is planning to present further details and, if possible, a preliminary plan to shareholders, bondholders and other stakeholders by the end of 2016.
While new opportunities and increased and diversified business activities are creating unparalleled opportunities and therefore a positive outlook and good entrepreneurship, the Company is still faced with serious financial restraints. Falling asset values, regular liquidity squeezes and negative sentiment in the financial markets are forcing the management to continuously trim the Company's cost base, to deleverage in a disciplined manner and to use our resources carefully.
Oceanteam's stable operational performance and solid EBITDA reflect the viability of both the Company and its team. We believe that we have all the elements in place that will enable us to take full advantage when the oil and gas market recovers, and to grasp opportunities in new markets.
Please find attached the complete Q2 2016 report and presentation.
About Oceanteam ASA
The Company is comprised of two operating segments, Oceanteam Shipping and Oceanteam Solutions. Oceanteam Shipping owns, charters and manages deep-water offshore support vessels and fast support vessels. Oceanteam Solutions focus is to provide its clients with complete offshore solutions. Oceanteam ASA has been active in the industry as an offshore solutions provider for over ten years.
For more information: www.oceanteam.no
| For further information about Oceanteam ASA please contact: |
|CEO Haico Halbesma:||+31 20 53 57 570,||firstname.lastname@example.org|
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.