Offshore Vessel Market Set for Consolidation, Owners Say

OSLO, March 1 (Reuters) – A glut of offshore supply vessels and falling demand from oil firms will trigger a restructuring of the still-fragmented industry, two of the largest owners of the specialty ships told Reuters on Tuesday.

With crude prices down more than 70 percent since mid-2014, energy firms have sharply cut their exploration spending, leaving a rising number of vessels to be mothballed.

Norwegian supply vessel owners Farstad Shipping and Havila Shipping both said they expect to see mergers take place, echoing the sentiment of competitor Solstad Offshore , which said last week it too expects consolidation.

“What we have pointed to for a long time is that the supply side is too big compared to the demand side. We have also pointed out that there are too many owners in this market and therefore it is all set for consolidation,” Farstad Chief Executive Officer Karl-Johan Bakken said.

Havila, which is undergoing a financial restructuring, said the industry was facing its biggest crises to date.

“It’s in such environments things seem to happen. As the market currently is, we are open to most suggestions,” Chief Executive Officer Njaal Saevik said.

Supply vessel owners, dependent on oil companies’ drilling rig activity, have seen daily hires fall below operating costs even though around 100 vessels have so far been removed from the North Sea.

“The past six months we have seen the activity level come down. Whether we’re touching the bottom remains to be seen,” Farstad’s Bakken said.

For anchor handling vessels, which help move drilling rigs to new locations and help position them securely, there had been some positive news lately, both firms said.

Havila Shipping said it hoped to present a solution to its financial restructuring soon.

Farstad Shipping announced late on Monday said it had hired Danske Bank, DNB Markets and Nordea Markets as financial advisers to be prepared to take actions if amendments to its current capital structure become necessary.

Both firms also reported wider losses in the fourth quarter compared to the same period a year earlier.

By 1340 GMT, Havila’s shares traded 6 percent lower for the day and are down 95 percent in the last two years. Farstad was down 2.1 percent for the day and down 89 percent in the last 24 months. (Reporting by Henrik Stolen, editing by Terje Solsvik)

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