siem offshore

Strong Demand for Offshore Supply Vessels, Norwegian Operator Doubles Profit in 4th Quarter

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February 23, 2012

(Dow Jones) Norwegian supply vessel operator Siem Offshore Inc. (SIOFF.OS) said Thursday that a relatively strong market for supply vessels in the North Sea as well as rising demand in Brazil helped fourth quarter net profit more than double, while the long-term outlook is improving.

MAIN FACTS:
-Net profit was $9.8 million, compared to $4.1 million a year earlier.

-Operating profit was $20.8 million, up from $7.8 million in 4Q 2010.

-Operating revenue increased to $99.7 million from $60.9 million the year before.

-The company said it had its highest historical quarterly operating margin, and its cash position increased to $137 million from operations and renegotiated debt facility, from $115 million a year earlier.

-The company said the North Sea spot market for offshore support vessels (OSVs) was relatively strong in the fourth quarter, with average fixture rates up 300% for anchor handling tug supply vessels and up 60% for platform supply vessels compared to the fourth quarter of 2010.

-The company said that the 2012 summer season looks promising, as the number of anchor handling tug supply vessels will remain fairly stable or decrease, but that there is more uncertainty for platform supply vessels with around 30 newbuilds to be delivered in 2012.

-Demand for high-end OSVs continues to increase with Brazil as the main driver. This demand growth in Brazil is expected to continue, potentially at a somewhat slower pace than what has been seen over the last 12-24 months.

-Siem Offshore said that the long-term outlook in the high-end supply vessel sector is improving. Leading indicators such as the drilling rig count and tendering and contract award activity in subsea construction and FPSO industry increased during 2011, and it expects this to continue.

-Siem Offshore expects demand for supply vessels to rise in Brazil and West Africa, and the market is improving amid normalization of drilling in the US Gulf of Mexico.

-At 0850 GMT, Siem Offshore traded 3.9% higher at NOK10.65.

-By Kjetil Malkenes Hovland, Dow Jones Newswires

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