Owners of anchor handlers and subsea support vessels can expect strengthening demand, higher utilisation and improved charter rates as energy companies ramp up investment
Rising oil and gas activity, investment in large subsea projects and growing offshore wind markets are driving higher demand for these vessels, according to one of Norway’s largest owners, Solstad Offshore.
It has seen increased vessel demand worldwide from more robust global offshore drilling rig activity and new field developments.
Vessels are increasingly mobilising between regions, which shows the global supply and demand balance continues to improve for shipowners.
In addition, there have been few additions to OSV markets from shipyard newbuildings and no new orders, except for purpose-built vessels for offshore wind support, which will tighten supply in 2023 onwards.
Combined, this has resulted in improved rates for owners so far in 2023 and should lead to healthy market conditions going forward.
“We continue to sign new contracts at improved commercial terms,” said Solstad chief executive Lars Peder Solstad.
“Q1 2023 has seen reasonably high market activity. We have had a significant improvement in operating income in the quarter compared with the same quarter in previous years. We already see higher activity in Q2 2023 and beyond.”
Solstad reported utilisation of its fleet of 83 vessels in Q1 2023 at 88% compared to 81% in Q1 2022, despite higher levels of drydocking for maintenance and class renewal surveys, while five vessels are inactive.
In March 2023, Solstad announced the sale of its fleet of 37 platform supply vessels (PSVs) to Tidewater to repay some of its debt mountain and concentrate on high-end tonnage of anchor handling tug and supply (AHTS) and construction subsea vessels (CSVs).
“We are exiting a segment with pure oil and gas exposure,” said Mr Solstad. “Instead, we are building the company around the CSV and AHTS segments that are in demand from both oil and gas and renewable energy clients,” he explained.
“We are positioning the company further for the ongoing energy transition. In parallel, we are increasing our service offerings, like ROVs, survey and project support, meaning clients can get extended deliveries from us on top of the traditional time-charters.”
The financial rationale of the PSV transaction is the ability to reduce Solstad’s debt by about one-third through this fleet sale, which will strengthen its balance sheet, debt service ability and liquidity.
But Mr Solstad indicated more work was needed to stabilise the company’s finances and lower its debt.
“We have engaged with the lenders, creditors and advisers to address the refinancing. The outcome of the refinancing cannot be guaranteed at this stage,” he warned.
“Through the closing of the PSV sale and with a modern fleet of CSVs and AHTSs, Solstad is well-positioned for a promising market outlook ahead.”
So far in Q2 2023, Solstad has received a letter of intent for the hire of the CSV Normand Maximus for at least 490 days starting in Q1 2024 and secured a seven-year contract with Prysmian Powerlink for the charter of Normand Pacific to keep this CSV employed until the end of 2030. Prysmian has the option to extend the contract with two sets of two years and one year beyond the firm period.
Offshore Support Journal Conference, Asia returns to Singapore on 12-13 September 2023. Use this link to register interest and get more details on this key industry event
© 2023 Riviera Maritime Media Ltd.