Deepsea Supply sees ‘slight increase’ in tendering activity

Norwegian offshore vessel owner Deep Sea Supply says it has seen an increase in tendering activity, albeit a small one.

Announcing its first quarter results, Deep Sea Supply said “although there is still generally low activity in the global offshore support vessel (OSV) market, and the market in general remains oversupplied, the company has seen a slight increase in tendering activity in certain regions.”

Deep Sea Supply said that despite increased activity in some areas, contract coverage for its fleet remains unsatisfactory, although it is pleased that the company has been able to secure several contracts and reactivate vessels in recent months.

As a consequence of the weak market, Deep Sea Supply has laid up 16 vessels. In addition to laying up vessels to reduce costs, it has also been working hard to further reduce operating expenses for vessels in operation. It achieved an underlying cost reduction for vessels in operation in the first quarter and expects this to continue.

“Even though rates are under severe pressure and the competition is fierce, the company is not willing to enter into loss-making term contracts,” said Deep Sea Supply. “All new term contracts secured in 2016 and 2017 are expected to make a positive EBITDA contribution. With the current pipeline of tenders, the company is confident that we are able add more term work in the near future.”

As highlighted recently by OSJ, recent months have seen a growing number of term fixtures in the North Sea, although some are believed to have been entered into at rates were below or that barely cover operation expenses.