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GMS: new contract bolsters order backlog, future earnings
An owner of self-propelled and self-elevating support vessels has raised its contract backlog and lowered its debt after securing a long-term contract in the Middle East
Gulf Marine Services (GMS) has secured another long-term contract for one of its self-propelled and self-elevating support vessels, which it did not name, operating in a bubbling offshore energy sector.
This contract spans five years, inclusive of optional extensions, with an unnamed energy producer and “contributes to further improvement in fleetwide average day rates,” said GMS.
It comes as owners are benefiting from a rising demand for vessels and services in the offshore hydrocarbon and renewable energy sectors and there is a shortage of available assets.
This contract increases GMS contract backlog to US$464M. On the back of this new contract, GMS uplifted its revised guidance for full year 2024 earnings before interest, tax, depreciation and amortisation (EBITDA) to between US$95M and US$100M.
GMS executive chairman Mansour Al Alami said this new long-term contract is with one of the vessel owner’s key clients in the Middle East.
“This award reinforces the continued high demand for our vessels and reflects the strong utilisation of our fleet in the region,” he said. “The revised EBITDA guidance for 2024 reflects the favourable market conditions.”
GMS chief financial officer Alex Aclimandos agreed there are “favourable fundamentals for business going forward”, enabling GMS to reduce its debt.
“Our net debt today stands at US$224M,” he said. “Supported by the projected lower cost of financing and the continuing demand for our vessels, the business will generate free cash flow that will help us achieve our various objectives to increase our shareholders’ investment value.”
There is a window of opportunity for owners such as GMS, with a combination of high market activity and limited vessel availability. But this could change in the medium term, as GMS estimated 18-21 new vessels would be introduced to the global market in the next two or three years.
“We expect market growth and retirement of aged assets from 2025-2027 to absorb the supply increase,” said GMS.
Riviera’s Offshore Support Journal Conference, Middle East will return to Dubai, UAE, 11-12 December 2024, bringing together the industry’s leading vessel owners, oil and gas companies, EPC contractors, technology and service providers to discuss opportunities, challenges and strategies to succeed in a booming offshore market. Get your tickets on early bird rates here.
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