The net loss of $7.3m for the first six months of the year compared to a $25.4m net profit in the same period a year earlier.
BW Offshore does not expect the offshore market to improve in the near term. “The oil and gas markets continue to be challenging and field developments are still being postponed across the industry. The company`s expectations for slow market activity with few awards remains unchanged,” it said.
The company announced a financial restructuring plan in June and has put in place a new management which has been implementing staff cuts onshore in a programme that is now almost complete. Attention is now being turned to staff offshore. “The current target is to reduce offshore personnel costs by 10-15% and offshore R&M (repairs and maintenance) spend by 10% through higher efficiency, renegotiated supplier agreements and subcontracts,” it said.
The company also warned of possible charter defaults. “However, at current oil price levels BW Offshore still faces risks of customers delaying or defaulting on their obligations. The effect of this may affect asset values should option periods not be declared or units not be redeployed, potentially also affecting liquidity and covenant compliance.
“Redeployment of units coming off contracts are currently being affected by the low number of new developments.”
BW Offshore currently has three units in lay-up - Azurite, BW Athena and Belokamenka – while they are marketed for new contracts.
A fourth FPSO Cidade de São Mateus is also in lay-up awaiting repairs after a deadly fire offshore Brazil in February 2015. The vessel was inspected at Keppel Shipyard in May and June this year and a final repair plan is yet to be established. BW Offshore said loss of hire insurance on the unit stopped paying out in May this year.