“The decision to indefinitely postpone the service rigs was after careful deliberation by the group amidst the continued challenges faced by the marine and offshore oil and gas industry to conserve the cash position of the group,” Singapore-listed Ezion stated.
“The indefinite postponement of the service rigs would reduce the significant cash outflows required to take delivery of the service rigs and also the burden of the additional financial liabilities on the balance sheet with the drawing of additional bank loans required for taking delivery of the service rigs,” it added.
Ezion had announced back in 2014 that the four service rigs had landed charter contracts for deployment in regions including Southeast Asia and the Middle East.
Meanwhile, Ezion’s full year 2016 results were in line with expectations as it registered a net loss of $33.61m as against the profit of $36.78m in 2015 due to $70.9m of impairment charges made due to some projects committed at higher oil prices and the difficult and uncertain market conditions of the global oil and gas industry.
Full year revenue fell by 9.4% year-on-year to $318.25m due mainly to absence of contribution from projects in Australia, lower charter rates, and delay in the completion of modifications and upgrades of the group’s service rigs.
“The group is working closely with its bankers and several government agencies to complete the repair, modification and upgrade of several of its service rigs for deployment as soon as possible,” Ezion said.
“The group will also continue to engage in discussions for possible disposal for one of its existing service rigs and to invite potential partners to co-own some of its assets to further strengthen the group’s balance sheet.”
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