Topaz slips into red, looks to future with West African investments

“We expect [the investments] to continue to impact profitability for the rest of the year," said ceo René Kofod-Olsen. "Our long-term contracts in the Caspian allow us to invest in long-term growth markets such as Nigeria and Angola as well as build our presence in the MENA region.

"Africa is a long-term strategic investment for Topaz as the offshore market is forecast to grow and clients will increasingly require our services."

Company-wide revenues fell to $175.4m in H1 2015 versus the $185.2m recorded for the same period in the previous year, and utilisation decreased by 4.7% to 85.1%, as the market continued to feel the effects of a low oil price.

A jump in revenues from the Caspian Sea region to $111.9m from $106m in H1 2014 helped to mitigate losses, but was largely offset by four drydockings costing $2.3m, lower utilization of two vessels resulting in a $1.1m decrease and lower utilization of barges in Russia cutting revenue $0.5m.

In the MENA region, revenues fell to $38.7m from $42.5m in H1 2014. The Africa region also decreased, to $12.6m from $14.9m, while Topaz' subsea division decreased $9.6m, to $12.2 m in H1 2015 compared with $21.8m in the same period last year. The expiration of two long term subsea contracts left vessels out of contract in the second quarter, but those vessels are now employed for the second half.

"Despite the challenges we face as the market adjusts to a low oil price, Topaz’s model continues to enable us to generate value," said Kofod-Olsen. "Vessel utilization in the Caspian has risen to 98%, up 5% from 1H 2014, and the company’s overall fleet utilization maintaining strong levels at 85%. We continue to see high levels of commercial activity in Qatar and KSA and we are confident of securing additional long-term contracts in these regions.

“As outlined in the first quarter results, we are now fully registered in our key African markets of Nigeria and Angola. This quarter we established a Topaz licensed entity in Angola, received the key operating licenses, appointed a country manager and rented office space for a three year term. This means we can move from spot rate contracts to our proven model of securing medium to long-term contracts."

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