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MMA Offshore expects reduced earnings, struggles to sell vessels

MMA Offshore expects reduced earnings, struggles to sell vessels
The offshore oil and gas sector slump which ensued from the collapse of oil prices is expected to prolong into 2017, Australia’s MMA Offshore noted, as the company anticipated reduced earnings and finds it hard to sell its vessels.

With the offshore oil and gas vessel market remaining under pressure due to low oil prices and substantial reduced demand for services, MMA Offshore expects to deliver EBITDA slightly lower than the previously stated guidance for the 2016 financial year of AUD75-85m ($55-62m)

MMA Offshore added that asset sales have become “increasingly difficult” in the prevailing market. Vessel sales for FY2016 will be below the AUD78m target identified in the company’s half-year financial report dated 19 February 2016.

The company has been focusing on asset sales in order to reduce debt, as well as streamlining the business to cut costs and raise productivity.

“Whilst MMA Offshore expects the extremely challenging trading conditions experienced during 2HFY2016 to continue at least into 1HFY2017, the company does have a number of additional new vessels being added to the fleet which will all contribute towards earnings in sHFY2017,” it stated.

There are five offshore vessels – MMA Plover, MMA Brewster, MMA Privilege, MMA Pinnacle, MMA Prestige – due for deliveries to MMA Offshore by 2017.

On an optimistic note, MMA Offshore said there is “increasing evidence that the fundamentals of the oil and gas market are moving back towards balance”.

“Whilst FY2017 will continue to be characterised by low demand and low charter rates, MMA Offshore expects to see some improvement in the market in FY2018 driven by underlying market fundamentals,” it said.