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Deep Sea Supply see light with BP Egypt contract win

Deep Sea Supply see light with BP Egypt contract win
Deep Sea Supply’s gloomy financial forecast has brightened with the struggling Norwegian offshore operator awarded three new time charter contracts for operations by BP Egypt.

The PSV Sea Swift has been awarded a two years firm plus 12-month option contract, while the PSVs Sea Spear and Sea Spark have been awarded one year firm plus 12-month option contracts. All three vessels are expected to commence operations in Egyptian waters in Q3 of this year.  

The contracts are a heartening development for Deep Sea Supply (DESS) amid uncertain times for the global offshore marine sector.

The company sold two AHTS vessels - Sea Lynx and Sea Bear - in February for a book loss of $17m and has laid-up a total of 16 vessels from its 37-strong fleet - 11 PSVs and five AHTS vessels – in the first five months of 2016.

Taking into account the sale of the two AHTS vessels, Deep Sea Supply reported a Q1 2016 loss of $25.5m. This follows a net 2015 loss after tax of $151.5m.

Times have been so challenging Deep Sea Supply recently announced it has diversified, with Seatrade Maritime News reporting it's  foray into the aquaculture industry in a joint venture with Marine Harvest earlier this month.

Deep Sea Supply, which boasts a global operation with particular focus on Brazil, the North Sea, South East Asia and Africa, forecast further fiscal headwinds in its Q1 Financial report, saying it did not expect to see an “improvement of the difficult market situation for OSVs in the short to medium term.”  

“As a consequence of the weak market, Deep Sea Supply will continue to lay up vessels that do not have any fixed activity [in] the next months. In addition to laying up vessels to reduce cost, the company is working hard to further reduce operating expenses for the vessels in operation,” the company said.

“During the first quarter of 2016 the oil price has increased somewhat, but still there are no signs of improvement of the fundamentals of the global OSV markets.

“In Brazil, the situation remains challenging, and the company now has only nine vessels left in Brazil. The North Sea spot market is challenging with unsustainable rate levels and low utilisation for PSVs. Following the sale of two AHTS vessels in February 2016, the company only has one vessel (PSV) in the North Sea spot market.

“The contract coverage for 2016 for the company is not satisfactory. DESS (Deep Sea Supply) is currently in advanced contract negotiations for some term opportunities, however the competition is fierce and rate levels are low. “

Sea Swift is owned by Deep Sea Supply through one of its 100% owned subsidiaries, while Sea Spark and Sea Spear are owned 50% by Deep Sea Supply through the joint venture DESS BTG.