Elevated oil prices will lead to multi-year surges in the investments of the oil and gas industry, forecasts hotel rig firm Prosafe, which books a positive operating result for the year’s first quarter in the wake of increased activity.
Photo: PR / Prosafe
Prospects for the offshore market are looking much more positive than they have for a long time, says Prosafe, which bagged positive earnings before interest, taxes, depreciations and amortizations (EBITDA) of USD 4.8m in the first quarter of the year compared to a loss of USD 10.1 in the same period last year.
In its quarterly financial report, the accommodation rig provider writes that recent months’ highly elevated oil prices have seen the offshore market’s outlook ”improved significantly” after an extended period with very low levels.
In addition, ”energy security and diversification [need for several energy forms, -ed.] have come on the agenda again,” reads the report, adding:
”The development in the market for energy is anticipated to lead to a multi-year increase in the investments for oil and gas.”
Demand for accommodation rigs is increasing primarily due to maintenance efforts, alterations and lifespan extensions in existing oil and gas infrastructure.
But Prosafe also hopes that the energy industry’s sharpening focus on electrification and ”other [greenhouse gas, -ed.] emission reducing investments, including the emerging market for carbon capture and storage, will be positive for the demand for offshore accommodation in the longer term,” the company writes in the report.
Despite higher activity and positive EBITDA, the hotel rig company finished the quarter with an overall loss, coming in at USD 11.9m compared to a loss of USD 90m in the same quarter last year.
Had debt restructured
Prosafe has been struggling with a weak market since oil prices suddenly dived in 2014, which has led to low utilization in the years since and, in the end, brought the company into a situation where it needed a comprehensive restructuring to handle its debt – a process that was finally carried out in December last year.
The company’s creditors agreed to convert debt for a total of USD 1.087bn into shares, and the restructuring reduced overall debt by 75%. Thus, Prosafe ended up with equity of USD 439.9m and cash holdings of USD 60m by the end of 2021.
