Increased demand for construction support vessels combined with a strong North Sea spot market for anchor handling tug supply and platform support vessels (PSVs) in Q2 2022 drove Solstad Offshore’s quarterly earnings to the highest levels in the company’s history
Commenting on the results, Solstad Offshore chief executive Lars Peder Solstad said Q2 2022 was “the highest quarterly EBITDA we have had… ever”.
One of the world’s largest offshore support vessel (OSV) owners, the Norwegian owner nearly doubled its adjusted EBITDA year-on-year, posting Nkr613M (US$63M) in Q2 2022 compared with Nkr309M (US$32M) in Q2 2021. Revenues for the period were up 38% year-on-year to Nkr1,750M (US$180M) from Nkr1,264M (US$130M).
Improving market conditions kept Solstad’s fleet busy; it reported 80 OSVs in operation during the quarter yielding a robust average utilisation rate of 91%. Utilisation of PSVs was even higher, at 94% for the quarter.
And the market outlook looks positive, with strong bidding activity, particularly offshore Norway and Brazil. Solstad reported securing Nkr2Bn (US$206M) in new contracts during Q2 2022, pushing the company’s firm offshore backlog to Nkr7.2Bn (US$740M), and Nkr13.9Bn (US$1.4Bn) when options are considered.
“With the tragic invasion of Ukraine as background, energy security has become as important as developing more renewable energy”, Mr Solstad told investors in announcing the historic quarterly results.
“Energy prices remain high and the number of offshore projects to be developed continues to increase. Meanwhile, the number of vessels in the market is stable and will likely be so for several years. This is due to a limited newbuild programme and realistic reactivation candidates are few and far between. With an increasing activity level and a stable supply side, there should be many interesting commercial opportunities for Solstad going forward both within oil and gas and renewable energy”.
Market challenges
Like other OSV owners noted at the recent Annual Offshore Support Journal Conference in London, Mr Solstad sees better times ahead but cautions that several factors continue to drive up costs, including inflation. “We see increasing prices, lead times and logistics issues from the supply chain, while a higher interest rate level affects our finance cost. In addition, currency fluctuations influence our net result”, he said.
It completed planned vessel maintenance projects and drydockings, reactivating the CSV Normand Valiant and PSV Normand Triumph.
S&P and JV
Solstad continues to refine its fleet in line with its rationalisation plan. During Q2 2022, Solstad sold five platform supply vessels and two AHTS vessels, and, as OSJ previously reported, reached an agreement with US Jones Act pure-play tanker owner AMSC for the purchase and bareboat charter of CSV Normand Maximus.
Østensjø Group and DeepOcean Group joined with Solstad Offshore to form Remota AS, offering remote operation of vessels and subsurface activity.
