Topaz posts net loss of USD 13.4m for the first half of 2017

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Topaz Energy and Marine announced its results for the six months ended 30 June 2017.

Topaz reported a net loss of $13.4m for the first half of 2017 compared a $800,000 profit in the same period a year earlier. Revenues fell 22.7% to $115.6m in the first half of 2017 from $149.5m in the same period in 2016.

Business Highlights

-Boost to long term utilization with $100 million Dragon Oil 5-year contract won for 6 vessels in Turkmenistan
-Overall core fleet utilization at 62%, while we continue to demonstrate resilience in Azerbaijan with utilization at 95%
-Robust EBITDA margin of 50%, despite utilization and rate pressure in Africa and MENA
-Resolute focus on cost control across the organization has resulted in savings of US$14m for H1 2017 compared to the same period last year
-Fully compliant with financial covenants: reset successfully during the period enabling Topaz to borrow to fund its growth strategy
-Credit Ratings by S&P and Moody’s reaffirmed and remain stable
-Safety continues to be Topaz’s top priority. No Lost Time Incidents (LTIs) during the past 18 months and fatalities remain at zero

René Kofod-Olsen, Chief Executive Officer, Topaz Energy and Marine said, “Topaz continues to deliver value for its investors and shareholders despite the ongoing challenges of the sector. Our focus remains on driving cost efficiencies across the business whilst continuing to make the investments that mean Topaz is able to offer a differentiated proposition to its customers. We are beginning to see some signs of recovery in the market and we expect 2018 to offer better opportunities for growth.

“We successfully completed the issuance of US$375 million 9.125% Senior Notes during the first half, which was achieved against the backdrop of both a volatile economic environment and what remains a challenging market for the offshore services sector. The positive reception from investors was testament to the robustness of our business model and long-term growth strategy. The refinancing further strengthens our long-term, sustainable capital structure, equipping Topaz for its next phase of growth.

“We also won a new $100 million contract with Dragon Oil, the upstream oil and gas subsidiary of Emirates National Oil Company (ENOC) whose principal asset is the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan. Under the terms of the contract, Topaz will supply Dragon Oil Turkmenistan with six vessels, comprising five anchor-handlers and one Emergency Recovery and Response Vessel. The contract has already commenced with vessel mobilization and operation ramp-up under way. The contract is scheduled for a five-year term with a two-year option and brings Topaz’s market leading revenue backlog above $1.5 billion.

“Revenue for the six months ended 30 June 2017 is at US$115.6m which is down 23% compared with the same period last year. EBITDA is at US$57.6m, down 25% compared with the same period last year. Our EBITDA margin remains stable at 50% on the back of our persistent efforts to optimize our cost base and reshape the organization to better perform in a volatile and unpredictable market. Our operating costs reduced by US$14m and stand at US$77.9m for the quarter.

“Core fleet utilization for the period was 62%, reflecting the pricing challenges of the spot market during the period. However, in Azerbaijan, our most significant operation in the Caspian, where we have solid contract coverage utilization was 95%, reflecting the strength of our business in the region. In the MENA and Africa regions, which are far more spot market driven, compared to our longer-term contracts of the Caspian, we have continued to face severe pressure on rates and utilization, with lower overall core fleet utilization of 51% and 26% respectively. The outlook in both regions remains very challenging. However, we have witnessed a slight uptick in MENA tendering activities and as a result, reactivated three vessels from the MENA fleet and redeployed one vessel from Africa fleet to MENA. We continue to have six vessels from the MENA fleet and one vessel from the Africa fleet in layup. We will leverage our strong presence in the region to continue to pursue and win contracts. MENA and Africa remain long-term strategic markets for Topaz.”

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