• Results in line
• Deployment of more vessels
• But recovery to take time

2Q17 Results in Line With Expectations

PACC Offshore Services Holdings (POSH) reported 2Q17 results that were within expectations. The group saw an 8% YoY drop in revenue to US$42.4m and a gross loss of US$2.7m, leading to net loss of US$9.1m for 2Q17. 1H17 net loss of US$27.5m accounted for 55% of our full year net loss estimate.

OSV revenue increased by 4% YoY to US$20.5m with improved utilization of 64%, mainly due to more deployment of vessels under long-term charters with a Middle East national oil company. The transportation and installation segment also saw higher revenue of US$4.2m (+8% YoY) with higher utilization of 48%. The drag came from offshore accommodation, which registered a 24% YoY fall in revenue to US$12.7m and gross loss of US$4.3m for the quarter.

Some Visibility Ahead

As at 30 Jun 2017, POSH has deployed six vessels to the Middle East and another six vessels will be deployed progressively in 2H17. Looking ahead, POSH Terasea JV will be executing the towage and positioning of the INPEX Ichthys FPSO and the Shell Prelude FLNG platform in 3Q17 and the Egina FPSO unit in 4Q17. POSH Arcadia will also be sailing away today for the Prelude project to provide accommodation support for the hook-up and commissioning work.

Time Needed for Recovery

Currently the Middle East and West Africa remain as key regions where oil majors continue to issue tenders for vessel requirements, and POSH will focus in these areas. Still, despite efforts by oil producing countries to curb oil production, oil prices have not been able to break the US$55/bbl mark on a sustainable road to recovery, resulting in a lack of new field development. The oversupply situation for all vessel categories also continues to exert pressure on charter rates and vessel utilisation, and recovery will take time. With a reallocation of resources, we are ceasing coverage on the stock.

Source: OCBC Research - 2 Aug 2017