Topaz Energy and Marine swung to a loss in the first half of the year as severe pressure on rates and utilisation hit earnings in what it called “a volatile and unpredictable market,” but it also raised debt to plan for future growth.
The company reported a net loss of US$13.4 million for the first half of this year, compared to a year-earlier profit of $800,000. Revenue fell 23 percent to $115.6 million.
Topaz, a unit of Oman’s Renaissance Services, operates in the Caspian Sea, the Middle East and West Africa. In the Gulf, it works with state oil giants such as Saudi Aramco and Abu Dhabi National Oil Co.
In the MENA and Africa regions, which the company is far more spot market driven, compared to longer-term contracts in the Caspian Sea, Topaz has continued to face severe pressure on rates and utilisation, with lower overall core fleet utilisation of 51 per cent and 26 per cent respectively, the company CEO René Kofod-Olsen said in a statement.
It focused on driving down costs and is now beginning to see some signs of recovery in the market.
Topaz reduced its operating costs by $14 million to $77.9 million for the quarter. “We expect 2018 to offer better opportunities for growth,” Kofod-Olsen said.
The company raised debt of US$375 million at 9.125 per cent in Senior Notes, which will help the company’s long-term, sustainable capital structure for its next phase of growth.
“Core fleet utilization for the period was 62 per cent, 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 per cent, reflecting the strength of our business in the region,” Kofod-Olsen said.