Topaz reports H1 revenue of $115.6 million

MUSCAT, AUG 19 - Leading offshore support vessel firm Topaz Energy and Marine (Topaz), a subsidiary of Muscat-based Renaissance Services, posted revenues of $115.6 million for the six months ended on June 30, 2017, a decrease of 22.7 per cent against corresponding revenues of $149.5 million in H1 2016.

Announcing its financial results, the company said its achieved an EBITDA of $57.6m, down 25 per cent compared with the same period last year. EBITDA margin remained stable at 50 per cent on the back of persistent efforts to optimize its cost base and reshape the organisation to better perform in a volatile and unpredictable market, Topaz said. Operating costs reduced by $14 million and stand at $77.9 million for the quarter.

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 $375 million 9.125 per cent 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.”

The company 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.

Core fleet utilization for the period was 62 per cent, reflecting the pricing challenges of the spot market during the period, the CEO said. However, in Azerbaijan, its most significant operation in the Caspian, where Topaz has solid contract coverage utilization was 95 per cent, reflecting the strength of its business in the region.

In the MENA and Africa regions, which are far more spot market driven, compared to its longer-term contracts of the Caspian, the company continued to face severe pressure on rates and utilization, with lower overall core fleet utilization of 51 per cent and 26 pe rcent 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,” René Kofod-Olsen added.