Gulf Marine Services profits plunge on low rig utilisation

Oil services firm turns to renewables as oil services remain depressed

Gulf Marine Services revenues nearly halved in the first half of the year as the oil services market remains depressed. Mona Al Marzooqi / The National

Gulf Marine Services (GMS), one of the largest operator of self-propelled self-elevating support vessels (SESVs), reported lower profits for the first half of the year, as rig utilisation rates remain depressed.

The Abu Dhabi-based company's profits fell to US$700,000 in the six months to June compared to $27.8 million the same period last year. Revenue nearly halved to $58.5m from $110.4m a year earlier.

"There's a lag when the market takes a downturn, but there's also a lag when it picks up again," Duncan Anderson, the chief executive of GMS, told The National. "Figures that we're producing at the moment haven't been the best, but tender activity is picking up."

GMS has struggled in the low oil price environment that has remained a mainstay for more than three years. Mr Anderson said that clients have been cautious about pricing, managing and awarding contracts for the past 18 months.

While the company expects new contracts to increase, there have been delays. “We haven’t seen any tenders coming to the market that are cancelled, they’re just been pushed back,” he said. “We anticipated the second half to have more awards, but those tenders are still [delayed].”

Market conditions have decreased the company’s SESV fleet utilisation rate to 56 per cent, down from 89 per cent last year.

However, GMS is faring better than some of its  peers by diversifying its rig use and catering to offshore renewable energy projects. Mr Anderson said that the focus had always been on easy offshore oil, helping to maximise existing fields or help with decommissioning. "Now we're seeing a big uptick in offshore renewables - there's a lot of activity there," he said.

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The company has carried out turbine and transformer installation operations for wind farms in the southern North Sea and offshore Germany. More than 2 gigawatts of offshore wind power was installed across the world last year, bringing the total to 14GW, according to the Brussels-based Global Wind Energy Council.

John Brown, chief financial officer for GMS, said: “ There was no renewable energy [contract] this year, but next year - two barges have been contracted for 26 and 16 months.”

Mr Anderson added that GMS supported the production cycle in oil and gas, but being in renewables gave the company the “resilience” to operate in the current low oil price market.