Offshore accommodation rig provider Floatel International believes that the demand for accommodation rigs is starting to recover but, due to market oversupply, it still remains below levels in late 2019 before the Covid-19 pandemic, resulting in prices continuing to be under pressure. As a result, Floatel expects the overall utilisation of the accommodation fleet to remain at modest levels in the near term.
Floatel saw an increase in its vessel utilisation in the third quarter of 2021, which is in line with an increase in the worldwide semi-submersible accommodation fleet. Namely, in its quarterly update on Monday, Floatel revealed that the utilisation for the worldwide semi-submersible accommodation (ASV) fleet was 74 per cent in Q3 2021, up from 41 per cent in Q3 2020.
In comparison, Floatel’s utilisation in Q3 was 63 per cent – with four out of five vessels active – up from 40 per cent in the same period last year. The global ASV fleets’ utilisation year to date 2021 was 58 per cent compared to 43 per cent in 2020.
The company’s total firm contract backlog, excluding options, is approximately $134 million as of the end of September 2021 and it was $32 million in the same period last year.
Revenues for the third quarter were $30.4 million compared to $18.7 million for the same period in 2020. The net result for the third quarter was a loss of $11.2 million compared to a loss of $32 million in the same period last year.
There were no new contracts signed in the quarter, with the tendering activity reasonably buoyant with several tenders outstanding. Three vessels are currently idle with one being marketed for new work and the other two waiting for their upcoming charters in 2022.
Three Floatel vessels idle & two employed
The contract for Floatel Superior with Var Energi at the Balder FPU, which started at the end of May 2021, was extended to 9 October 2021, whereafter the charter ended. The unit is now idle in Skipavika, Norway, awaiting the charter for Equinor expected to start in April 2022.
Floatel Reliance is idle in Tenerife in the Canary Islands awaiting the next assignment. The vessel is actively marketed for new charters.
Floatel Victory was in operations at the Unity platform, in the UK sector of the Central North Sea until 25 July 2021, whereafter the rig steamed toward Las Palmas in the Canary Islands, Spain to prepare for the Equinor charter in Brazil. The unit transited to Brazil and started the contract with Equinor in late September, providing Maintenance and Safety Unit (MSU) services at Peregrino FPSO with six months duration and options after the firm period.
Floatel Endurance completed the charter for Equinor at the Martin Linge field in late August 2021 and is now idle in Skipavika, Norway, awaiting the charter for Equinor expected to start in March 2022.
Floatel Triumph started the charter for Shell in the Philippines at the Malampaya field on 1 September 2021, for three months.
Modest utilisation in near term
According to Floatel, the overall offshore market was slowly improving from the downturn during 2019 driven by oil price development combined with continued pressure to reduce cost levels for the operators, however, the Covid-19 pandemic stalled the gradual improvement. The Covid-19 outbreak and the drop in the oil price have increased the uncertainty within the accommodation market.
However, Floatel believes that the outlook has improved because oil production has been kept under control by the producing countries after the previously agreed cuts and the development of vaccines. This, in combination with demand starting to recover, albeit levels remain below those levels reached in late 2019 before the Covid-19 pandemic as the market continues to be oversupplied resulting in prices continuing to be under pressure, the company explained.
Although the oil price has recently recovered to $70-80 per barrel, Floatel noted that the oil companies globally have adjusted their activities for the short to medium term. Additionally, the strong shift in the energy discussion towards renewable sources has created a discussion about energy composition for the future.
Floatel consequently expects the overall utilisation of the accommodation fleet to remain at modest levels in the near term, particularly for those areas with high overcapacity, however, it still believes that the market will recover once the situation stabilises.
The worldwide operating purpose-built semi-submersible accommodation fleet presently comprises 21 vessels following recent announcements by competitors to scrap older vessels plus two vessels yet to be delivered. 17 vessels are built since 2005, including the 2 new buildings, and it is expected that the older vessels will exit the market in the coming years.