Electro-magnetic offshore survey provider OHM is preparing to cut back its operations by sub-letting one of its two survey ships after a lower than expected level of demand for its services.
OHM – Offshore Hydrocarbon Mapping – said “difficult and testing” trading conditions have remained in effect since its first half in February this year, while demand for surveys has remained “at a relatively low level,” the company declared today in a trading update.
Because of a delay in the start of Norway’s 20th Offshore Licensing Round, OHM said further data library sales are likely to be pushed into next year.
Although data library sales made a strong contribution to the company in its second half-year to the end of August, OHM said this contribution would have been greater but for the delay in announcing Norway’s 20th Round.
“Together with TGS Nopec, we have seismic and data packages over 13 key prospects. This delay is likely to move some expected sales to fiscal year 2009,” the company said.
With two controlled-source electro-magnetic (CSEM) survey vessels available, the OHM Express and the OHM Leader, OHM said it is reducing costs by sub-letting the recently-delivered OHM Leader to an ROV operator until demand for CSEM surveys rises again.
“In the last year, our nearest competitor has had five vessels available for work, while OHM has had two available,” OHM stated, explaining the move. “The combined vessel utilisation figures are unacceptably low and suggest there is over capacity in this area. OHM understands that its nearest competitor is making moves to reduce capacity and seeks to play a role in achieving market balance by temporarily sub-contracting OHM Leader.”
OHM said it expects revenue for the half- year to August to reach between £5.9 m to £6.3 m with a pre-tax loss between £5 and £5.3 m. For the full year, OHM expects revenue between £10.6 to £11 m pre-tax losses of between £9 to £9.3 m