BW Offshore, an operator of floating production storage and offloading (FPSO) vessels, sank to a loss during the first quarter of 2016 compared to a profit in a year-ago quarter.
In its first quarter results report on Monday, BW Offshore posted a net loss of $2.9 million, compared to a profit of $5.8 million in the same period last year.
Operating revenues for the quarter dropped to $214.4 million from $236.8 million in the corresponding period last year.
During first quarter, the company initiated a process to reduce staff in line with the activity levels as a result of the low oil price.
According to the company, the staff reduction program is expected to reduce the company’s annual cost base by around $30 million. In addition, a best practise process has also been initiated with a target of reducing offshore personnel costs by 10-15% and offshore R&M spend by 10% through higher efficiency, renegotiated supplier agreements and subcontracts, BW Offshore added. This process will be implemented during 2016 with full effect from 2017.
The company’s net debt amounted to $1,631.3 million at March 31, 2016.
BW Offshore operates 17 units and the company’s owned fleet consists of 14 FPSOs and one FSO. Average uptime during the first quarter was 97.8%.
Cidade de São Mateus will be excluded from the average uptime until the unit re-starts operations. To remind, an explosion aboard the FPSO in February 2015 resulted in deaths of nine offshore workers.
Cidade de São Mateus left Brazil in February 2016 from offshore Vitoria. The FPSO was towed to Karimun in Indonesia for de-watering and tank cleaning, before it was taken to Keppel shipyard, where activities have started to prepare the repair scope.
Expects prolonged downturn
The oil price has recovered from the 12-year low point in January 2016. The company stated that uncertainty about future oil prices continues to drive cost cutting and reduction in E&P spending. BW Offshore added it still expects outsourcing of production to be a cost effective solution for oil and gas companies, but still believes it is prudent to expect a prolonged downturn in contract awards.
Offshore Energy Today Staff