Mermaid Maritime, an offshore services provider, has canceled the delivery of a subsea vessel it ordered in China back in 2014.
In a statement on Wednesday, Mermaid said its subsidiary Mermaid Offshore Services had terminated the construction contract by mutual consent with the China Merchants Industry, the vessel builder.
The company had earlier agreed to postpone the delivery of the DP2 dive support and construction vessel Mermaid Ausana vessel until 2017, citing tough times in the industry.
However, it seems Mermaid now expects the situation to remain tough for longer than initially thought.
The company said on Wednesday: “In light of the challenging global oil and gas market situation and the co-operative relationship between company and the builder, the parties have mutually entered into a settlement agreement to terminate the construction contract for the cessel effective December 6, 2016.”
While China Merchants Industry will retain the pre-paid installment of $20.4 million, paid earlier by Mermaid, the Thai offshore services provider has freed itself of needing to pay $124.8 million in case of the final vessel delivery.
“In a move to mitigate financial exposure, the company had already recorded an asset impairment on the entire Pre-Paid Sum and associated costs related to the vessel in its 2015 Financial Statements,” Mermaid said.
Also, as part of the deal, Mermaid has received $1 million from the vessel builder, for expenses incurred in relation to the construction contract and the settlement.
Offshore Energy Today staff