Gulf Marine Services – even with bad weather the use rates are higher and day rates better
Despite some unfavourable weather conditions and options on contracts not having been exercised, in its latest Trading Update the Abu Dhabi based provider of advanced self-propelled self-elevating support vessels is projecting higher utilisation rates for this year.
Young flexible fleet
The group’s fleet of 13 SESV’s serves the oil, gas and renewable energy industries in the Middle East, West Africa, Europe, South-East Asia, the Gulf of Mexico and North America. The fleet is amongst the youngest in the industry.
The vessels are four‐legged and are self‐propelled, which means they do not require tugs or similar support vessels for moves between locations in the field, making them significantly more cost‐effective and time‐efficient than conventional offshore support vessels without self‐propulsion.
The vessels support GMS’s clients in a broad range of offshore oil and gas platform refurbishment and maintenance activities, well-intervention work and offshore wind turbine maintenance work, as well as offshore oil and gas platform installation and decommissioning and offshore wind turbine installation.
Higher utilisation and better day rates
For the year to the end of this month the group is guiding that its use rate will be 2% higher this year at 87%, against 85% last year.
Better still the group’s day rates on average are up 7% on last year’s figures.
Demand is stronger
The group’s Executive Chairman Mansour Al Alami stated that:
“Our markets continue to improve, and demand remains strong, as reflected by the increase in utilisation and day rates seen in recent contract wins. These contracts, for work in the Gulf and North Sea (Firm + Options), increased our backlog to US$378 million. Our focus remains on deleveraging and on delivering Operational effectiveness for the remainder of this year and into 2023.”
In early November the group announced that it had been awarded two new contracts and one contract extension, equating to 78 months of utilisation, increasing both its overall fleet backlog and its secured revenue.
Analyst opinion
Daniel Slater at Arden Capital has rated the group’s shares as a Buy.
He is looking at a 20p Target Price compared to the current 5.8p.
The Arden Capital estimates for the current year to end December suggest $135.4m of revenues ($115.1m), while adjusted pre-tax profits could come in at $32.8m ($20.7m), with earnings of 2.5c (2.7c) per share.
The analyst suggests that his estimates for the coming year figures are for $143.6m sales, $39.6m profits and 3.1c earnings per share.
Conclusion
The recent contract awards will solidify the GMS financial position going into 2023 and reflect positively on its future prospects.
The group’s shares, now just 5.8p, were trading at around the 7p level in mid-August and could well be very much higher than that within the next year.