Emas Offshore posts US$2.2m loss in Q1, flags going concern risk

Emas Offshore's Lewek Constellation.
Emas Offshore's Lewek Constellation.PHOTO: EMAS OFFSHORE

SINGAPORE - Emas Offshore Ltd announced on Wednesday (Jan 11) a net loss of US$2.2 million (S$3.2 million) for the quarter ended Nov 30, 2016, on the back of lower revenues and flagged the going concern risk for the company.

For the corresponding period a year ago, Emas made a net loss of US$3.2 million.

Revenue for the quarter being reported was 15 per cent lower at US$42.5 million compared to revenue of US$49.8 million a year ago due to continual weakness in the offshore oil and gas industry leading to lower demand for offshore support vessels, said the company.

Said Emas CEO Captain Adarash Kumar: "The market is expected to remain extremely challenging for the rest of FY2017. Daily charter rates are still expected to remain depressed."

Offshore oil and gas activities have not increased significantly and this trend is expected to continue and will have a negative impact on the group's financial performance, said Emas.

The group continues to execute its plans to improve operational efficiency and overall fleet utilisation as well as dispose of non-core assets, the company added.

"We continue to maintain focus on our key geographical markets which are Asia Pacific and West Africa. This was reflected in the US$61 million worth of contract awards during Q1FY2017 as announced earlier", Captain Kumar added.

Emas on Wednesday also warned of a going concern issue arising from delays in the settlement of disputes relating to a US$43 million put option with its collapsed Malaysian associate Perisai Petroleum Teknologi.

Emas said that due to uncertainties including those surrounding PPT's developments, the completion of its refinancing exercise and obtaining of additional working capital facilities have been delayed.

"The completion dates of these agreements are currently targeted to be concluded before the end of the second quarter of financial year 2017," said Emas. "In the event that these efforts do not achieve a favourable and timely outcome, the group will be faced with a going concern issue."

Emas' parent, Ezra Holdings, has also announced recently that it faces a going concern issue if discussions with various stakeholders and consolidation of its funding requirements do not reach a timely outcome. Emas said on Wednesday that as Ezra is a guarantor to its various financial obligations, this development may have a negative impact on Emas.