Ezra's loss widens to $484m in Q4 over impairment losses

The Lewek Constellation is a flagship vessel of Emas AMC, Ezra's subsea-to-surface solutions provider. Ezra said it expects "an extremely challenging outlook" in 2017 as the oil and gas industry remains mired in uncertainty.
The Lewek Constellation is a flagship vessel of Emas AMC, Ezra's subsea-to-surface solutions provider. Ezra said it expects "an extremely challenging outlook" in 2017 as the oil and gas industry remains mired in uncertainty.PHOTO: EZRA HOLDINGS

Offshore contractor Ezra Holdings has plunged deeper into the red, posting a net loss of US$339.6 million (S$484 million) in the fourth quarter, far greater than the US$7.8 million net loss recorded in the same period a year earlier.

The losses come on the back of about US$270 million in impairment losses. In October, Ezra had warned that it was reassessing the value of its assets and would take impairments or write them down as appropriate. The warning came in a presentation, where it asked note holders for leniency on $150 million notes maturing in 2018.

Revenue in the three months to Aug 31 fell 8 per cent to US$136 million, owing to fewer service requests from customers and lower project activity in the energy services division, as well as lower engineering design work in the marine services division.

Ezra posted a full-year net loss of US$887.7 million, reversing a net profit of US$43.7 million in the 2015 fiscal year. This translates into a loss per share of 30.21 US cents, down from earnings per share of 2.29 US cents a year earlier.

Excluding the discontinued operations, full-year net loss from continuing operations came to US$813.4 million.

Net asset value per share was 7.93 cents as at Aug 31, down from 37.56 cents a year earlier.

  • AT A GLANCE

  • REVENUE:

    US$136 million (-8%)

  • NET LOSS:

    US$339.6 million (US$7.8 million in the same period last year)

Separately, Ezra said that it and Emas Offshore Limited have agreed to extend the long stop date for the proposed sale of unit PV Keez to PetroFirst Infrastructure 2 Limited once more, this time until Dec 31.

PetroFirst Infrastructure 2 is a joint venture between private equity firm First Reserve and Petrofac. PV Keez owns the floating, production, storage and offloading vessel, Lewek Emas.

The purchase agreement had originally been entered into on July 1 at a price of about US$166.3 million. On Oct 28, the long stop date was extended to Nov 30.

Ezra said it expects to face "an extremely challenging outlook" in 2017 as the oil and gas industry remains mired in uncertainty.

"As at Aug 31, the group has breached certain of its financial covenants and as a result, non-current portion of these bank term loans and lease obligations and the notes payable which are subject to these financial covenants have became reclassified as current liabilities. As at announcement date, the group has rectified the breaches by way of obtaining covenant waivers."

It added that it is in discussions with various stakeholders and consolidating its funding requirements.

"In the event that this effort does not achieve a favourable and timely outcome, the group will be faced with a going concern issue," it said.

Ezra is in talks with certain vendors to try to cancel certain procurement contracts to conserve cash, and will assess if further impairment is required for the assets.

Said one analyst: "Timely divestment of PV Keez is essential to Ezra remaining as a going concern."

Results were posted late on Tuesday night. The counter fell 0.1 cent or 2.33 per cent to close at 4.2 cents yesterday.

Marissa Lee

A version of this article appeared in the print edition of The Straits Times on December 01, 2016, with the headline 'Ezra's loss widens to $484m in Q4 over impairment losses'. Print Edition | Subscribe