SINGAPORE - Offshore services firm Ezion Holdings reported deeper quarterly losses on Thursday (Feb 23) as it cancelled delivery of some rigs and slashed capital expenditure.
For the fourth quarter ended Dec 31, 2016, Ezion suffered a net loss of US$66.6 million, higher than US$63.5 million net loss a year ago.
Revenue fell 14.3 per cent to US$72.6 million on lower charter rates and a delay in the completion of the modifications and upgrade of some service rigs.
The bottomline was also hit by impairment losses on plant and equipment and provision for trade receivables amounting to US$70.9 million for the quarter. This was on top of impairment losses made in Q415 of US$81.1 million. It said the impairment losses for Q416 were made due to some of the projects that were committed at higher oil prices and the difficult and uncertain market conditions of the global oil and gas industry.
For the full year, Ezion swung to a net loss of US$33.6 million from a net profit of US$36.8 million in FY2015, as revenue dropped 9.4 per cent to US$318.2 million.
In a separate filing with the Singapore Exchange on Thursday (Feb 23), Ezion announced it would cut its capital expenditure by some US$270 million with the "indefinite postponement" of four service rigs.
Thsi would reduce the significant cash outflows required to take delivery of the service rigs and also the burden of the additional financial liabilities on the balance sheet with the drawing of additional bank loans required, said the company.
Ezion said the reduction in capital expenditure is not expected to have a material impact on its earnings per share or net tangible assets per share for the current financial year ending Dec 31, 2017.
Separately, Ezion announced it has completed discussions with all its bankers to cut its net annual principal repayment to match its operating cash flows upon the completion of the legal documentation of a loan extension. It said it has also successfully renewed its working capital facilities with all its principal bankers.
Said Ezion: "The company is appreciative of the support and the vote of confidence given by its bankers amidst the challenges currently facing the marine and offshore oil and gas industry. The company believes this will improve the overall liquidity of the group and its financing cash flows."
At the end of 2016, the group's current assets fell US$60.8 million, or 10 per cent, to US$547.9 million compared to a year ago. Total liabilities decreased by US$180.8 million, or 9.7 per cent, to US$1.7 billion.
Ezion said it is working closely with its bankers and several government agencies to complete the repair, modification and upgrade of several of its service rigs for deployment as soon as possible.
It will also continue to engage in discussions for possible disposal for one of its existing service rigs and to invite potential partners to co-own some of its asset to further strengthen the group's balance sheet.