Offshore services firm Ezion Holdings yesterday reported deeper quarterly losses as it cancelled delivery of some rigs and slashed capital expenditure.
For the fourth quarter ended Dec 31, Ezion suffered a net loss of US$66.6 million (S$94.2 million), higher than the US$63.5 million loss in the same period last year.
Revenue fell 14.3 per cent to US$72.6 million on lower charter rates and a delay in the modification and upgrade of some rigs.
The bottom line 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 the impairment losses of US$81.1 million made in the fourth quarter of 2015. Ezion said the impairment losses for the latest quarter were due to projects committed to higher oil prices and the 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, as revenue dropped 9.4 per cent to US$318.2 million.
Loss per share amounts to 2.3 US cents, compared with earnings of 1.51 US cents previously, while net asset value per share shrank to 63.43 US cents from 77.5 US cents in 2015.
AT A GLANCE
Q4 NET LOSS: US$66.6 million (+4.9%)
Q4 REVENUE: US$72.6 million (-14.3%)
In a separate filing, Ezion announced it would cut its capital expenditure by some US$270 million with the "indefinite postponement" of four service rigs.
This would reduce the significant cash outflows required to take delivery of the service rigs and also the burden of 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.
Meanwhile, 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.
"The company is appreciative of the support and the vote of confidence given by its bankers amid 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," Ezion said.
At the end of last year, the group's assets fell US$60.8 million, or 10 per cent, to US$547.9 million compared with a year ago. Total liabilities decreased by US$180.8 million, or 9.7 per cent, to US$1.7 billion.