Aban Offshore, the country’s largest offshore oilrig service provider, reported a consolidated loss of Rs 93 crore for the quarter-ended March 2009 despite growing its revenues by over 17 per cent on a year-on-year basis.
While waning demand for oil rigs and falling rig rentals resulted in four of Aban’s assets lying idle, the net loss was driven primarily by a one-off asset impairment charge of Rs 151 crore on the capital expenditure incurred on its jack-up rig Murmanskaya. Aban decided to terminate the bareboat charter of the jack-up rig (due for expiry in November) to avoid incurring the added cost, as the rig had been lying idle.
Even as Aban’s consolidated quarterly revenues were up 17 per cent over last year, it declined by 8 per cent sequentially led by the idling of its rigs – due to either delay in deploying them (Aban Abraham and Aban Pearl) or completion of their old contracts.
Idle assetsThe company currently has four idle rigs with four more due to near their contract completion shortly. Considering that none of these rigs has a follow-on contract, Aban may find it difficult to deploy them any time soon as the demand for rigs (especially jack-up rigs) have fallen considerably.
That said, Aban’s performance at the EBITDA (earnings before interest, tax, depreciation and amortisation) level remained healthy. EBITDA margins improved by 5 percentage points to 55.7 per cent, helped partly by the long-term contracts sealed earlier.
The one-time asset impairment charge, however, wiped away the company’s operating profits. While this write-off will help the company save the cost it otherwise would have incurred in keeping the bareboat, what’s notable is that Aban decided to call off the charter months before its lapse.
Saddled with a gross debt of roughly over $3.3 billion, Aban is said to be considering re-financing debt obligations as its cash flows may not be sufficient to meet the debt repayment requirements
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