Wintermar Offshore (WINS.JK) 1Q2018 Owned Vessel revenue jumps 48% to US$14M

Total revenue for 1Q2018 stood at US$16.6 million, up 27% compared to 1Q2017, reflecting the recovery in the oil and gas industry. Total gross profit stood at US$3.3 million, compared with a loss of US$0.3 million for 1Q2017.

Owned Vessels Division

Owned Vessel Utilization rose to 70% for 1Q2018 compared to only 50% in 1Q2017, supported by better utilization of mid- and high-tier vessels which had been idle in the same period last year. The new vessel purchased during 4Q2017 also contributed positively.

With a higher number of vessels becoming operational, crew costs also increased by 19% to US$2.45 million and maintenance costs rose by 56% to US$0.9 million, as vessels which were previously warm stacked were mobilized for work.

Fuel cost salso increased 159% to US$0.4 million, resulting from a new "wet contract" where fuel is included in the vessel owner's cost. Depreciation fell slightly to US$6.7 million as a result of vessel sales and impairments taken in 2017.

This quarter saw the start of a collaboration with a new consortium to provide air diving and ROV services on our modified AHTS vessel, for the inspection of underwater pipelines. Contracts in Papua New Guinea and Seismic work in Eastern Indonesia also concluded during the quarter, and the vessels which were deployed in those projects underwent maintenance to prepare for new contracts beginning in 2Q2018.

Chartering and Other Services

The Chartering Division saw a 41% decline in revenue to US$1.7 million compared to US$2.9 million in 1Q2017, following the completion of a drilling project last year which has not been renewed. Management continues to prioritise Owned Vessels for tendering as the margins are higher. Gross profit from chartering fell by 90% from US$0.56 million in 1Q2017 to US$58,000 for the same quarter this year.

The fall in income from the Chartering Division was offset partially by an 81% YoY rise in gross profit from Other Services to US$ 0.4 million, owing to higher ship management income and fees relating to completion of one of our contracts.

Indirect Expenses and Operating Profit

Indirect expenses fell slightly by 4% YoY to US$1.8 million for 1Q2018, mainly as a result of lower staff expenses, while other marketing expenses rose because of much more activity in tendering.

After a year of operational losses, the Company turned in an Operating Profit for 1Q2018, which amounted to of US$1.5 million. This compares with an operating loss of US$2.2 million in 1Q2017.

Other expenses and interest bearing debt

Interest expenses fell by 26% in 1Q2018 to US$1.6 million. The Company paid down a significant amount of debt over the past 12 months, thus reducing interest bearing debt by US$29 million as at end March 2018 compared to one year ago at March 2017.

Apart from fully paying off loans on two vessels in 1Q2018, there was a debt prepayment made, using part of the proceeds of new equity issuance received in the quarter. Two old vessels were sold for scrap and one low tier vessel was committed to be sold in April, resulting in a small loss on sale of fixed asset amounting to US$0.2 million.

EBITDA

EBITDA for 1Q2018 jumped by 72% YOY to US$8.2 million as compared to US$4.8 million in 1Q2017, reflecting much better operational results from Owned Vessels.

Net Loss Attributable to Shareholders

The Net Loss Attributable to Shareholders fell to US$1.3 million for 1Q2018 compared to a loss of US$ 4 million in 1Q2017.

Industry Outlook

Oil Prices continued to be robust in 1Q2018, finally rising above US$70 per barrel in April for the first time since 2014 on tensions in the Middle East and Venezuela.

Although activity has picked up, OSV charter rates are still weak as there is still an oversupply of vessels. New Projects are also being approved at much lower costs, driving more efficiency in the industry. Over the quarter we noticed more transactions of older vessels, and some troubled companies going under, as well as a few fortunate ones being rescued. Scrapping of rigs and OSVs continued, which is taking the demand and supply balance to a better level.

Globally, the rising geo-political risks in 2018 have triggered upward adjustments to oil price forecasts by EIA and the World Bank for the next few years, supporting a stronger business outlook for oil support services.

In Indonesia, SKK Migas has announced that there are 50 upstream oil and gas projects due to start production in the next ten years that are expected to produce 84,700 bpd of petroleum output and 6,100 mmscfd of gas, with a total investment of Rp160 trillion (US$11.9 billion). Of these 50 projects, 30 are offshore fields.

Not included in the projections are two large projects, which are in the process of Front End Engineering Studies, which are the Indonesian Deepwater Development (IDD) Project and the Masela Field, which if approved to proceed, will significantly increase the level of drilling activities in future years.

Business Outlook

There are some longer term tenders in progress, but commencement begins in 3Q2018 onwards. In the meantime the higher tier fleet will be deployed on spot contracts. The plan is to continue to sell older and low tier vessels in line with keeping a younger fleet, and we hope to book more vessel sales in the coming months.

The tendering activity in 2Q2018 combined with a lower net gearing ratio of 44% by end 1Q2018 compared to 50% as at end December 2017 should contribute to better profitability in the second half of the year.

Total contracts on hand as at end March 2018 were US$83.4 million.

About Wintermar Offshore Marine Group

Wintermar Offshore Marine Group (WINS.JK), developed over 40 years with a track record of quality that is both a source of pride and responsibility that we are dedicated to upholding, sails a fleet of more than 70 Offshore Support Vessels ready for long term as well as spot charters. All operated by experienced Indonesian crew, tracked by satellite systems and monitored in real time by shore- based Vessel Teams.

In 2011, Wintermar became the first shipping company in Indonesia to be certified with an Integrated Management System by Lloyd's Register Quality Assurance, comprising ISO 9001:2008 (Quality), ISO14001:2004 (Environment) and OHSAS 18001:2007 (Occupational Health and Safety). For more information, please visit www.wintermar.com^[1].

Contact:

Ms. Pek Swan Layanto, CFA  
Investor Relations
PT Wintermar Offshore Marine Tbk
Tel: +62-21-530-5201 Ext 401
Email: [email protected]

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References

1. ^{^} www.wintermar.com (www.wintermar.com)
2. ^{^} [email protected] (www.acnnewswire.com)
3. ^{^} Wintermar Offshore Marine Group (www.wintermar.com)
4. ^{^} Marine/Offshore (www.acnnewswire.com)