Mermaid Maritime’s Q3 profits jump 22% YoY to US$15.9m

It’s buoyed by optimised subsea utilisation.

Mermaid Maritime (MMT)’s Q3 core net profit soared 22% YoY to US$15.9m thanks to better subsea utilisation, according to a report by CIMB. As MMT has successfully deployed its vessels in the Middle East where activities are still high, estimates place subsea utilisation in the low-80s. Further, Mermaid’s Tender Rig (MTR)-1 and -2 are cold-stacked and therefore made no contributions.

Meanwhile, earnings before interest, taxes, depreciation and amortization were bolstered by the cessation of depreciation for MTR-2 and Mermaid Siam. The two vessels have been re-classified as held-for-sale at the beginning of 2015, but the tougher climate lends to the probability that the units might not be sold.

CIMB analysts further note that owing to the structure of the contract, the 10% reduction in AOD drilling rigs’ day rates has not trickled down to profits and losses. The company does concede, however, that it will reflect in a matter of days. In line with with this, CIMB has low hopes that the day rates will rebound to its original stand at US$180k/d when the 1-year cut ends in end-March 2016.

Meanwhile, MMT is breaking out cost-saving measures. It’s looking to taper its workforce by as much as 15% and save US$12m mainly through the release of its operating drilling team and the withdrawal of onsite shipyard supervision of its China newbuilds.

Further, the company has successfully navigated negotiations for the return of chartered-in Windermere in December.

“2015 has been a decent year for subsea IMR but the sub-segment could feel the lagging effects of the oil tumult, as a substantial number of DSVs globally could come off-hire together in end-15,” asserted CIMB.