This Form 10-Q includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements concern management's expectations, strategic objectives, business
prospects, anticipated economic performance and financial condition and other
similar matters and involve significant known and unknown risks, uncertainties
and other important factors that could cause the actual results, performance or
achievements of results to differ materially from any future results,
performance or achievements discussed or implied by such forward-looking
statements. Certain of these risks, uncertainties and other important factors
are discussed in the Risk Factors and Management's Discussion and Analysis of
Financial Condition and Results of Operations of the Company's 2022 Annual
Report on Form 10-K and this Quarterly Report on Form 10-Q. However, it should
be understood that it is not possible to identify or predict all such risks,
uncertainties and factors, and others may arise from time to time. All of these
forward-looking statements constitute the Company's cautionary statements under
the Private Securities Litigation Reform Act of 1995. The words "anticipate,"
"estimate," "expect," "project," "intend," "believe," "plan," "target,"
"forecast" and similar expressions are intended to identify forward-looking
statements. Forward looking statements speak only as of the date of the document
in which they are made. The Company disclaims any obligation or undertaking to
provide any updates or revisions to any forward-looking statement to reflect any
change in the Company's expectations or any change in events, conditions or
circumstances on which the forward-looking statement is based. It is advisable,
however, to consult any further disclosures the Company makes on related
subjects in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with the
The following Management's Discussion and Analysis (the "MD&A") is intended to help the reader understand the Company's financial condition and results of operations. The MD&A is provided as a supplement to and should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the 2022 Annual Report.
Overview
The Company provides global marine and support transportation services to
offshore energy facilities worldwide. As of
The Company operates and manages a diverse fleet of offshore support vessels that (i) deliver cargo and personnel to offshore installations, including offshore wind farms, (ii) assist offshore operations for production and storage facilities, (iii) provide construction, well work-over, offshore wind farm installation and decommissioning support, (iv) carry and launch equipment used underwater in drilling and well installation, maintenance, inspection and repair and (v) handle anchors and mooring equipment for offshore rigs and platforms. Additionally, the Company's vessels provide emergency response services and accommodations for technicians and specialists.
The Company operates its fleet in four principal geographic regions: the
Significant items affecting our results of operations
The number and type of vessels operated, their rates per day worked and their utilization levels are the key determinants of the Company's operating results and cash flows. Unless a vessel is cold-stacked, there is little reduction in daily running costs for the vessels and, consequently, operating margins are most sensitive to changes
20
--------------------------------------------------------------------------------
in rates per day worked and utilization. The Company manages its fleet utilizing a global network of shore side support, administrative and finance personnel.
Offshore oil and natural gas market conditions are highly volatile. Prices
deteriorated beginning in the second half of 2014 and continued to deteriorate
when oil prices hit a 13-year low of less than
While the Company has experienced difficult market conditions over the past few years due to low and volatile oil and natural gas prices and the focus of oil and natural gas producing companies on cost and capital spending budget reductions, the increases since the lows experienced during the COVID-19 pandemic in oil and natural gas prices has led to an increase in utilization, day rates and customer inquiries about potential new charters.
Low oil prices and the subsequent decline in offshore exploration have forced many operators in the industry to restructure or liquidate assets. The Company continues to closely monitor the delivery of newly built offshore support vessels to the industry-wide fleet, which in the recent past contributed to an oversaturated market, thereby further lowering the demand for the Company's existing offshore support vessel fleet. A combination of (i) low customer exploration and drilling activity levels, and (ii) excess supply of offshore support vessels whether from laid up fleets or newly built vessels could, in isolation or together, have a material adverse effect on the Company's business, financial position, results of operations, cash flows and growth prospects.
Certain macro drivers somewhat independent of oil and natural gas prices may support the Company's business, including: (i) underspending by oil and natural gas producers during the recent industry downturn leading to pent up demand for maintenance and growth capital expenditures; (ii) improved extraction technologies; and (iii) the need for offshore wind farms support as the industry grows. While the Company expects that alternative forms of energy will continue to grow and add to the world's energy mix, especially as governments, supranational groups and various other parties focus on climate change causes and concerns, the Company believes that for the foreseeable future demand for gasoline and oil will be sustained, as will demand for electricity from natural gas. Some alternative forms of energy such as offshore wind farms support some of the Company's businesses and the Company expects such support to increase as development of renewable energy expands.
The Company adheres to a strategy of cold-stacking vessels (removing from active
service) during periods of weak utilization in order to reduce the daily running
costs of operating the fleet, primarily personnel, repairs and maintenance
costs, as well as to defer some drydocking costs into future periods. The
Company considers various factors in determining which vessels to cold-stack,
including upcoming dates for regulatory vessel inspections and related docking
requirements. The Company may maintain class certification on certain
cold-stacked vessels, thereby incurring some drydocking costs while
cold-stacked. Cold-stacked vessels are returned to active service when market
conditions improve, or management anticipates improvement, typically leading to
increased costs for drydocking, personnel, repair and maintenance in the periods
immediately preceding the vessels' return to active service. Depending on market
conditions, vessels with similar characteristics and capabilities may be rotated
between active service and cold-stack. On an ongoing basis, the Company reviews
its cold-stacked vessels to determine if any should be designated as retired and
removed from service based on the vessel's physical condition, the expected
costs to reactivate and restore class certification, if any, and its viability
to operate within current and projected market conditions. As of
21
--------------------------------------------------------------------------------
Recent Developments
SEACOR Marine Foreign Holdings Credit Facility. On
SEACOR Offshore OSV. On
Amendment No. 8 provides for, among other things, the division of the loans
under the SEACOR OSV Credit Facility into two tranches of debt, Class A Debt (as
defined in the SEACOR OSV Credit Facility) deemed loaned under the SEACOR OSV
Credit Facility by
22
--------------------------------------------------------------------------------
© Edgar Online, source