Challenging Times for Seismic Operators
Two well-established service providers in the seismic acquisition market became victims of the current challenging market conditions at the beginning of this year.
Marine seismic contractor Polarcus, formed in 2008, saw its lenders take control of its vessels following a debt payment default notification on 26 January. The company had $415.7 million of total debt as of 30 September 2020 and earlier this year signalled its near-term outlook was uncertain due to operator budget cuts.
On 8 February 2021, Joint Provisional Liquidators (JPLs) were appointed by an order of the Court; the JPLs are specifically authorised to take all steps to develop and propose a restructuring of the company’s financial indebtedness, with a view to making a compromise or arrangement with the creditors.
Although the banks were initially open to having a standstill period to allow continued operations and existing projects to be undertaken, it does look as though this is the end of the line for another vessel-owning seismic operator, after a vessel sale process was initiated. Sadly, this means all group employees will lose their jobs.
The Polarcus fleet consists of seven seismic vessels including the Vyacheslav Tikhonov, which is on bareboat charter to Russian shipping giant SCF Group and not subject to lender control. Most of the fleet was built to the ULSTEIN SX124 design, incorporating the innovative and distinctive ULSTEIN X-BOW® hull. These are amongst the most environmentally designed seismic vessels with diesel-electric propulsion.
In February, Axxis Geo Solutions ASA filed for court-protected reconstruction having failed to reach agreement with its creditors. Axxis, unlike Polarcus, is an exclusively ocean-bottom seismic node focused operator and this illustrates how the full spectrum of seismic companies have been negatively affected by the coronavirus pandemic and last year’s oil price downturn.
The vessel-owning companies in particular have been very hard hit and an obvious question is ‘will these developments help the other vessel-owning seismic companies weather the storm until better times and could it signal further consolidation within this business area’?
Please note: this information was valid at the time of writing (Jan 2021).