Helix and Jurong agree to delay newbuild

Helix Energy Solutions Group has come to an agreement with Singapore’s Jurong Shipyard to delay work on newbuild well intervention vessel. By pushing back delivery of the semi-submersible Q7000 to 2017, initially scheduled for mid-2016, the US offshore services company expects to save upward of $200 million in capital expenditure between 2016 and 2017, according to Helix’s chief financial officer Tony Tripodo.

The delay will also prevent the Q7000 from entering idle into a depressed market. Helix’s two main vessels in the US Gulf of Mexico, the Q4000 and H534, worked just 42 percent of the days between April and June 2015, compared with a rate of 81 percent for the first quarter.

The Q7000 was ordered prior to the precipitous fall in oil prices beginning in June 2014, amid high demand for such vessels. Helix placed the order along with another semi-submersible, the Q5000, which was delivered in April 2014 to BP as part of a five-year contract for work in the US Gulf of Mexico. BP renegotiated to delay the start of the contract until April 2016.

The agreement between Helix and Jurong marks a trend between operators and shipyards. It is representative of a wider trend in the oil and gas industry of various players renegotiating prices and contracts to minimise losses from a bearish market.

The downturn in exploration activity is eating into Helix’s profit margins. The company saw its revenues from well intervention services decline to $85.7 million in the second quarter of 2015, an 18-percent fall from the first quarter, and a 53-percent year-on-year decline from $181.2 million in 2014.