Polarcus Ltd, which operates ships that search for offshore oil and gas, announced two project cancellations that will reduce its fleet utilization next quarter, highlighting the effects of the oil price slump on the energy services sector.
Polarcus' ships are used to collect seismic data from below the seabed that energy exploration companies examine to locate oil and gas deposits.
A survey project in the Asia-Pacific region and one in West Africa has been canceled, the company said. This follows the crash in oil prices and energy stocks earlier this month that caused energy producers to slash expenses, limiting revenues at companies like Polarcus.
Global oil price Brent has slumped more than 60% from its peak at the start of the year on falling fuel demand from the coronavirus outbreak and a failure between the Organization of the Petroleum Exporting Countries and Russia to extend an agreement to cut output.
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"The client has decided to cease operations on the project and the contract has been terminated," the company said in a statement on its website late on Friday, referring to a 3D marine seismic acquisition project offshore West Africa which it won in November 2018.
"Polarcus is engaged in discussions for alternative project opportunities although the Company expects its vessel utilization in Q2, 2020 to be negatively impacted," the company added.
Earlier this month, Polarcus said a project to acquire seismic data in the Asia Pacific region which was to start in the second quarter this year had been terminated.
The company's fleet had been 100% booked into late second-quarter this year and 65% booked for full-year 2020, according to the company's full-year earnings reported on Feb. 27.
(Reporting by Florence Tan; Editing by Christian Schmollinger)