Norway-based geoscience firm Dolphin Group has said it may be forced into insolvency if it is not able to restructure its business.
The firm, which owns Dolphin Geophysical, saw shares halve in trading this morning, following its announcement. Its share price has fallen more than 97% in the past year, as conditions for seismic vessel operators have worsened.
The geoscience segment of the offshore oil and gas industry was the first to be hit, when oil prices took a nose dive from 2H in 2014, plummeting from more than US$100 million to sub-$50 prices through 2015, leading to widespread spending cuts.
Fellow seismic vessel Polarcus has been in similar dialogue over its long term restructuring with its stakeholders - i.e. banks, bond holders and lease providers. It announced last week that it had decided to "formally address its long term financing structure," as it also seeks to improve its financial situation. Dolphin's net income has dropped from $12.2 million in Q3 2014 to a loss of $31.1 million in Q3 2015, with revenues having fallen from a high of $130 million in Q4 2014 to $78.7 million in Q3 2015.
Announcing the firm's Q3 results, CEO Atle Jacobsen said: “Dolphin is operating one of the most efficient high-capacity seismic fleets in the industry, however based on the very weak market fundamentals, fierce competition and low seismic market rates, we are not able to deliver profitable figures for third quarter."
Seismic spot prices have been reduced to a level which is not sustainable over time for the seismic industry, the firm said at the time.
Dolphin has been working with advisors on restructuring proposals, but has yet to agree a deal with its main stakeholders.
"Without a firm solution accepted by the group's main stakeholders, and in light of its financial situation, the board of directors of the company is of the opinion that the group's current business cannot be continued as it is currently carried out," the firm said.
Dolphin operates a fleet of 2D and 3D vessels, based on charter agreements. Its newest vessel is the Polar Empress, owned by GC Rieber, and brought into operation this year.
Earlier in October, GC Rieber Shipping agreed a deal with Dolphin to “improve Dolphin’s competitiveness in a challenging market,” by taking early redelivery of the Polar Duke seismic vessel, built 2010. Dolphin had also already agreed reduced charter rates for its vessels on hire from Sanco, to improve its costbase. But, in October, it received notice of a time charter termination for the Sanco Sword and Sanco Swift, vessels, which were then chartered to PGS.
Dolphin says its board continues to seek alternative solutions.
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Suffering continues in seismic markets
Image: The Sanco Swift.
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