Gulf Marine Services Share Discussion Threads

[dodge meister] 16/5/2016 18:17

Only one idle rig at the moment.

[twistednik] 16/5/2016 17:57

Strange.... oil price rebounding but GMS keeps drifting down.

Very difficult to call the bottom! News on re-contracting the two rigs would be helpful as too risky to jump in right now IMHO.

[dodge meister] 16/5/2016 16:51

Low volume dripping the share price down.

[robroy2000] 16/5/2016 07:35

Many thanks. Very interesting.

[andy2205] 14/5/2016 08:24

Check out iii, there is a summary from a PI that attended.

[robroy2000] 12/5/2016 08:21

If anyone out there attended the AGM I would be grateful for some feedback/reaction. I imagine there wasn't much of a party atmosphere.

[dodge meister] 11/5/2016 10:30

At least the new medium vessel is being utilized, albeit it only a short contract. Not really surprised the order log is reducing as they work through some of the long term contracts. They wont be able to sell the vessels till nearly the end of the existing contracts.


Ugly chart here...ugliest charts provide the best opportunities, just a matter of timing providing the balance sheet is secure.

[jakedog2] 11/5/2016 09:00

robroy,

thanks, was just about to do the same analysis.

Agree, not good.

Have decided not to rebuy at this point. The lag is really starting to bite on O&G suppliers.

Margin erosion across the sector as the big companies turn the screw to maintain their btm line. Margin erosion mentioned by CIU & WG. this morning also in their AGM statements

GLA holders

[robroy2000] 11/5/2016 08:00

Apologies. Above table looks rather messy but the numbers convey the same message.

[robroy2000] 11/5/2016 07:54

Best guess from trading profile.

A very downbeat update. Diminishing backlog over the last year in US$m.

DATE FIRM OPTIONS TOTAL
May 2016 179.8 233.3 413.1
March 2016 210.2 233.7 443.9
Nov 2015 295.5 320.4 615.9
Aug 2015 341.9 322.1 664.0
April 2015 367.0 318.0 685.0

[bmw30csl] 10/5/2016 17:33

how do you work out it is the algos?

[robroy2000] 10/5/2016 12:26

The algorithms have been at work on GMS over the last few weeks. More activity today.

AGM tomorrow. Expecting an update.

[bmw30csl] 29/4/2016 11:04

Good to see the realism here - in any case if they breach i think the banks grant a waiver and charge fees. The above on oil price recovery and ADNOC wanting to stem declines is very true and what i like here is that the vessels are a cheaper/better alternative to jackups so should prevail and indeed be utilised fairly well even in adverse times like today. The rate cut was a gesture as the companies are getting them everywhere else but to lock in a new vessel at a lower rate again would hurt. I feel like dipping my toe in but my head tells me to wait for another update and for others fear to allow me to be greedy.

[robroy2000] 29/4/2016 08:30

Forecast net debt y/e 2016 $425m
Forecast EBITDA y/e 2016 $118m-$111m
Net leverage ratio 3.6-3.8

Forecast utilisation rate 2016 85%

On forecast net debt, covenants triggered at EBITDA of $106m.

No significant headroom for 2016. As Fergie would say, squeaky bum time. Some positive news would be much appreciated.

[dodge meister] 28/4/2016 19:45

From last year results:
"The Group's net leverage ratio, being the ratio of net debt (including finance lease obligations) to EBITDA, was 2.9 times at year end (2014: 2.2 times) against a maximum net leverage ratio permitted under the bank facility agreement of 4.0 times EBITDA. The Group remained in full compliance with all its debt covenants, with significant headroom, during the year and expects to remain so."

With the fall in EBITDA and increase in debt it is not going to be as cosy as one would like. If performance is not inline with expectations (depending on the timing of the evaluations which may only be yearly) well...who knows.

For me the 2 (one small one medium) (2 out of 14) idle rigs is more of a concern...we need a new contract cos there could be more contracts ending soon, further dropping the utilisation rate. If oil keeps going the way it is though, oil companies will want to lock in service companies before oil world pricing recovers.

[bmw30csl] 28/4/2016 17:45

So on it's own guidance this company pretty much breaches covenants - anyone with a view on how that works out?

[dodge meister] 27/4/2016 13:04

I call the bottom, when this breaks the down trend...happy days

[svenice7] 21/4/2016 16:23

Had a nibble at this. It has clearly been oversold imho.

[richtea1701] 16/4/2016 18:27

Have a small position and thinking of adding very soon. Just like to see some green days

[richtea1701] 16/4/2016 18:26

Good board this - went ex div last week. when do we buy? Gotta be some strong upside if oil can get going again.

[twistednik] 15/4/2016 12:33

Hopefully the two out of contract are re-contracted quickly as this firstly will provide a good indication of supply / demand in the current market environment (a concern if there are too many spare vessels not being utilised in the market) and secondly provide an insight into current rig rates and how much pressure the Company may see on margins going forward.

I'm thinking of taking a small opening position as I like the cash generation, and believe the value will come back once they reduce the debt pile and get their new vessels in the market. They are servicing the right end of the market being the low-cost producers in the middle east who have shown no sign of cutting production despite the impact of lower oil prices.

The bit I'm worried about is that others out there know more than I do and the price is appropriate for current risks and could be a 'value trap'. Some key questions I have...

- what is the demand / supply balance for vessels globally and if other operators will target the middle east for new business (if conditions are tougher in their home markets) driving rates lower very quickly?

- I'm not sure what new capacity is coming online in the next couple of years and how this may impact prices and utilisation ?

- The final piece of the puzzle is how confident management are of re-contracting their vessels when they come due and at what rates? Having a large fixed depreciating asset generating no cash-flow for a significant period of time equals major profit warning and will be the catalyst for the Company becoming severely distressed. Value would quickly disappear in this scenario...

Obviously the management team have a strong informational advantage being at the forefront of discussions / re-negotiations on their vessels. Seeing them purchase a significant number of shares would provide confidence on the sustainability of earnings.

[dodge meister] 15/4/2016 10:00

There is some good analysis here (refreshing for a BB), just add my ten cents worth. Previously in the company presentation they provided the dates for contracts for each ship. My concern at the moment is that one small vessel does not seem to be under contract and another two may be out of contract this quarter (potentially 3 out of 8). The debt is manageable if the utilization rate stays up.

[robroy2000] 15/4/2016 08:08

Thanks Pete, it's always helpful to get a view from someone inside the industry and the bleak picture you paint is certainly reflected in the share price of GMS.

GMS recognizes that it will need to diversify into decommissioning and saw it's first decommissioning project last year as a significant milestone. The project appears to be progressing successfully and has been commended by the client. As you suggest the possibilities for 'big business' are attractive and GMS should be well positioned to take advantage. This is seen as an area of opportunity and I think we should sit in anticipation as well as hope. A chance for management to display their mettle.

[petes5] 14/4/2016 21:31

The problem is with this company is that its involved with offshore vessels in the oil industry. There will have to be a bigger and sustained raise in the oil price before any effect will be seen on the share price. Rig rates are declining still with most oil companies wanting even lower prices. More rigs are being stacked with the prospect of a lot more going the same way once contracts have run out.
For the offshore oil industry its very much doom and gloom and I cannot see any recovery for at least 2-3 years in the offshore sector. There are some who think it may never recover. Any rise to $50-60 will see fracking taking off again with the prospect of the tap being turned to full by Saudi.
I am a long term holder who should have know much better (work in drilling) but was hoping that this company would be more involved in decom of platforms which could be big business around the world and that is why I invested. I sit in hope.

[tintin82] 14/4/2016 19:26

Many thanks for sharing your detailed analysis Rob Roy, much appreciated.