Two companies affiliated with Singapore’s Mermaid Maritime have renegotiated their respective contracts at lower rates with what appears to be the same Middle Eastern client.
Mermaid’s joint venture Zamil Mermaid Offshore Services has agreed a lower contract rate for an ongoing subsea inspection, repair and maintenance contract.
The five-year contract was awarded in the fourth quarter of 2012 and is scheduled to run until the final quarter of 2017. The contract has a two-year extension option attached, which has not yet been exercised.
Mermaid estimates its portion of the revised contract value for the remainder of the term will be not less than around $70m.
“This reduction in rates was part of a cost reduction initiative driven by the client, given the challenging business environment,” Mermaid said in a filing.
The company is providing diving services using one of its modern DP2 dive support vessels, plus remotely operated vehicles (ROVs), diving equipment and divers.
“To mitigate the reduction in rates, Mermaid has also initiated a second round of cost efficiencies, centralization and consolidation of its business in order to improve its cost base and make it more efficient and competitive during this period while maintaining its operating excellence and safety performance,” Mermaid said of the Zamil contract.
Meanwhile, a jack-up drilling rig owned by Mermaid’s associate Asia Offshore Drilling has secured a short-term contract extension at a reduced day rate until the end of this year.
The extension will begin immediately after the firm period is up. Mermaid expects the deal to add around $8.4m in additional contract backlog.
This unit has been employed with the client since 2013, as have two other jack-ups owned by Asia Offshore Drilling. The company secured contract extensions for the two other rigs in July in deals worth a combined $225m in contract backlog.
