Mermaid drops $25m vessel purchase

The falling Australian dollar coupled with the economic climate has forced Mermaid Marine Australia to drop its purchase of a $25 million vessel.

The company was due to receive a $US18.2 million ($A25 million) AHTS vessel this month, which was to form part of its core spot market fleet.

However in light of the movement in the Australian dollar exchange rate and the current global economic environment, Mermaid said it was more appropriate to charter vessels to supplement its fleet at this time.

Chartering vessels has the benefit of reducing the overall risk profile of the company in the current circumstances and also reducing the quantum of debt that the company carries.

The company also expects to be able to attract more vessels to the Australian market at reasonable charter rates due the global situation. A one off charge was incurred due to the cancellation but earnings remain in line with the guidance given at the annual general meeting.

Mermaid undertook a capital raising in May 2008 on the basis of the Gorgon development requirements. The capital raising was strongly oversubscribed and as a result MMA took the opportunity to raise more capital than was immediately required.

The company is conservatively geared and has the balance sheet strength to undertake the planned Dampier Supply Base upgrade work and also to take advantage of other opportunities as they emerge.

MMA will continue to review options for fleet renewal and upgrade and also continue to pursue longer term contracts as they arise. The company recently announced delivery of our new vessel the Mermaid Searcher and as indicated, this vessel will contribute to our second half earnings.

Notwithstanding the current environment, MMA remains positive about the long term fundamentals of the Oil and Gas industry and is ideally positioned to support a number of Oil and Gas developments currently under construction or entering construction phase.