Reach Subsea secures cost attractive long-term vessel capacity through acquisition of Edda Sun and charter of Go Electra
Haugesund, 24 November 2022: Reach Subsea ASA the trusted data and subsea service provider for ocean-based industries, has secured significant vessel capacity for the coming four years through an agreement to acquire the multipurpose ROV support vessel Edda Sun for USD 29 million and a charter contract for the multipurpose ROV support vessel Go Electra with a duration, including options, through 2027.
With the favorable terms on the two new vessels, and the existing charters of Havila Subsea and Deep Cygnus, Reach Subsea now has a long-term core fleet portfolio with an estimated 20-30 percent cost advantage compared to the current market. This will be further improved with the launch of the unmanned Reach Remote vessels, set for launch in 2023.
“We are currently seeing record high activity and face a market with a solid growth outlook for years to come. Hence, the market for vessel capacity will be very tight, but we are now perfectly positioned to maneuver and take advantage of the growing demand for both short-term and multi-year assignments,” said Jostein Alendal, CEO of Reach Subsea.
The Go Electra charter agreement is for four years firm with an option to extend for one year, with a highly competitive fixed charter rate and a profit share arrangement.
The USD 29 million acquisition of Edda Sun represents a new development for Reach Subsea, as the company’s operations have thus far been based on chartered vessel capacity. However, the implied charter rate derived from the purchase price on the vessel is well below the charter rates we are offered on other similar vessels in the market.
“In the current market, it is attractive from a cost perspective to own parts of the ROV vessel capacity. Owning the vessel also implies a mitigation of any cost inflation risk in the coming years, as well as being able to credibly cater to our clients growing need for long term solutions,” said Jostein Alendal.
Edda Sun was built in 2009, whereas Go Electra was built in 2011. They are both highly versatile ROV support vessels, well fit for Reach Subsea’s broad range of subsea survey, inspection and maintenance activities (IMR) as well as construction and decommissioning activities. They are fuel efficient and are capable of operating in harsh weather conditions with low down-time.
Edda Sun will be mobilized with one work-class ROV and one high-speed Surveyor Interceptor in time for the high activity season in the North Sea. Go Electra will be available for Reach Subsea early 2023 and will be mobilized with one work-class ROV and one observation ROV.
Settlement of the Edda Sun acquisition will take place in March 2023, and is subject to consent from our banks, and satisfactory vessel inspection. Execution of the Go Electra charter agreement is also subject to satisfactory vessel inspection. Reach Subsea is considering various financing opportunities for the transaction, including debt, equity, partnering, or a combination of these sources.
Birgitte Wendelbo Johansen
Chief Financial Officer
Reach Subsea ASA
About Reach Subsea:
Reach Subsea ASA Group offers subsea services as a subcontractor and/or directly to end clients, based out of our head office in Haugesund. The core business of the Group is based on modern, high spec Work ROVs operated by highly qualified offshore personnel and supported by onshore engineering resources. The Group’s objective is to be a preferred subsea partner and full-service provider of subsea operations for clients, focusing on safety, environment, financial solidity and profitability.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements according to section 5-12 of the Norwegian Securities Trading Act. The information was submitted for publication by CFO Birgitte Wendelbo Johansen, on behalf of the Company at the date and time set out above.