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Offshore company formed by Danish cluster lands new deficit

Two years after the Danish offshore players Orskov, VMS and Scanel established OVS Offshore, the company is still yet to deliver a profit. The owners have just injected new capital.

Photo: Ritzau Scanpix/Henning Bagger

The relatively new OVS Offshore is still yet to reach its first profit and has just had new capital injected by its owners to continue operations, according to the recently published company report.

OVS Offshore's ambitions were announced at the beginning of 2017, where the three Danish offshore suppliers operating in the Frederikshavn area – Orskov Yard, VMS Group and Scanel International entered a joint collaboration.

With the company, which the three parties each own a third of, the aim from the beginning was to establish the venture as one of Northern Europe's strongest service suppliers within reparations and support for the oil and gas indusry.

However, the report reveals that 2018 saw a fresh deficit for the company. In this instance, OVS Offshore booked a deficit before tax if DKK 1 million, which was in line with the DKK 1.3 million deficit in 2017, the company's first year in operations.

"This is not at all good enough," says the company's CEO, Gert Balling, who is also head of operations in Scanel, to ShippingWatch.

"We would have been underway earlier, but some things have happened in the port and everything has been delayed slightly, and OVS can first begin to create revenue and earn money on the day when the port is ready," he says.

Besides the CEO role, Balling is also on the OVS board, which also includes the VMS Group's CTO Bjørn Strandos, and CEO of Orskov Yard, Lars Fischer.

New capital injection

OSV's ownership capital made up DKK 189, 353 at the end of 2018. Development in recent years has meant that the owners entered a deal in February this year to inject further capital of DKK 1.2 million so that the "budgeted operations for 2018 can be realised," according to the report.

However, Balling stresses that the three companies from the Frederikshavn cluster are prepared to make the investment necessary taking the waiting time and its word, and that the dialogue with the ports is overall good.

The company's expenses are also low, as OVS currently has one single employee as well as IT and market leadership.

OVS is currently waiting to be able to begin, but expects that the port facilities will finally be ready from either July or August of this year. Until this time, OVS will put in a lot of effort into landing a larger contract already in the third quarter and if it succeeds the company is banking on black figures on the bottom line from next year, says Galling to ShippingWatch.

"We expect that when we get the first task the benefits will flow from that, and this calendar year we would very much like to have a contract on a major maintenance task. Whether that is carried out in 2019 or 2020 is tough for us to know," he says, referring to the planning work involved when going from winning a contract to launching the work.

"Ideally we will secure the first deal in the third quarter of this year, so I believe that we will already see a positive bottom line from 2020," adds Balling.

Good opportunities in the North Sea

Over the coming year, the expansion of Frederikshavn port, which includes the construction of more quays, deeper water depths and broader sailings, will brace the company to be able to receive all types of jackup rigs in the North Sea, evaluates the report.

OVS Offshore also expects to see rising demand for updating and upgrading the rigs.

"Speaking to the major rig companies, we hear that as a minimum there will be nine rigs which must have statutory maintenance inspections carried out within the next 12 months alone," says Balling to ShippingWatch.

According to OVS, the majority of the rigs lie in the North Sea and while Denmark is not relevant for them all, the companies behind them "will need to spread this out among Danish, UK and Norwegian ports in order to make room for everything, if it all comes at once," he says.

It is worth noting the contracts that OVS hopes to be able to bid on.

"So it's about being up to speed and showing that you can do the job," says Balling, adding:

"We have teamed up on OVS to win these kinds of deals, because alone we would never have gotten a chance on an SPS, because it requires steel, and engines and maintenance on board as well."

English Edit: Lena Rutkowski

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