A Solstad Offshore subsidiary and REM Offshore have announced a merger to help face the current downturn in the oil and gas industry.
When combined, the two offshore service vessel operators will operate a total of 62 vessels.
“The offshore service vessel (OSV) industry is undergoing a period of great uncertainty. Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting day rates and utilisation,” Solstad CEO Lars Peder Solstad, said.
OSV Operators Merge to Face Downturn
After the merger becomes effective, Solstad is to retain its head office in Skudeneshavn, from which the combined fleet of construction support vessels (CSV) will be operated, while the combined fleet of production support vessels (PSV) will be operated from the current REM office in Fosnavåg.
“The OSV industry’s fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn,” he added.
“The combination of Solstad and REM is one step in the right direction, but there remains a strong rationale for further consolidation,” he stated further.
Merger Strengths OSV Industry
According to the CEO of REM, Arild Myrvoll, both the companies show strong operational capabilities, expertise and employee and management bases that will contribute to the success of the merger.
“From a commercial perspective, the merger will further strengthen these pillars of productivity and profitability, while at the same time improving margins and reducing downtime through inherent cost and operational synergies,” he said.
The company’s Chairman, Åge Remøy, believes the combination will help secure “development possibilities for the region and stable employment opportunities” for REM’s nearly 500 employees.
REM Offshore had been undergoing a restructuring, considered a necessary measure in the current OSV market, which is set to make the company reach more efficiency and lower costs.
“The combination of Solstad’s, REM’s and Aker’s industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry,” said Øyvind Eriksen, President and CEO of Aker, one of the main shareholders in REM Offshore.