Jasper Investments plunges into the red for Q2 with no revenue, warns of tight cashflow

OIL and gas related Jasper Investments reported on Tuesday a staggering net loss of US$255.04 million for the fiscal second quarter ended Sept 30, 2014, compared to a net profit of US$1.36 million a year ago.

No revenue was generated during the quarter due to the non-employment of Jasper Explorer, compared to US$23.59 million a year ago when the drillship was deployed in the offshore Republic of Congo.

During the quarter, the group also incurred US$242.11 million in other expenses, up from US$1.74 million a year ago. This comprised mainly impairment of drillship and accommodation vessel totalling US$227.6 million, US$1.5 million paid to shipyard for Jasper Cosmopolitan and a write-off of US$13 million deposit paid to shipyard.

As a result, Jasper sank deeper into the red for the fiscal first-half, with a net loss of US$280.70 million, compared to a net loss of US$12.95 million a year ago.

Jasper said it continues to market Jasper Explorer for drilling contracts in very challenging conditions and is in pre-tender discussions with an oil and gas company for a potential drilling contract.

It cautioned that future day rates and rig utilisation will be adversely affected as the oil and gas industry is preparing for the worst by cutting capital and operating budgets, amid a declining oil price and projections of weak and uncertain global outlook.

On certain subsidiaries' inability to meet the US$11.1 million in interest payment due to the bondholders of the US$165 million senior secured bonds on Nov 27, 2014, Jasper said it is still in discussions with the bondholders towards a restructuring or settlement.

Jasper also said it has entered into a memorandum of agreement (MOA) with Alyar Offshore and China's Yiulian Shipyard, for the sale of the converted accommodation semi-submersible vessel Jasper Cosmopolitan for US$75.6 million. Ordered in 2011, the price is significantly below its estimated value of US$160 million after Jasper failed to take delivery of the vessel due to its inability to complete payment.

Yiulian Shipyard exercised its right to sell the vessel under the contract. Of the total, US$73.6 million will be paid to Yiulian Shipyard, covering an agreed balance US$68.7 million, the costs of the sale, and 25 per cent of the remaining balance. Jasper will retain the remaining US$2 million to be used as working capital.

On its outlook, Jasper further warned that "it is anticipated that the group will experience tight cash flow for the remainder of FY2015 and management will continue with its programme of strict costs control".

Its cash and cash equivalent stood around US$8 million at the end of September, compared to about US$41 million a year ago.