Polarcus Limited (Polarcus) announced earlier today that one of its Norwegian subsidiaries has entered into a heads of agreement with SCF GEO AS (Sovcomflot), to charter a vessel on bareboat terms with delivery scheduled for March, 2017. The fixed period of the Charter will be 5 1/2 years with options to extend for up to four additional months. With this agreement, the Polarcus Group reinforces its collaboration with a strategic client and now has two vessels on long-term charter, both built to operate in environmentally-sensitive sea areas including high Ice Class conditions.
The vessel will be delivered without streamers and the streamer package currently on board the vessel will be available for use across the Polarcus fleet. The Charter will generate minimum hire of USD 72 million over the fixed charter period with the possibility of increased charter hire fees based on Sovcomflot benefitting from certain market improvements. Sovcomflot will have the right to purchase the vessel at any time during the charter at pre-agreed prices.
The heads of agreement and the Charter are subject to the consent of the bank lenders who have mortgagee rights over the vessel. The Charter is also subject to finalizing terms with Sovcomflot. The terms will be based on a previous agreement between the Polarcus and Sovcomflot Groups which contains amendments and supplemental terms to the industry standard BARECON 2001 form.
Polarcus is a seven-vessel marine geophysical company. Following delivery of the vessel to Sovcomflot, the Polarcus Group will have two vessels on long-term bareboat charter with a total fixed backlog of USD 110 million with no associated operating costs. In addition, the Polarcus Group operates a fleet of four vessels in the contract market for which the current backlog amounts to USD 115 million. The Company also has Polarcus Nadia, currently cold-stacked, which will be considered for re-activation on improved market conditions. The available excess streamer package will reduce re-activation costs significantly if installed on Polarcus Nadia.
"Securing this long-term revenue stream is testament to the Company's ability to adapt to the current environment. As well as strengthening Polarcus' backlog and cash flow profile, this vessel commitment generates healthy tension in our current vessel schedule," stated Duncan Eley, Group COO.
Following signature of the Charter on the terms outlined above, the combined backlog will be USD 225 million and booked capacity for the Polarcus fleet will be as follows:
Q1-2017 = 81%
Q2-2017 = 85%
Q3-2017 = 75%
Q4-2017 = 35%
IMPORTANT NOTICE: There is no guarantee that the necessary Bank approvals will be granted, that Charter terms will be finalized in an agreed period or on the terms described above.