Well said GFD; Seafox presents itself as a success story in the niche market of Jack-Ups and subsequently bought 14% at 18pps on the back of that experience and additional knowledge gained from GMS's earlier approach. If they see great value at 18pps then the current share price is bargain basement!
Timmy no they can't; generally the rate agreed at the start of the contract is the rate throughout and that can be an issue especially in the current climate. Essentially, in order to get work at the moment companies have to be very competitive resulting in very narrow margins. The dichotomy is that if 6 months into an 18 month charter, OPEX increases (wages and other costs etc have to increase as the market is recovering and the 'supply chain; reacts), then a company could finish the rest of the charter operating at a loss. Precisely why the need to generate revenue 'now' must be balanced against getting locked into low rates for any length of time.
Guys, the driver of day rates is directly impacted by the availability of rigs; straight forward supply and demand. Having said that, the availability of rigs is driven by the oil price; the higher the price of oil then NOC, IOCs etc increase their spending to get it out of the ground. Each region has a different break even point that it needs to extract oil; in the Middle East, shallow water etc makes it less costly to extract so they make a profit at a lower oil price than in the North Sea for example. As a result, the downturn hit the Middle East later than the North Sea and will also recover before the North Sea. Due to the downturn, the biggest impact was in CAPEX spending (eg. exploration); OPEX (keeping oil flowing & maintenance) was reduced but they kept the lights on. The significant thing about GMS is that the majority of their work is in the OPEX sector so that bodes well especially in the ME (where the bulk of their fleet is) as both KSA and the UAE have committed to increase their output which means money being spent to open the taps and increase output.
The results of any PLC have credibility as they come as a result of being independently audited; without that independent oversight the results of any Company that have not been independently verified are essentially worthless. I fully understand that private companies have no reason to follow that route and also why; it's inherently expensive I should imagine. Anecdotally I wonder what the monetary cost is of being a PLC; a whole plethora of expenses that Seafox has to neither consider or incur. Like most I suspect, I too would like to see the YE results as soon as possible, though I suspect their development is subject to a timeline that was set in place some time ago so is unlikely to change at this relatively late stage....
Below posted by Jadpi some weeks ago. Seafox may have initiated change at GMS but no way to tell if it was already planned; either way good for SHs. Bigger question is the Seafox intention; no way to ascertain and no need to guess due to the impending meeting I suppose. As previously stated, my concern is a lack of transparency from Seafox et al; easy to make comparisons vis-à-vis EBITDA etc against a transparent organization whilst you operate in the relative 'dark': Equally, not comparing 'like for like' IMHO. GMS is largely recognized as a premier provider giving the highest quality service whereas Seafox by their own admission have a much older fleet etc. Is their claimed EBITDA better because they scrimp on maintenance and food services etc? Again, none of us are able to objectively assess as Seafox has provided nothing to assess against:
"Millennium Offshore Services Superholdings / Seafox loans, 225M USD Feb2013 (162M USD paid to shareholders), 240M USD Nov 2014 (used to acquire Seafox), 450M USD loan.
HM MOS International acquired MOS Superholdings for 200M USD in March 2014.
The Principal investors in HM MOS International Limited include, amongst others, a GCC Sovereign
Wealth Fund, MENA Regional Family Offices and also MENA Regional High Net Worth Individuals.
Seafox has not published any financial results since 2014.
Jan 2016 Moody's withdrew it's rating for MOS Superholdings because of inadequate information to monitor the rating, due to the issuer's decision to cease participation in the rating process".
GFD, apologies, I stand corrected; you mentioned performance related bonuses and it was the other poster that pointed out the CEO etc got none. My opinion stands....Executives get LTIPs for the reasons Selenium posted, but in this case got none (I assume due to poor Co performance)......but someone did hence my assertion it must of been the operational managers, and they get it for the purpose of retention...
Selenium, if you read the post that initiated this thread you will see that GFD opined that the CEO shouldn’t get shares when the Companies performance was poor; it was subsequently pointed out by another poster that he didn’t. In fact receive any From what I can glean it is not the executive management team that have received LTIPs so I’m assuming it is those more at the operational, rather than strategic level. If that is the case, you’re assertion cannot be correct as operational management don’t make decisions that impact the long term direction of the Co, they ‘merely’ make it happen.
That is why I still subscribe to the view that if the LTIPs were indeed paid to operational level management, it was for the purpose of retention. I assume this as it was declared that the Executive Management group (CEO) didn’t get any but some (un-named) did; who else could it reasonably be? Onwards and upwards!
Lol, nowhere have I said the Co has cut anyone’s salaries! I have said that when the market dropped off a cliff in 2016, it was common, and widely repoterted, that employees within the industry took salary cuts. Please don’t ascribe statements to me that I didn’t make. I’m happy to be held accountable for what I have said (it’s on record in this BB) but I won’t allow anyone to make things up.
The point is, with pressure on the workforce likely to increase as the recovery kicks in (????), it makes good sense for Co’s to implement and/or maintain strategies to ensure scarce and highly competent employees are retained.
I’ve already told you I’m in the industry so I’m saying that it happened across the whole industry GFD. Not a secret, reported extensively at the time, particularly in places like Aberdeen. First to feel it were day raters and then it was salaried employees. Nature of the industry is that when times are good they’re very good...when times are hard it’s hard for all. It’s for precisely that reason that skills shortages are forecast for the upturn as many have either left the industry or, the lucky ones, made enough in the good times so they were able to take early retirement.
Selenium, you bore me (and probably many others); a total of 2 posts and none of any substance.... Always a good idea to understand the culture of the industry you’re investing in. GFD would like to take that a stage further but I’m unable to help....
Sorry but you’re wrong, particularly when virtually every Co in the industry implemented pay cuts as it went off a cliff in 2016 and many have still not rectified that as times are still hard.
LTIPs are not intended as a financial reward, their primary function is retention and that is precisely why an award is given but not actually realized until a number of years later. If you leave you don’t receive the shares; if you stay, you get them ...... they tie the employee to the Co. If a Co doesn’t award LTIPs for year, all they have done is provided a window in which employees can leave with no financial penalty so in order to fulfill the purpose for which they are intended, they must be applied consistently.....
Because I understand and support the intent of LTIPs and want to see fully independent NEDs on the Board of a Co I’m invested in for the long term!.... If you’re able to make such deductions accurately (you’re not), then please let me in on who you’re investing in!
GFD, a LTIP is just that, a plan whose purpose is to keep good people at the Company long term. You could argue that these people are worth more in a downturn than when the market is going like a train because it is the efforts of high performing people that ensure the Company remain a viable entity in difficult times. Reality is that in the O&G sector, it isn't hard to make money when the going is good!
I don't believe it would serve the Company or SH's well by dis-incentivising these people during a downturn and potentially creating a window in which they could resign with no financial penalty by not awarding shares during a FY. You not only lose talent and therefore operational capability, you potentially cede these talented individuals to your competitors to add insult to (self-imposed) injury. IMHO lol!
GFD, a LTIP is just that, a plan whose purpose is to keep good people at the Company long term. You could argue that these people are worth more in a downturn than when the market is going like a train because it is the efforts of high performing people that ensure the Company remain a viable entity in difficult times. Reality is that in the O&G sector, it isn't hard to make money when the going is good!
I don't believe it would serve the Company or SH's well by dis-incentivising these people during a downturn and potentially creating a window in which they could resign with no financial penalty by not awarding shares during a FY. You not only lose talent and therefore operational capability, you potentially cede these talented individuals to your competitors to add insult to (self-imposed) injury. IMHO lol!
Have to say I agree with JADPI in that NEDs are supposed to be independent; able to represent ALL shareholders; I fail to see how that can be the case when they are being recommended by a shareholder. If it is felt that having some 'local' representation would be an advantage (I wouldn't be against it), I would prefer that the Board seek candidates from the 'market' rather than those with a potential disposition to push individual shareholders agenda's........
No source but a lot of reading and too much coincidence and crossover (and maybe even seeing things that don't exist!). Look at the chain Millennium Offshore and Seafox. Mr Hisham Halbouny appears throughout and it all appears to stem from MANCapital.
Don't get me wrong, I sincerely hope you are right because my intent is to be in this for the long haul...I feel over the next 2-4 years this could do very well indeed..
And what would you expect the result to be if they were to take control and eventually de-list? From what I have been able to find out, the real power behind this seems to be MAN Capital and I can see no track record for them maintaining listed companies......interested in your thoughts?