Global Offshore Services Ltd Management Discussions.

The offshore oil and gas support service sector continued to face a very difficult and challenging period over the past 12 months and, even though there were some improvements in activity levels the "overhang" of supply of Assets is not expected to disappear anytime very soon. It is likely to be another challenging year with further rounds of restructuring and consolidations ongoing. In a longer-term context, focus on the Energy Transition to "greener and cleaner" energy is gathering pace as post- Covid-19 planning looks to "green and tech" to help "build back better."

The dramatic impact of Covid-19 on global energy markets prompted contrasting reactions across offshore. In traditional oil and gas, there was reduced activity, project deferral, lower spending and operational disruption especially as a result of the price of oil futures touching negative levels. Across offshore renewables however, there was continued growth and record project sanctioning, overtaking offshore oil and gas for the first time ($56bn vs $43bn). While the firming up of oil price has improved market sentiment and according to experts, suggests improvements in utilization of oSVs and rigs, the general outlook indicates that these contrasts will continue in 2021.


i) The market in 2019 started with some of the lowest activity levels seen in 20 years, with rig demand about 3 to 4 percent lower than it was in 2017.

ii) The offshore Support Vessel (oSV) markets were hard hit by the economic after-effects of Covid-19.

iii) Demand declined by 8% across full year 2020, and by the end of the year the number of oSVs active was only 3% above the lowest point of the post-2014 downturn.

iv) Demand could well remain under pressure through the year 2021 at least.

v) Covid-19 has exacerbated pre-existing supply-side challenges for the oSV sector.

vi) There is an overhang of vessels on order, and scrapping of oSVs continue to be "few and far between".

vii) Lay-up is the primary supply side lever for oSVs as a result, but units in hot lay-up may still add to supply-side pressure on day rates.

viii) Early in 2021, there has been marginal uptick in rates in some regions.

ix) Given the overall supply/demand balance, any more sustained rate improvement may take longer.

x) As of February 2021, key indicators across both Anchor Handling Tug cum Support Vessels (AHTSV) and Platform Supply Vessels (PSV) segments are more than 40% below the average levels of the last decade.

xi) The gradual market improvement witnessed in 2017-19 has been firmly reversed by the effects of the Covid-19 pandemic.

xii) Global (AHSTV) utilisation was 58% by February 2021, four points lower y-o-y, whilst PSV utilisation was 57%, six points lower y-o-y.

xiii) over the last year, demand for AHTSs is down 3%.

xiv) Demand for PSVs (which are more exposed to IoC demand) was down 10%.

xv) By end-2022, utilization is only expected to pick up to 62% in both sectors, demonstrating the scale of the challenge of weak demand and a fleet that is still relatively young.


Price improvements have been helped by improved global demand, which has recovered by 22% since its April 2020 low, despite Covid related restrictions, to an estimated 95.1m bpd (this is still 7% down y-o-y). however, the price gains have also been supported by heavy oPEC + supply cuts (plus concurrent reductions in US shale output), which reduced global supply to an estimated 93.1m bpd in December. of course, output comes at a cost of reduced volumes for participants in the cuts. on an annual basis, global oil supply is estimated to have fallen by 6.4% in 2020 to 94.1m bpd. Some easing of oPEC action is expected in 2021, but the full year 2021 projection of 1.5% growth to 95.5m bpd would still leave supply 5% below 2019. Drawdown of the record stock builds in 2020 will also complicate the supply-demand balance.

Gas production is estimated to have reached 379.9 bn cfd in 2020, which is a 2.8% reduction year-on-year. Production has been affected by similar trends to a degree; reduced shale output plus lower associated production from oil have had an effect. However, the lower carbon emissions of gas mean that producers may be keener to preserve productive capacity for the medium-term. In the shorter term, whilst reduced industrial demand during peak lockdowns ensured gas prices were weak, production was supported when prices spiked late in 2020 as a result of low temperatures in North Asia and Europe.


After the market upheaval of mid-2020, oil markets had tightened somewhat by end-2020, and barring risks of any adverse developments, related to Covid -19, market could well stay so in 2021. However, even if oil prices stay at the upper end of most forecasters expectations, and if the supply-side is carefully managed by participants, it is not anticipated that there will be any large-scale upturn in Oil Company spending on offshore. After a low of $41.5bn of capex commitments to offshore projects in 2020, $67bn is currently projected to be awarded in 2021. Even this moderate projection may be revised as project prioritization and progress towards cost savings become clearer (with accompanying impacts on margins in the supply chain). over the medium term, should vaccination bring greater normality, a robust rebound in demand and offshore market rebalancing remains possible. however, it is also clear that 2020 has accelerated focus on the green transition/energy transition, and this will certainly influence the relative long-term development of each energy source. In the long term, offshore oil is projected under a gradual transition to grow at a CAGR of 2.0% to 2030, to reach 30m bpd (30% of global oil output), while offshore gas output is projected to grow at a CAGR of 3.1% to reach 164bn cfd (36% of global gas production).

The market outlook for AHTS vessels is weak; the segment has been exposed to the impact of IoC CAPEX reductions on rig markets as a result of Covid-19. S&C America notwithstanding, reduced deep water drilling demand has sharply impacted the global large AHTS active vessel count (down 13% since start-2020). Moreover, large AHTS utilization stands at just 56%. At start-February, 44% of the segment was idle or laid-up; the number of deactivated units is likely to continue to rise in 1H 21, with additional market pressure expected in the near-term. moreover, any recovery in drilling activity across 2021-22 is likely to be gradual, and this may limit any large AHTS market uptick.

The largest small AHTS market is in the Asia-Pacific region, which currently accounts for 41% of 4,000-8,000 BHP demand. While the Covid-19 induced downturn has seen a softening in demand in Asia, NoC requirements provided some support to small AHTS market activity last year. An average of 336 small AHTSs were active in the Asia-Pacific region in 2020, down just 1% from 2019. However, against a backdrop of waning jack-up demand in Asia (down by 4% since Sept-2020), there are signs that regional AHTS demand may fall across early 2021. At start-February, 342 <12,000 BHP units were active in the region, down by 6% over the last two months. Small AHTS day rates in Asia have been subject to pressure since the onset of the latest downturn. For instance, the rate assessment for a 5,000 BHP AHTS stood at $3,502/day at end-January, down 25% y-o-y.

Despite the relative stability usually observed in the middle East, the impact of Covid-19 has clearly weakened small AHTS market conditions in the region. At start-February, 261<12,000 BHP units were active in the middle East/ISC, an 11% decline on start-20. Subsequently, small AHTS rates have also weakened in the middle East. The rate assessment for a 5,000 BHP unit stood at $5,000/day at end-January, down 15% year-on-year.

The small AHTS market outlook remains negative in light of the impact of Covid-19. With jack-up drilling demand only expected to record 3% growth over 2021, there is very little scope for any significant improvement in small AHTS market activity in the near-term (utilisation stands at just 58%). While the impact of Covid-19 continues to vary regionally, small AHTS demand-side weakness is evident on a global basis; the number of active vessels has declined by 7% since start-2020. Reduced vessel demand has impacted charter market conditions, weakening small AHTS day rates. The global 12-month time charter rate for an 80t BP vessel stood at $4,350/day at end-January, 17% and 63% below end-2019 and end-2014 levels respectively. Evidently, the small AHTS sector is in the midst of a renewed downturn and is facing another period of severe pressure.

The large PSV market outlook remains soft with the impact of Covid-19 continuing to pressure demand (>4,000 dwt utilization currently stands at 76%, down 5 pts since start-20). While vessel upsizing trends may have insulated the larger PSV segment from the sharpest impacts of the latest downturn (>4,000 dwt demand is down 6% since start-20, compared with a 12% reduction for <4,000 dwt units), the 12-month global time charter rate is currently 19% and 59% below start-20 and start-14 levels respectively. Supply-side risks are evident; the youthful nature of the fleet precludes formal removal and so reactivations may limit rate improvements when market conditions eventually tick up. However, any uptick still feels a long way away, with owners likely to face another challenging 12 months.

Operational Performance:

The average age of the Companys fleet on a consolidated basis, stands at just over 10 years. The Company has strived to keep the Vessels on long term contracts albeit at lower rates. Fortunately, for the FY21, this strategy has "paid off" with almost all the Vessels (except one) earning continuously for the full year.

As regards netherlands subsidiary, out of a total of six vessels owned and operated by the said Entity, three were sold in conjunction with the Senior Lenders, the restructuring of a Loan for one has been completed and the remaining two vessels taken on bareboat basis, were returned to owners.

While the Company strived to achieve maximum utilization of its subsidiarys vessel, the severe impact of Covid 19 was felt by the Company as well and one of the Vessels on charter in West Africa remained idle for the first five months of FY21. Both the vessels on Bareboat were also returned, partly because their earning capability fell drastically as a result of the Covid 19 pandemic.

Your Company is keenly aware of the need to ensure that costs are monitored closely and monies are spent prudently in order to be able to obtain the highest value out of all maintenance and repairs, while at the same time conserving precious fund.

Financial Ratios :

Pursuant to the Provisions of Schedule V - Part B, Clause I, Sub-Clause (i) & (j), the details of the significant changes in the financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year) are as follows :

1] The change in the Debtors Turnover Ratio is 33%. This is due to reduction in Turnover and also delay in realization of debtors (for one Vessel in particular).

2] The change in Inventory Turnover Ratio is 83%. This is due to considerable reduction of levels of stores and spares maintained on the Vessel. This ratio however, is not representative of its definition for a Shipping Company since "Inventories" do not consist of Raw Material, Work in Progress, or Finished Goods - as normally defined.

3] The change in Return on Net Worth was 69%. This ratio has improved in view of the foreign exchange gain on translation of long term loans in current year.

4] The change in Current Ratio is -39%. This is due to non payment of outstanding Interest and Principal of Term Loans availed from banks leading to a substantial increase in current liabilities.

5] The change in Net Profit margin is 69%. This is due to Foreign Exchange gain on long term loans, as compared to Foreign Exchange loss.


Any adverse developments related to Covid-19 represent further risks to the existing "weak" recovery. The supply/demand imbalance in early 2021 is less extreme than it was in Q2 2020, as economies have partially adjusted to the pandemic, and vaccines help to provide potential greater normalization. However, market risks will continue to exist should the crisis be prolonged, or if a disorderly unwinding of quota cuts produces excess supply growth. Meanwhile, political risks have not disappeared, particularly in the middle East. Risks of escalation with effects on oil markets remain.

Following the onset of Covid-19, the OSV sector finds itself in a weakened position, with demand already close to the lows seen during the last downturn. Although 2021 may eventually offer marginal demand improvement (projected utilisation at end 2022 is 62%), the sector is likely to face continued challenges. Though a slow contraction of the OSV fleet size is likely to continue, it is unlikely that this will be enough to have a significant effect on the supply/demand balance. Absent an unexpected magnitude of demand-side firming, the OSV sector is likely to face a weak short to medium term outlook.


Your Company continues to emphasize the importance of the set-up of suitable systems which would drive the performance of its various "verticals". A regular audit of systems and processes is carried out and findings help your company improve continuously.

Cost management is an important issue for the company and the Technical, Procurement and Health & Safety teams are continuously exploring ways and means to be able to manage assets at optimal costs - but never at the expense of safety.


The Employees of the Company continue to be the most important and valuable asset of your Company. The Company continues to hold small and effective training modules for its employees.

Special attention is being paid to this in order that your company is able to retain good talent.

NOTICE is hereby given that the Forty Third Annual General Meeting of the members of Global Offshore Services Limited will be held on Wednesday, 29th September, 2021 at 11.00 a.m. IST through Video Conferencing ("VC")/ other Audio Visual means ("oAVM"), to transact the following business:


1. To consider and adopt :

(a) the audited standalone financial statement of the Company for the financial year ended March 31,2021 and the reports of the Directors and Auditors thereon; and

(b) the audited consolidated financial statement of the Company for the financial year ended March 31, 2021 and the report of Auditors thereon

2. To appoint a Director in place of Mrs. Maneesha S. Shah (Din : 00019794), who retires by rotation and being eligible, offers herself for re-appointment.

Registered Office: by order of the board
101, Swapnabhoomi, "A" Wing, sd/-
S. K. Bole Road, Dadar (W), A. c. chandarana
Mumbai - 400028 company secretary &
CIN: L61100MH1976PLC019229 president - Legal & admin.
date : 13th August, 2021
place : Mumbai.