Gulf International Services (“GIS” or “the Group”; QE ticker: GISS), today reported a net loss of QR 0.8 million for the six-month period ended 30 June 2021.
Oil and gas industry continue to show positive signs of recovery with constructive macroeconomic drivers, on the back of effective vaccination campaigns leading to ease of lockdown restrictions in major markets linking to heightened economic activity.
However, the post-pandemic recovery within the Group remained uneven, with Aviation and Insurance segments reported improved set of results, while the macroeconomic tailwinds were not immediately felt within the drilling segment, which continue to remain under pressure, engulfed with rig suspensions and depressed rig day-rates. With revised rig day-rates for off shore fleet and Gulfdrill JV’s fleet becoming fully operational, the drilling segment is expected to improve on its performance matrix entering into second half of this year.
Business performance updates and outlook
Since the start of pandemic, Group’s drilling segment had undergone rate reduction, together with suspension of certain rigs within onshore fleet, which brought an additional layer of challenges to the segment.
However, on a positive note, a key milestone has been achieved by Gulfdrill JV with the deployment of the remaining three jack-up premium rigs; “Java Star”, “W-Castor” and “W-Tucana” during Q2-21. Going forward, with all the five JV rigs being operational, would result in additional revenue streams for the segment and improved operational cash flows for GDI.
Moreover, starting from July’21, the new rig day-rates applicable for off shore fleet will take effect, which is expected to positively impact the segment’s topline.
Performance of the aviation segment improved compared to last year. COVID-19 related travel restrictions, which affected the transport demand last year for the oil and gas companies remained relaxed during the period. As a result, higher flying hours were recorded on an overall basis, which affected the overall segment’s performance. Additional topline contributions from MRO business were also recorded, as a new contract was awarded to GHC during the current year. Furthermore, contracts in Libya and Angola has been successfully extended.
With an intent of upgrading its current fleet to ensure retention of its existing customers and to maintain a core fleet that has the latest aircraft technology, the segment successfully added one new helicopter (AW139) to the domestic fleet during Q2-21. With certain in-house upgrades in line with client’s specifications, the new aircraft will replace an existing helicopter on a domestic contract, with the existing helicopter is intended to be marketed in the international market.
The insurance segment managed to build up on the strong performance achieved throughout the period by further expanding both the medical and general lines of business, coupled with successful renewal of major contracts and additional coverage obtained for major contracts within the energy segment. Additionally, the segment continue to expand its footprints within the domestic SME market, specifically within medical line of business and added new clients during the period.
Restrictions and lockdowns imposed by the Government and clients continue to impact segment’s performance. However, despite stiff market challenges, the Company was able to win new contracts within the manpower segment during the year.