Q4 2021 Tidewater Inc Earnings Call
Hello, and welcome to the Tidewater fourth quarter 'twenty to 'twenty, one earnings cool and see Pacific offshore acquisition announcement. My name is Alex and I'll be COVID-19, Nicole today, if you'd like to ask a question at the end of the presentation. You can press star one on your telephone keypad.
If you'd like to withdraw your question you May press Star two.
I'll now hand out material hoist West Coccia, Vice President of Finance and Investor Relations I went to your west.
Thank you Alex Good morning, everyone and welcome to Tidewater earnings Conference call for the three months ended December 31, 2021, and also the Swire Pacific offshore acquisition announcement.
I'm joined on the call. This morning by our President and CEO Quintin Kneen, our Chief Financial Officer, Sam Rubio, and our General Counsel and corporate Secretary, Daniel Hudson, and our Vice President of sales and marketing appears Milton.
During today's call, we'll make certain statements that are forward looking.
And referring to our plans and expectations there are risks and uncertainties and other factors that may cause the company's actual performance to be materially different from that stated or implied by any comment that we make during today's conference call.
Please refer to our most recent Form 10-Q for additional details on these factors. This document is available on our website at T. D. W dot com or through the SEC at SEC Gov.
Information presented on this call speaks only as of today March nine 2022.
Therefore, you're advised that any time sensitive information may no longer be accurate at the time of any replay.
So during the call we'll present, both GAAP and non-GAAP financial measures a reconciliation of GAAP to non-GAAP measures is included in yesterday's press release now with that I'll turn the call over to Quentin.
Thank you Wes good morning, everyone and welcome to the fourth quarter of 2021 Tidewater earnings Conference call.
Today's call will be slightly different is in addition to catch you up on the quarter. We will update you on the business combination, we announced simultaneously with the earnings release.
We've also added a slide deck to go along with the press releases to help us present, the synergy potential in this transaction as well as provide some additional information on the deal. It was linked to the press release and it's visible to those listening via webcast.
Thank you for accommodating this last minute conference call and for the releasing of two press releases in the Wee hours of the night, but we had to find the time it doesn't interfere with the NYSE or a Hong Kong stock exchanges.
As you can appreciate deals come together when they come together.
So Sam it's been holding on to the earnings release for over a week. So we figure the best just to get all the information out to you in one fell swoop.
So thank you and here it goes.
I'm pleased to say that this hasn't been another solid quarter for Tidewater and a busy quarter as we had several transaction and in an event since we last spoke.
In addition to the solid quarter, we closed on the debt refinancing that we mentioned on the third quarter earnings Conference call. We terminated early the tax benefits preservation plan.
We bought out our joint venture partner in Angola, and we announced last night, if you're entering into a definitive agreement to acquire the 51 vessel fleet of Swire Pacific offshore.
Revenue surprise to the upside in the fourth quarter revenue was just over 105 million for the quarter up 14% from the third quarter. The increase was positive but the trend is even more noteworthy.
Usually the seasonal softness in the north sea offsets any increases in the other areas in the third and fourth quarters, but this year the north sea was up slightly in the other areas. Other areas were up nicely, resulting in a 14% increase also noteworthy quarterly revenue has ticked up every quarter this year.
Good indication that activity levels are increasing and are becoming expected and accepted by our customers. As we proceed past the pandemic driven pullback and into an increasing offshore activity cycle.
Historically and forgive me as I know most of you have heard this before but I like to remind people each year. The first quarter is the weakest quarter of the calendar like.
Like the typical fourth quarter is due to weather in the North sea, but in addition to that some customers charter on a calendar year basis.
The beginning of the year, so you get a bit of charter hire gap in the first quarter.
Gross margin also improved during the quarter up three two percentage points to 32, 2% before the noncash impairment charge that pushed the annual gross margin up to 29, 1% just shy of our 30% guidance for the year.
Our G&A cost for the year included $2 million for the transaction, we just announced and you may recall that G&A had bumped up last quarter due to increased professional fees.
Of course, we weren't necessarily vague last quarter as the deal was in negotiations, but absent the deal costs G&A for the year was $66 6 million down 10% from the $73 4 million in 2020, our annualized G&A expense for the first for the fourth quarter was $68 4 million.
We're going to talk a bit about G&A going forward in a moment as we get into the transaction with Swire Pacific offshore, but just as a reminder, the combined 2014 G&A for Tidewater and Gulfport stand alone. The peak of the last cycle was $253 million.
Combined G&A the merger was $143 million were now at $66 6 million, we're quite confident in our ability to achieve the estimated G&A synergies in this deal and we will give you some more details on that later in the call.
Free cash flow for the year was $52 2 million in the bulk of it was earned during the first half of the year, we were free cash flow positive every quarter of the year and I'm certain you recall that being so as one of our mantras as we go through to a more recovered offshore vessel market and the reason for the lower free cash flow in the second.
Half of the year is due to vessel reactivation. This is going to be the same for the first half of 2022 as the gross margin from the additional vessel reactivation doesn't overwhelm the cost to reactivate until the second half of 2022.
The other mantra that we have been really is that all boats are going to be working or sold by the end of 2022. We're on track for achieving that in addition, 49 of the 51 of Swire Pacific offshore vessels are active and we intend to make sure. The 49 remain gainfully employed.
Vessels in lay up cost was $13 7 million in 2021, that's four percentage points of gross margin recall that pandemic related expenses are costing us approximately five percentage points, both opex and all higher impacts.
I'll, let Sam update you on the new bonds, we issued in the fourth quarter and the new revolver in a moment, but we had a few other events that I'll update you on before I hand, the call over to peers.
We terminated early the tax benefits preservation plan in the fourth quarter, you will recall, we put in place just as the pandemic hit to preclude the.
<unk>, Oregon, and Burton limitation of our tax credits, which are substantial over $400 million.
One of our key a few key factors and tripping the IRS limitation on all these attributes was the acquisition of the go Mark in the fourth quarter of 2018.
The tax limitation determination is a rolling three year Compathy computation and as soon as three year anniversary of that deal occurred.
<unk> moved to early terminate the plan.
We and the board appreciate that these plans can be seen is not shareholder friendly another certainly not our disposition.
As soon as the probability of tripping. The plan was lowered sufficiently the board acted to terminate the plan.
With regards to the proposed transaction involving Swire Pacific offshore as it elevates the rolling three year average naturally, but not enough to concern us.
Another transaction that we completed early in the first quarter of 2022 is the acquisition of our partner's 51 interest in Sarnia tied our joint venture in Angola.
We purchased the outstanding 51% for $11 2 million.
Doing so allows us to fully control and operate our business and then Paula, allowing us to bring the efficiency improvements we have brought to the rest of tidewater to Angola.
It eliminates the commission, we were paying to the joint venture and allows us to consolidate the $10 million and net assets held by the joint venture.
This transaction allows us to use our platform and Angola for growth throughout West Africa, including the 25 Swire Pacific offshore vessels located there.
Also in the fourth quarter, we initiated the previously mentioned after Monday's stock issuance plan. The ATM plan, we issued no shares under that plan since it was put in place in the fourth quarter.
Our intended use for the plan is to repurchase Jones Act warrants Jones Act warrants as many of you recall are the warrants given to a foreign equity holders, who do not meet the U S and requirements. So they can't hold regular equity shares due to the Jones Act foreign holder reputation.
Our intention with the ATM plan is to create a market for those warrants by issuing new equity shares under the ATM plan in exchange for those warrants no new net shares are intended to be issued this plan is to facilitate getting out of the Jones Act warrants.
We still have approximately $1 2 million Jones Act warrants remaining from the Tidewater and Gulfport restructurings and we intend to issue $8 1 million and the proposed transaction involving Swire Pacific offshore.
If you are holding these warrants and you Wanna get out just give us a call obviously, we control the issuance and we're mindful of what the market compare at any given time and we're not interested in adversely impacting the price, but give us a call. If you're interested we are open to working something out there as a win win and creating more float with no dilution to equity holders.
And last but certainly not least let me give you an overview of the strategic rationale for the proposed transaction involving Swire Pacific offshore peers.
Here's and Sam will give you more details.
As I just mentioned, we intend to issue $8 1 million Jones Act warrants and $42 million of cash for a total purchase price of about $190 million.
Acquisition is debt free the value per ship of this transaction is $3 7 million compared to Tidewater as average per ship value of $5 4 million.
Our intention is to operate the new vessels under the Tidewater brand.
Many investors do not know much about swire Pacific offshore, but within the industry that is known as one of the premier operators. Their safety record is impeccable their reputation with clients a stellar their vessel fleet is world class in their Mariners are top notch, it's a great company full stop.
Tidewater will now own the largest fleet of <unk>.
Fees in the industry with 174.
I'll talk about some of the other strategic merits of the deal in a moment, but we believe the combination of these fleets presents a great opportunity to drive earnings and free cash flow growth and.
The recovery of the offshore.
The recovery in the offshore vessel market continues.
Furthermore, we have identified meaningful synergies that we can realize by bringing their operations to our scalable shore base infrastructure.
Squyres fleet of 51 OSV use is primarily located in West Africa, Southeast Asia, and the Middle East.
Why our fleet is comprised of a mix of <unk> and anchor handlers with a nice mix of large vessels within each group.
The combined fleet of 174 OSB is now the largest in the industry. We will have a sizable presence in every major.
Market globally, we remain weighted towards <unk>, but believe the large anchor handlers acquired from supplier will capitalize on the forecasted improvement in the drilling market.
Another compelling aspects of this transaction is not only are we now the largest OSV operator in the space for the combined fleet is also the youngest in the industry of any large fleet. We believe the combination of size and fleet quality will allow us tidewater to position itself as the OSV operator of choice in every major region globally.
We have been proponents of equity driven relative value transactions and that's what we have done was wire.
On a market value basis, we are clearly the most investable company in the sector. Furthermore, given the nature of the Jones Act warrant and cash split we've retained our balance sheet strength, which we believe is the prudent approach to running the business, but also allows us the flexibility to pursue additional avenues of growth.
If youll recall this isn't our first time to approach a sizable M&A transaction, we previously consummated the Tidewater Gulf Mark merger and developed a strategy to realize synergies from that transaction, we successfully identified and executed on our strategy realization strategy and outperformed our initial expectations based on continuous improvement.
<unk> initiatives and optimizing the shore base infrastructure. It's also important to note that that wasn't a one off event, it's something we focus on over time and as a result, we're able to achieve 10 consecutive quarters of G&A reductions.
I bring this up as I believe we have a playbook that will be able to tweak and implement as we approach. The newswire transaction all in we anticipate $45 million of synergies from the <unk>.
Combination of these two businesses the elimination of duplicate corporate level expenses as a large portion of the synergies as well as regional level shore based costs, where our operations overlap and then operating expense savings as we leverage existing supplier relationships and operating protocols.
When you look at the fleet on a combined go forward basis that is excluding any vessel that was sold in 2021 or is currently held for sale.
Combined company would have generated $86 million of EBITDA in 2021.
And that's with 45 million of synergies compared to the Tidewater stand alone EBITDA of $35 million.
There's no doubt the synergies we expect expect to realize from this transaction will be meaningful from an earnings perspective, but we're just excited about the added earnings leverage does this wire acquisition provides us.
Bringing the combined fleet up to 90% utilization would add about 100 million of EBITA and in addition for every $500 a day rate increase all else held constant.
EBITDA would increase another $100 million given our substantial operating leverage.
To help put this in perspective to the extent that our fleet day rates approached 2014 levels, we'd generate nearly $700 million of EBIDTA.
Turning to the regions as shown by the performance of the Tidewater West Africa region over the past two quarters. This region is rebounding from the pandemic lows the Swire Pacific offshore fleet combined with our now wholly owned position in Angola, and the sizable infrastructure, we have demonstrated to you by our.
<unk> reduced G&A cost structure, we will enable significant synergies on both the administrative and operating cost categories.
Our high quality fleet, we acquired now positions Tidewater with the largest fleet of active vessels in the region. We believe theres been a flight to quality, which is evident in the working fleet, which we believe will continue to accrue benefits as this market continues to grow over the coming years.
Swire Pacific offshore its current position in the Middle East will be a natural addition to our current operations in that geography.
Benefits from our sizeable shore base infrastructure footprint and improved operating expense management through economies of scale.
Our position in Southeast Asia has been limited to Thailand over the past five years, but its wire has an enviable position in the area and our Thailand business will nicely into their operations. In this area, we will be adding more G&A costs as we will invest in that areas existing infrastructure similar to our combined.
In West Africa Fleet, we've seen a similar flight to quality and given the wires vessels are completely utilized this time speaks to the quality of their fleet.
The combined fleet will similarly be the largest active fleet in the region, which positions us well and growing oil throughout the oil and gas market, but also provides us a better platform.
And the rapidly developing offshore wind market in the region.
The 51 vessel Swire Pacific offshore fleet includes one seismic vessel is one vessel in layup and perhaps two additional vessels will be determined to be uneconomic and held for sale.
One of the vessels may be sold prior to closing we will make a final determination. After the closing of the transaction on the number of vessels to be sold with the perspective of an enhanced geographic footprint to deploy the vessels within on top of our swiftly improving market.
However, we have recalled we have acquired a relatively young fleet with an average age of 10.2 years compared to our fleets current average of 11 years.
Importantly, the large PSV using the anchor handlers meaningfully improve our combined age profile in these vessel classes and give us a more compelling offering to our customer and extends the earnings profiles of the fleet.
The day rate of US why our fleet in 2021 was 11913, 15% above our day rates average for 2021 of 10335.
We are excited about the transaction, we believe that the fleet quality of the earnings power and the preservation of our balance sheet leaves us well positioned to pursue additional strategic opportunities in the future.
The transaction that is envisioned to close in 30 to 60 days.
And with that let me turn it over to peers for an overview of the Companys performance by region and some additional commentary on the proposed transaction.
Thank you Quintin and good morning, everyone.
A full sand goes through our numbers in greater detail I wanted to talk through some of the things we set out to do in 2021, and then we start to see bear fruit in Q4, and what we see happening as we go into 2022, and then based on how we see the Swan tied with the combination of being able to take advantage of the improving market and we are currently in.
2021 was a year of transition for both us and the industry as we came out of a very tough 2020.
Im sorry flat 2021, we talked about discipline is a key commercial tenants for our teams around the world.
Depending on rates disciplined on reactivation.
Depend on utilization and discipline on contract.
We felt that as a market leader in the industry, we had and have the responsibility to lead the market in all four of these areas.
I'll still clearly to take advantage of what we see is an improving market in 2022 and 2023 and beyond.
On day rates as Quintin mentioned, we saw incremental improvement quarter over quarter, culminating in a strong revenue bump in Q4.
Every region contributed but where we have really been able to start pushing rates.
Global approach to a large deck PSV fleets.
Anticipated increased global demand for Q4 and into 2022, and we're able to be disciplined about reactivating. The majority of our remaining large PSV to meet that demand at the right time, which has meant we've been able to bring more vessels back into the fleet in Q4, but still increase active utilization by 1%.
<unk> Q3 2021.
One of the important milestones for Q4 was to get certain customers to salt paying full mobilization and demobilization again for our vessels.
Yes, we've had to compete against less disciplined and desperate competitors were willing to buy in order to survive. It would not appear for the right best in class tonnage that Tidewater provides customers all prepared to pay to mobilize all ships to where that project solve.
This isn't across the board yet, but we do expect this trend to continue into 2020 to logitech PSC and high volatile HTS.
Which as long as we remain disciplined will translate into high day rates and increased utilization throughout 2022.
By being disciplined and focusing on a flight to quality philosophy. It allows us to plan all the activations of supplies and shipyards in 2021 to be able to meet demand at the right time as the market improves and then that will be.
More focused more modern more hydrated fleet, we have not had to take some of the loss, making long term contracts our competitors have.
But instead, they're able to concentrate on shorter term contracts with first class customers, leaving us with Optionality to drive the rates up in 2022 and 2023.
With just one announcement.
A company with a similar disciplined and best in class philosophy as we've created at Tidewater.
Brilliant people and opinion fleet of modern vessels and as Quintin mentioned with the combination of our two fleets, we will shape and I'll just I'll just be operating well today.
It is the combination of the types of vessels, which is so important and that will allow us to drive revenue growth in 2022.
After close we will have over 80 large P&C and 11 200 ton plus acs's in the fleet and yes. The combination will enhance our competitive position greatly in both West Africa, and Asia Pac and then the market where customers are starting to pay for mobilization to get the right vessels in the right locations to the projects we.
Believe we'll be in the enviable position of having not just the largest OSV fleet on a truly global footprint, but most importantly, the right types of vessels to leverage OSV rates globally.
It's going to happen overnight, although with a $100 all it might move a bit quicker than any one thought.
This combined fleet is modern best in class for the market, but the combination of two marquee OSV operations also creates a clear first choice supply for our customers around the world.
And with that I'll now hand over to Simon to talk to the balance sheet and regions in greater detail.
Thank you Pierce and good morning, everyone. At this time I would like to take you through our financial results and discuss some key points that make up these results.
My discussion will focus primarily on a quarter to quarter results of the fourth quarter of 2021 compared to the third quarter of 2021.
As previously mentioned by Quentin, We recently announced the engineering of a definitive agreement to acquire Swire Pacific offshore.
I will also provide a bit more detail about the acquisition later on the call.
As noted on our press release filed this morning, we reported a net loss for the quarter of $37 9 million or 92 per share.
From an operational perspective, we once again showed steady signs of improvement quarter over quarter.
Our revenue for the fourth quarter of 2021 was $105 2 million. This was $12 8 million or approximately 14% increase from the third quarter of 2021.
The increase was driven mainly by capacity increase as we added six vessels are active.
Well count in the quarter.
In addition, we did see an increase in active utilization of 82, 4% compared to 81, 6% in the previous quarter. We also saw our average day rate increased 3% to 10583 per day in the fourth quarter from 10000 to 88 per day in the third quarter.
Overall gross margin for the quarter increased nicely to 32% up from 29% in Q3.
Vessel operating cost for the quarter was $71 2 million, an increase of $5 8 million from Q3.
The increase in overall cost is mainly due to operating six more vessels and the continued reactivation costs associated with these vessels.
Reactivation cost for the quarter was approximately $1 3 million.
In the fourth quarter of 2021, we recorded a $13 5 million impairment charge as we moved five vessels into our asset held for sale category.
And we moved one vessel from the asset held for sale sale category back to the active fleet.
We also incurred an affiliate credit loss impairment of $1 4 million related to our Angolan JV.
We did not sell a vessel in the quarter.
For the year, we have sold 19 vessels and other assets for net proceeds of $34 million and recorded a net loss of $2 9 million on the sale of these assets.
Our operating loss of $27 million for the quarter increased by $5 4 million from Q3, due mainly to the increase in the impairment expense and higher operating costs offset somewhat by the increase in revenue.
Yeah any costs for the quarter was $17 6 million a decrease of 400000 from Q3 due mainly to lower professional fees.
Our annualized G&A expense for the third quarter was 71.
However, certain charges for the quarter are considered onetime charges.
In Q4, we incurred 500000 in professional fees related to the Florida Pacific offshore combination.
For the year of 2021, we incurred approximately $2 million of professional fees related to the combination.
Taking these charges affect our G&A cost for $2021 $66 6 million against the target set at the beginning of the year of $68 million.
At this time I would like to provide some information as it relates to this wire Pacific offshore combination and what the expectations are now that we have signed a definitive agreement.
We expect the closing to occur in the second quarter of 2022, we have already done a lot of work through the diligence process to understand the structure of the company.
We will immediately begin to fine tune our initial results.
Achieving the $45 million of synergies principally the G&A synergies of 20 million noted on investor presentation will be important.
So these next few weeks will be a crucial time as we prepare to begin the integration once the acquisition is complete.
I see this process mirroring the same process, we went through in the Gulf Mark and Tidewater margin merger.
You may recall that the combined G&A run rate for both companies was $143 million at the closing of that transaction.
After the first year of the cost was below a $100 million.
Our current goal is to achieve $20 million in G&A synergies, which would be significant considering we anticipate the combined G&A run rate will be slightly over $100 million in closing.
I do see us, adding G&A cost in southeast Asia as we currently have no infrastructure to support this area.
Areas, where there is overlap in the middle East and Africa is where the opportunity will be to maximize synergies.
We are confident that we will achieve similar results as in our previous combination.
Also as is the case and all combinations, there's a cost associated with them through December 31, 2021 as mentioned previously we have spent $2 million in professional fees I see another $4 million in cost to complete the transaction.
In addition, we could spend another $8 million to $10 million to achieve noted synergies.
This will include items, such as severance costs lease termination costs stay bonuses and integration performance bonuses.
In the third quarter, we incurred $9 9 million of deferred drydock cost compared to $10 6 million in Q3.
Q4 was a heavy drydock quarter with 244 Drydock days.
Some of the Drydocks, we had scheduled in the first half of the year are not now materializing and as we continue to reactivate vessels, we see 2020 to be another heavy year.
We incurred $27 3 million in dry dock costs for the full year 2021.
We anticipate full year 2022, drydock cost to be approximately $51 million.
In the quarter, we also incurred about $6 4 million in capital expenditures related to the purchase of the battery pack for one of our vessels in a down payment of two tugboats being built for our Angolan operation full year spending for 2000 22021 was $9 million.
Free cash flow was positive once again this quarter as we achieved $2 9 million of free cash flow continuing a positive trend of achievement.
Free cash flow, even though positive was lower than prior quarters due primarily to the hydraulic drydock activity.
And in the quarter there were no proceeds from asset sales free cash flow for the last 12 months was $52 million, which is a remarkable achievement considering the challenges that we're faced throughout the year.
We expect to continue to generate positive free cash flow in the future, However, reactivation and dry dock costs were impacted over the upcoming next two quarters.
On previous calls we've talked a lot about collection challenges related to Pemex I am pleased to say that there are balance decreased from $16 million at the beginning of the quarter to $8 million at December 31.
This is the lowest balance we've seen in quite some time. Our dialog will then we will continue to remain open to ensure the balance can be kept at these levels going forward.
In Q4, 2019, we began reclassifying vessels on our balance sheet from property and equipment to assets held for sale.
At that time, we reclassified 46 vessels in 2020, we added another 30 vessels and we sold 53, leaving a balance of 23 at the end of 2020.
During the first three quarters of 2021, we sold nine vessels added two vessel sit a category and reactivated two vessels and transfer them back to the active fleet.
In Q4, we added five vessels to the category and reactivated and transferred one vessel back to the vessel fleet, leaving us with 18 vessels held for sale.
The book value for these vessels was $14 4 million at December 31, 2021.
Yeah.
On November 16th.
'twenty, one we completed an offering of $175 million aggregate principal amount of the 2026 notes.
The bonds were privately placed at an issue price of 98, 5%. We used the net proceeds from the offering to redeem the 8% senior notes due in 2022.
The discharge electrons offshore debt and for general corporate purposes.
Including fees and expenses related to the foregoing actions and recognized.
$11 1 million loss on debt extinguishment, resulting from cost and expense incurred in connection with this transaction.
On November 16, 2021, we entered into a super senior revolving credit facility agreement with Dnb Bank.
The credit facility agreement takes precedence over all other debt if and when drawn the credit facility agreement matures on November 16th 2026, and provides 25 million for general working capital purposes.
All amounts owed under the credit facility agreement is secured by the same collateral secures deployed in 'twenty six notes and such collateral is to be shared in accordance with their priorities established an inter creditor agreement now.
No amounts have been drawn on this credit facility.
Also on November 16, 2021, we also entered into an aftermarket sales agreement.
To which we may offer and sell shares from time to time of our common stock par value of 0.001 for sure having an aggregate offering price of up to $30 million.
We set up these financing transactions to be cash flow neutral and at December 31, 2021, we had $154 3 million of cash on hand, including $4 million of long term restricted cash and total liquidity of $179 3 million.
You may recall that in the third quarter, we did reclassify on our balance sheet, our senior secured notes from non current to current as the notes mature in August 2022.
This was a temporary accounting reclassify the funding of our new senior notes do not occur prior to us filing the third quarter Form 10-Q .
Since the offering was completed in November and re class has been reverse reflecting the senior note balance back in long term debt.
I would now like to focus on the performance of the regions.
Our Americas region reported an operating loss of $2 9 million for the quarter compared to an operating loss of $1 8 million in Q3 2021.
<unk> reported revenue of $27 9 million in Q4 compared to $24 6 million in Q3.
Yeah operated 26 vessels in the quarter, which was an increase of one from Q3.
Active utilization for the quarter was 80%, which was unchanged from the prior quarter.
Day rates also increased to 14603.
From 13740 day 742 per day in Q3.
The increase in operating loss was due primarily to the increase in operating costs related to higher crude costs and operating supplies as vessels were reactivated in the period and vessels did not begin their contracts until early 2022.
We also accrued for illegal for claim related to prior years custom charges in Brazil.
Our Middle East Asia Pacific area reported operating income of $1 1 million compared to operating income of 713000 in Q3.
The area of reported revenue of $26 9 million in the current quarter, which was an increase of $1 2 million quarter over quarter.
The area operated 37 vessels was which was also the same as Q3 active utilization that increase by approximately five percentage points.
92% in the quarter compared to 87 three in Q3.
I ever day rates remain constant at 8580 per day.
In Q4 compared to 8623 per day in Q3.
The increase in operating income is due to higher revenue, coupled with lower operating costs due to lower operating supplies and freight costs.
Our Europe , Europe , and Mediterranean region reported an operating loss of $4 million in Q4 compared to an operating loss of $2 9 million in Q3.
We saw revenue increase by 6% to $22 five compared to $21 2 million in Q3.
The area operated 23 vessels in the quarter, which was an increase of two vessels from Q3 and active utilization did decreased a bit.
To 88, 5% compared to 91% in Q3.
We did see a slight uptick in day rates 90, 811917 per day compared to 11008 890 per day from Q3.
The increase in operating loss for the quarter was mainly driven by the increase in operating costs due mainly to the reactivation and operation of two additional vessels in the quarter.
Our West Africa region reported an operating loss of $1 1 million in Q4 compared to an operating loss of $3 7 million in Q3.
The market in the area has improved throughout the year as we have seen revenue increase steadily every quarter this year rather.
Revenue for Q4 was $23 2 million compared to $20 2 million in Q3.
The area operated three more vessels in Q4 in active utilization remained flat at 71, 4% in Q4 compared to 71, 3% in Q3.
Day rates increased 6% to 9052 per day in Q4 from 8562 per day in Q3.
The decrease in operating loss from Q3 resulted mainly from the increase in revenue offset somewhat by the increase in operating costs due to the reactivation and operation of three additional vessels in the quarter.
We're glad to see quarter over quarter improvement in results for the region.
Also subsequent to year end, we purchased our partner partners, 51% interest in <unk>, our joint venture in Angolan approaches was for $11 2 million.
Which will allow us.
Two full control of the business operations in that area.
In summary.
We're encouraged to see increase in revenue day rates and utilization.
We are encouraged to see the continued positive signs in market activities.
We reactivated 20 vessels in 2021, which did have an impact in our operation results and soon we will begin to see the full benefit of those reactivation as revenue will continue to grow and operating costs stabilize to a normal level.
Reactivation will continue in 2022, so we will continue to see some additional cost run through the P&L, but this as positive as each reactivation are being done on vessels where contracts have been secured.
We remain very encouraged with all the positive signs to look forward.
Look for this to continue in 2022 and beyond.
The Swire Pacific offshore acquisition will prove to be an important grilling.
We're here to grow and the value of the company. Its wire brings a great team high quality fleet and a strong commercial position in key markets.
Very excited and eager to work together and create an exciting and world leading OSV company.
Shortly you will see a form 8-K filed for the sign share purchase agreement.
On the date of the completion of the acquisition, we will file a form 8-K, including general information related to the close.
We then have 75 days to file a form 8-K, a will include historical target financial statements and pro forma financial information.
Our intent is to file a registration statement for the issued warrants as soon as practical after the acquisition. So this information will be included in that filing.
With that I will now turn it back over to Clint.
Thank you Sam.
Our objective is to generate continuously increasing free cash flow by positioning our vessels geographically to obtain the highest possible day rates operate them at the most optimal operating cost per vessel.
And to do this at the lowest G&A cost per vessel, we're doing this while carefully minding the capital expenditure and working capital investments.
These objectives are simply stated, but achieving them requires innovative technology and trial change management.
And strong financial discipline.
The company's free cash flow positive and our objectives and compensation plans are all geared to increasing free cash flow.
And with that Alex we will open it up for questions.
Thank you we will now begin the Q&A if you'd like to ask a question you can press star one on your telephone keypad.
You'd like to withdraw your question you compress start too.
Please show your Unmetered likely when asking your question.
Yeah.
Okay. As a reminder, if you'd like to ask a question star one on the telephone keypad.
Okay. We currently have no questions. So I'll hand, it back to quintin for any closing remarks.
Wonderful. Thank you Alex everyone. Thank you for the impromptu conference call. We appreciate.
If you are listening in if you have any questions. Please reach out to myself Sam or west.
With any take care see you.
You would make goodbye.
Yeah.
Thank you all for joining you may now disconnect.
Yeah.
Uh huh.
[music].
Yes.