Hi Darren. Sometimes closing up shop isn't the worst outcome....

Hi Darren.

Sometimes closing up shop isn't the worst outcome.

The more I look at the OSV sector the more I see what has really happened.

What happened last time the oil price went up was that orders on Offshore Vessels went through the roof.
As as example of this Hornbeck Offshore (who previously as previously mentioned have 46 or 47 their newer boats stacked, and just 17 of their boats working), still are building more boats! Boat deliveries are due to run well into 2017.

For example, from what I can see the SE Asia business can make good money. Low opex and in the good times big margins. MRM obviously fell for this temptation, as did many many other operators, and this perhaps is why there are around 100 OSVs cold stacked in Batam and apparently over 200 cold stacked in Malaysia. Lots of people wanted to make their fortune, it became a crowd.

Oversupply is now so bad in one article I've read it suggested that the oversupply of OSVs is globally so high that we may not see another ship building cycle for another 15 years!

In previous cycles we saw a correlation between the oil price and the OSV market. It makes sense at first glance. What happened however in 2012, 2013 and 2014 in particular was the OSV operators had mega expansion in mind, fed by greed, cheap debt, and satisfaction of shareholder growth demands. We now see massive oversupply in this industry that will overhang for years.

MRM I believe will need to face up to this when they prepare the financial accounts this year, I believe a large impairment of assets will be required, challenging the balance sheet greatly.

As such as well as SP adjustments, I think all loyal MRM holders might need to put some cash aside, to participate in the capital raising, to avoid big time dilution..

It will be a big dilution given the market cap to debt ratios.. (And we are pre impairment now)...