Era Profits On Asset Sales, Merger Fever Comes To Offshore

 - July 31, 2019, 12:24 PM

Merger fever is coming to the offshore helicopter oil patch, as companies appear to be looking toward consolidation as a survival strategy. Meanwhile, the financial red tide continues, with companies using asset disposal as the chief means to improve financial performance. Helicopter services company Era Group announced yesterday that it posted $4.9 million in net income for the second quarter, but the positive results were assisted from a one-time $10.9 million gain from the disposal of its 50 percent share in helicopter aftermarket component manufacturer Dart.

The improved results come after Era posted a net loss of $5.9 million in the first quarter and $10.4 million in the year-ago quarter. Nevertheless, there are hints that the commercial situation is improving for Era, which has extensive operations in the U.S. Gulf of Mexico. 

Second-quarter revenues increased to $55.5 million, a $4.2 million jump from the first quarter due to higher aircraft utilization rates and revenues from new dry leasing and emergency services contracts, but operating expenses concurrently increased by $2.1 million, the company said. Era recently signed new multi-year contracts with Gulf of Mexico deepwater customers Anadarko and Exxon Mobil and has 14 medium and heavy helicopters supporting those contracts.

It also announced a new emergency response contract in Suriname, supporting oil and gas operations there, and a contract with a commercial space company in the U.S. to support two full-time medium helicopters and two additional medium helicopters during manned missions.  

As of June 30, the company had $88 million in cash, $124 million in additional available revolving credit, and $81 million in unfunded capital commitments largely in form of orders for Leonardo helicopters—three AW189s (with 10 options) and five AW169s. Deliveries of the AW189s are scheduled to begin next year. Era said it “may terminate” those commitments. 

Era announced its results days after the Wall Street Journal reported last week that privately-held competitor CHC is continuing to accrue large operating losses amounting to $257 million in the last two years. CHC CEO Karl Fessenden also resigned last week and this morning CHC announced that it had retained super law firm Paul, Weiss “to explore merger and acquisition opportunities across the space.” Candidates for merger could include Era or competitors PHI and Bristow Group; the latter two filed for bankruptcy protection earlier this year. 

Earlier this year Era CEO Chris Bradshaw said the offshore helicopter industry was “not sustainable” in its current form and called for consolidation.