Oil industry vessel provider Gulf Marine Services (GMS) gains 8.4% to 111.6p as it announces a four year charter for one of its Large Class Vessels with an unnamed national oil company in the Middle East.
The contract commences at the end of the first quarter and the day rate is consistent with that previously indicated for this class of vessel in the region. Taken together with the other contracts in place as at 1 January gives a secured order book of some $739 million - roughly equivalent to forecast revenues for 2015.
The news goes some way to demonstrating that the group's business - renting out its fleet of self-propelled self-elevating support vessels (SESV) - should be resilient despite lower oil prices. Around 80% of its work is sourced from operational expenditure which is far less vulnerable to cuts than big capital expenditure projects.
As we have discussed the company has been a victim of weak sentiment towards the wider oil services sector but it commands significant margins and is engaged in a $400 billion new build programme which, if executed on, should deliver significant growth.
Canaccord Genuity reiterates its buy recommendation and 160p price target and comments: 'This provides GMS with strong visibility on future earnings - 2015 consensus analyst revenue expectations are essentially covered.
'The group's entire fleet of SESVs is currently chartered. Good news and underpins a robust investment case.'
