The environment across the Oil & Gas industry remains challenging, to say the least, with impacts felt by our customers and suppliers alike. 2017 was the year we continued our focus on operational excellence and progressive cost saving initiatives. SMG’s management continues to make the decisions necessary to protect margins at healthy levels, including sustained operational cost savings to generate a positive cash flow.
In 2017, we successfully operated a diverse fleet of 46 OSVs across the Middle East, South East Asia, Nigeria and Angola. Utilization rate was higher than 2016 at 79%, and 63 new contracts were secured throughout the year.
On the Ship building side, Grandweld completed and delivered 5 new vessels to clients. Those included 2 Tug Boats to Jana Marine, 2 Aluminum Crew Boats to Humaid Badir Shipping and 1 Aluminum Crew Boat to Wesal Shipping LLC.
The teams’ focus on HSE could not be more reflective in the performance results with zero LTIs over 13.8 million man hours worked. This is a significant accomplishment that highlights everyone’s commitment to safety and continued focus on HSE. With a large and modern fleet, professional management team and certified HSEQ management systems, Stanford Marine reaffirms its position as one of the world class providers in the industry. These results would not have been possible without the hard work of our teams, both onshore and offshore, whom I would like to thank and salute for their exceptional efforts and work ethic.
We are proud to continue making positive contributions to social issues such as education, health and wellness, economic development and environmental sustainability. Year on year, we continue to support centers and initiatives outside our company such as Al Noor Training Centre for Children with Special Needs, the Rashid Pediatric Therapy Centre, and The Angel Appeal. At SMG we believe that giving back to society makes us a more socially responsible organization.
What should we expect in 2018? Given the depressed charter rate in 2017 which is expected to remain at low levels in 2018, we are pinning hopes on sustained utilization levels above 80%. Oil prices are not expected to improve much, but we believe it will hover around $70/bbl. Despite the slow demand in the shipbuilding business, we still manage to secure building contracts for clients within the GCC. This is on the back of lower building costs complemented with the improved efficiency and know-how of Grandweld shipbuilding team. As for the ship repair it is expected to remain steady, as the utilization of OSV fleet in the region will improve hence the demand for dry docking will improve too.
I remain optimistic that we will pull through the year ahead, thanks to the dedicated individuals who strive to make it better each and every time. We continue to rely on the sustainable strength of our customer base and continued implementation of cost saving initiatives to deliver positive performance.
In summary, I would like to thank the SMG team for their continued support and hard work in 2017. I would also like to thank our shareholders for their ongoing guidance and cooperation during this challenging period.