Nordic America Offshore says that a query from the US Securities and Exchange Commission (SEC) regarding how it assesses impairment charges is not an ongoing matter. 

The SEC query came in the wake of NAO's decision not to take any asset impairment charges in 2015 as the downturn in the offshore sector began in earnest. After the SEC sought further clarification on how NAO's assesses the value of its fleet, executive chairman Herbjorn Hansson responded personally to clarify the company's accounting policies.

In a June 2017 correspondence to NAO, the SEC said it completed the review of NAO's securities filings. Back in October 2016, the SEC requested additional information regarding its accounting policies for the impairment of long-lived assets. 

"The matter is closed. It is normal from time to time that a stock listed company has communication with SEC," NAO said in a statement.

 In its 2015 annual report, NAO said it was seeing a "significant decrease in charter revenues and utilisation" for its platform supply vessel (PSV) fleet. 

The SEC noted that these disclosures did not result in any impairment charges in the carrying value of the company's fleet. NAO said that any decline in vessel values could potentially result in a breach of debt covenants with lenders.

The SEC asked that the firm clarify the accounting treatment for making impairment decisions. NAO said it would include tables showing rate assumptions used in determining whether an asset was impaired. 

The agency asked for subsequent clarification regarding the rate assumptions NAO uses. In a February letter to the SEC, Hansson said the company's fleet had an excess value of future undiscounted cash flow of $250m. Furthermore, the current downturn would have to last until 2023 to affect the value of NAO's fleet due to its long remaining useful like. 

"Our assumptions are reasonable above all because of our long experience in the shipping (tankers) and offshore business which in several ways have identical features and has shown that historical rate pattern is the best indicator for the future rates," Hansson wrote. "We have no indications from our customers, nor available information from the market place, that indicates a structural change in demand for our PSVs."