Through its acquisition of SPO, Tidewater has added large, modern PSVs such as Pacific Legend (source: Alan Jamieson)
With the offshore oil recovery strengthening and Tidewater’s acquisition of Swire Pacific Offshore (SPO) complete, the offshore support vessel (OSV) owner’s chief executive has a bullish outlook on the market
Calling his company the “undisputed industry leader” following its acquisition SPO, Tidewater president and chief executive Quintin Kneen feels the Houston-based owner is “uniquely positioned to capitalise on what is looking to be a truly transformational period for vessel activity and day rate improvements.”
With day rates and vessel utilisation rates rising, it is hard to argue with Mr Kneen’s optimism. Tidewater’s global average utilisation for its total fleet jumped from 53% to 71% and average day rates from US$9,993 to US$10,687 year-on-year for the three-month period ending 31 March.
Big Board-listed Tidewater has acted as an industry consolidator and shed old tonnage. Through its acquisition of SPO, it has enhanced its fleet with 50 relatively young OSVs, while expanding its global footprint, including enhancing its position in West Africa, which “is just beginning to recover from the pandemic and which is likely to be a substantial beneficiary of the world’s search for hydrocarbons outside of Russia,” said Mr Kneen.
Revenue in West Africa rose 69% year-on-year, Mr Kneen told investors in detailing Tidewater’s Q1 2022 results. Prospects for platform supply vessels (PSVs) and anchor handling tug supply vessels in the region are brightening, with more drilling rigs being marketed and contracted. In early May 2022, IHS Markit reported marketed supply of offshore drilling rigs stood at 32, with 26 contracted, translating to an 81% marketed utilisation. This is compared with a marketed supply of 29 offshore rigs and 18 contracted for a 62% utilisation for the same period last year.
“Vessel margin in West Africa in Q1 2021 was 12%, so vessel margin is up 29 percentage points year-over-year,” explained Mr Kneen. “This market is recovering nicely. Active vessels increased to 42 from 39 in the prior quarter. We’re adding approximately 25 vessels to this region through the acquisition of the Swire fleet, essentially doubling our fleet count in the region.”
The persistent OSV tonnage overhang that has plagued the market since the oil downturn in 2014 is easing, and no new OSVs have been ordered in 2022, according to VesselsValue data.
The lack of newbuilds entering the market and ageing out of others in the global fleet has resulted in returning balance to the market, so much so that “the availability of high-quality PSVs has declined substantially over the past eight years such that only approximately 30 to remain to be reactivated worldwide,” said Mr Kneen.
PSVs now represent 63% of Tidewater’s fleet, 79% of which are larger, with 700 m2 of clear deck space, said Tidewater vice president of sales and marketing Piers Middleton.
“To put that into a global context, this class vessel where we believe the supply-demand balance is almost in parity with a current active fleet of circa 770 vessels, and with only an additional 108 vessels still stacked of which 68% have already been stacked for over five years /or are over 20 years old,” said Mr Middleton.
As a result, the global OSV market in Q1 2022 is “tight,” Mr Kneen said, noting, “We’ve reached near equilibrium in supply and demand balance for the larger PSVs.”
Concluded Mr Kneen, “We remain confident the second half of 2022 will represent a meaningful uplift in vessel demand with 2023, representing yet another leg up.” That has to be music to the ears of OSV owners that have been waiting for a meaningful recovery since 2014.
