Tidewater confirms ‘inflection point’ in offshore support vessel market
Houston-based Tidewater Inc. (NYSE:TDW), owner and operator of the world’s largest fleet of offshore support vessels, says this year has marked an inflection point for the industry as key metrics indicate better times to come.
Tidewater this week reported second-quarter and first-half financial results showing revenue of $163.4 million and $269.2 million, respectively, compared to $90 million and $173.5 million, respectively. in 2021. Net losses were $25.6 million and $37.7 million, also an improvement over last year.
But despite the red ink, things are looking up for the offshore support vessel sector as momentum builds on the back of rising oil prices. Average daily rates in the second quarter rose to $12,544, up 17% from the first quarter and are now at their highest level since the third quarter of 2016.
Global fleet utilization also increased significantly year-over-year in the second quarter, from 57.0% to 75.5%, while the active number of vessels in the Tidewater fleet is increased from 118 to 172, including its acquisition of Swire Pacific Offshore. The acquisition, which closed in April, brought Tidewater’s fleet to 203 total vessels, including 174 OSVs plus crew boats, tugs and maintenance vessels.
The results are the latest to add to the growing sentiment that the offshore oil and gas market is finally recovering after 8 years of suffering.
“We believe the second quarter of 2022 marks the inflection point in the industry that we have long anticipated and which is now reflected in our financial performance,” said Quintin Kneen, President and CEO of Tidewater. “Revenue, gross margin, average daily rate and utilization all improved significantly during the second quarter as the build momentum of the offshore vessel business reached critical mass.”
Although Kneen notes that the second quarter results reflect the impact of the acquisition of Swire Pacific Offshore (SPO) by Tidewater, certain key indicators reveal that “the improvement is clear”.
“The average daily rate has improved by almost $1,900 per day sequentially, which exceeds the improvement that we would typically expect to see over an entire year in a normal market cycle,” he said. said Kneen. “Vessel level cash margin improved to 38%, up about four percentage points and continues to significantly exceed the 30% target we have been discussing for the past few quarters. These improvements during the quarter, in particular the change in daily rates, demonstrate continued growth in demand as offshore activity continues to increase and vessel supply fundamentals continue to play into our favor given the shortage of ships available on the market today.
Looking ahead… “We expect activity to continue to improve through 2022 with further acceleration likely in 2023,” Kneen said.