HANSA 06-2019

Offshore
Slower recovery seen for OSVs
The tonnage oversupply continues to plague the market for Offshore Supply Vessels despite
an increased exploration and production activity in the oil market, reports Patrick Lee
Profits continue to elude OSV operators
even though oil prices have recovered
to around 70 $ per barrel, and
this is mainly due to a supply-demand
balance. Rystad Energy partner and head
of consulting (Asia-Pacific) Jon Frederik
Muller, recently painted an optimistic
picture for oil prices, stating that reduced
output in OPEC members helped oil prices
to recover. Muller also noted during
an industry event in Singapore that increased
scrapping of drilling rigs had enabled
charter rates and utilization to improve.
It has been estimated that 40%
of the global OSV fleet has been
laid-up, while utilization of the
active fleet is around 60%.
And oil majors are facing pressure from
investors and shareholders to produce as
much oil as possible in order to pay dividends,
Pareto Securities Asia’s managing
partner Erik Stromso added: »Investors
are investing billions of dollars in these
companies on a monthly basis and they
want that money to go to work. Now, oil
companies are more pressured to focus
on how much oil they can produce in the
next three years to pay dividends.«
Swire Pacific Offshore’s general manager
Florent Kirchhoff at Marine Money
Singapore Offshore Finance Forum
However, Swire Pacific Offshore’s general
manager, Florent Kirchhoff, told delegates
that the increased exploration and
production activity has not translated
into profits for OSV owners yet.
OSV owners stated that 2018 was another
consecutive year of declining revenue
for offshore marine contractors despite
the stabilisation of crude oil prices
and uptick in number of sanctioned upstream
projects. Kirchhoff said: »Definitely,
we can see there’s more activity
around the market. The big question
is whether this is seasonal or structural.
There’s still too much tonnage in the
© Lee
VesselsValue’s Singapore head Charlie
Hockless at Marine Money Singapore
Offshore Finance Forum
market and how fast the market will recover,
is going to be interesting.«
Consolidation has also not been a priority
for the OSV sector, unlike the rig
segment, which has seen the mergers of
Ensco and Rowan, as well as Atlantica
and Energy Drilling in recent months.
VesselsValue’s Singapore head, Charlie
Hockless, said that fleet valuations would
drive consolidation, using the 1.25 bill. $
merger of US OSV players Tidewater and
GulfMark as a case study.
At the time of their merger in January
2019, Tidewater’s OSV fleet, comprising
around 100 platform supply vessels
(PSV) and 75 anchor handling tug supply
(AHTS) units, was valued at just under
900 mill. $, while GulfMark’s fleet, comprising
around 50 PSVs and 60 AHTS
units, was valued at around 285 mill.
The merger resulted in a combined fleet
of around 150 PSVs and 135 AHTS units
valued at over 1 bill. $.
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Tidewater is top owner
Hockless said: »Tidewater is now the top
owner in terms of size. Here, we can also
see the importance of high-value tonnage
in particular operating areas, with the
value of Tidewater’s fleet exceeding that
of Bourbon and Edison Chouest, which
have around the same number of vessels.
Successful operators such as Solstad
74 HANSA International Maritime Journal 06 | 2019