Following its acquisition of Gulfmark in 2018, Tidewater will use its strong balance sheet, global footprint and continued scrapping programme of older vessels to right-size its fleet for the recovery, Tidewater president, chief executive and director John Rynd told delegates at the Offshore Support Journal Conference on 7 February.
“Six years into the down cycle, this business is far from being recovered,” said Mr Rynd.
“The offshore support vessel market is oversupplied. There are too many vessels chasing too little work,” he said. “We need the drillers to come back.”
Tidewater’s US$340M all-equity transaction to acquire Gulfmark after both companies emerged from bankruptcy, left the company with a well-positioned balance sheet to take advantage of a rising market, according to Mr Rynd.
The largest OSV owner, with a market cap of US$919M, Tidewater has a fleet of 264 vessels, 100 of which are stacked with an active fleet with an average age of 8.7 years.
Tidewater is going to be very judicious in its spending to “right size” its fleet, said Mr Rynd, and was not going to add assets “willy-nilly,” but only if it made sense either by individual acquisitions and M&A opportunities.
Last year Tidewater continued to rationalise its fleet, scrapping or selling 41 vessels and targeting another 40 vessels for sale or scrap this year.
One of the challenges for Tidewater is that it faces a heavy schedule of special surveys over the next two years, said Mr Rynd. Special and class renewal surveys are held every five years after the delivery of a vessel and become more expensive for older assets, depending on how well they are maintained. “This may be a catalyst for further fleet attrition,” said Mr Rynd. He estimated the cost of reactivation at US$1.5-US$2.5M per vessel depending on its condition.
“Let’s get rid of a liability and make it an asset,” said Mr Rynd.
Last year, Tidewater activated five vessels and, said Mr Rynd, has 24 other “Tier 1” vessels staged for reactivation as market conditions improve. The 24 vessels include platform supply vessels with clear deck areas of more than 700 m3 and AHTS vessels with bollard pulls of 80 tonnes or more. All of the vessels are DP2 class and less than 10 years old.