Houston-based Tidewater Inc. (NYSE: TDW), owner and operators of the world’s largest fleet of offshore support vessels, says this year has marked an inflection point for the industry as a key metrics point to better times ahead.
Tidewater this week announced its second quarter and first half financials showing revenue at $163.4 million and $269.2 million, respectively, compared with $90 million and $173.5 million, respectively, in 2021. Net losses came in at $25.6 million and $37.7 million, also an improvement from last year.
But despite the red ink, things are looking better for the offshore support vessel sector as momentum builds on the back of rising oil prices. Average day date rates in the second quarter increased to $12,544, up 17% from Q1 and are now at their highest levels since Q3 2016.
Global fleet utilization also increased significantly year on year in the second quarter, from 57.0% to 75.5%, while the active number of vessels in Tidewater’s fleet increased from 118 to 172, inclusive of 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, tugboats and maintenance vessels.
The results are the latest addition to growing sentiment that the offshore oil and gas market is finally turning around after 8 years of pain.
“We believe the second quarter of 2022 marks the inflection point in the industry that we have long awaited and is now evident in our financial performance,” said Quintin Kneen, Tidewater’s President and CEO. “Revenue, gross margin, average day rate and utilization all improved meaningfully during the second quarter as the building momentum in offshore vessel activity reached critical mass.”
While Kneen notes that the second quarter results do reflect the impact of Tidewater’s Swire Pacific Offshore (SPO) acquisition, some key metrics reveal “the improvement is clear.”
“The average day rate improved by nearly $1,900 per day sequentially, which is in excess of the improvement we would typically expect to realize over the course of an entire year in a normal market upcycle,” said Kneen. “Vessel level cash margin improved to 38%, up approximately four percentage points and continuing to meaningfully outperform the 30% target we have discussed in recent quarters. These improvements during the quarter, particularly the move in day rates, speak to continued demand growth as offshore activity continues to increase and as the vessel supply fundamentals continue to work in our favor given the shortage of available vessels on the market today.”
Looking ahead… “We expect activity to continue to improve throughout the remainder of 2022 with another likely step-up in 2023,” said Kneen.