The offshore support vessel market accounts for almost $30 billion in revenues each year. These boats transport various goods, food, and employees to the field from the shore. There are multiple categories that involve different levels of technology that help numerous industries, including oil and gas, sub-sea exploration, and general shipping, to accomplish their overall goals.
AHTS vessels (Anchor Handling Towing Supply) account for over 50% of the global offshore support vessels which currently operate.
The industry tends to suffer financial impacts based on the value of crude oil on the global market. When the prices crashed between 2013-2016, then rig capacities declined. Shipping traffic went down dramatically. This combination of factors caused the offshore support vessel industry to experience its worst 36-month period in history.
Up to 30% of the platforms once served by this industry are now non-producing entities requiring decommissioning. With similar activities expected in other sections too, there may still be difficulties on the horizon for this industry.
Important Offshore Support Vessel Industry Statistics
#1. About 70% of the current market supply for offshore vessels is in the hands of about 400 operators, each averaging about 6 vessels per active firm. Bourbon is the agency with the largest fleet, with 185 ships accounting for 5.2% of the industry. Tidewater Marine operates a fleet of 173 ships, while ECO has 166 that they control. (Alix Partners)
#2. 34 of 38 offshore support vessel firms were found to have an Altman Z-score analysis of less than 1.8 in the 12-month period ending March 2018, indicating a high likelihood for bankruptcy within a majority of the active firms unless substantial steps are taken to rectify their financial situation. (Alix Partners)
#3. The global offshore support vessel fleet has risen from 3,031 vessels in 2012 to 3,583 vessels as of July 2018, despite the fact that the active rigs being supported by the industry have fallen from a peak of 706 in 2014 to 474 in 2018. (Clarksons Offshore Intelligence Network)
#4. About 26% of the offshore support vessel fleet is at least 15 years old. Around 14% of the fleet, or around 500 vessels, is more than 25 years old. Although recent building trends have helped the average age of a vessel to decline dramatically, there are still several operators working with outdated equipment. There is even an active vessel which was built in 1965 within the industry. (Clarksons Offshore Intelligence Network)
#5. The fleet in the Asia-Pacific market is the largest in the world today, with 916 vessels currently active. That represents 26% of the total global fleet. The Middle East comes in second as a region, with 19% of the global fleet. North America is currently third, with 16% of the global fleet. (Clarksons Offshore Intelligence Network)
#6. North America is the most oversupplied region for the offshore support vessel fleet, running at a 48% capacity as of 2018. West Africa and the Asia-Pacific region both operate at 55% capacity levels respectively. The Middle East is the most efficient segment, operating at a 70% capacity level. (Clarksons Offshore Intelligence Network)
#7. There are currently 30 vessel subtypes which currently work with the offshore support industry, with the number of new deliveries averaging about 60 per year. (SEA Europe)
#8. Deepwater day rates sunk to record lows of $7,000 for services offered in the Gulf of Mexico in 2018, with utilization rates hovering at an average of 25%. Since the largest operating vessels in the fleet can cost $10,000 per day to run, most boat owners for the industry have been bleeding cash for up to 12 months just to stay in business. (Offshore Magazine)
#9. 39% of the U.S. Gulf share of the offshore vessel industry is controlled by Edison Chouest, followed by Harvey Gulf International Marine at 16% and Hornbeck at 15%. (Offshore Magazine)
#10. Vessel owners operating out of the U.S. Gulf require term contracts on an order of six months to justify that regulatory docking surveys which can cost up to $2 million. (Offshore Magazine)
Offshore Support Vessel Industry Trends and Analysis
Profitability and debt are fast approaching unsustainable levels for the offshore support and vessel industry. The EBITDA margin dropped to just 11% in 2017, far from the 29% achieved in 2014. Active rig numbers are down 33% from 2014 figures as well, which day rates currently 40% lower than what they were for the industry at the same time.
The current global offshore support vessel industry appears to be oversupplied by at least 1,150 vessels. The average offshore rig requires an average of 4.5 working vessels to support it. Only 175 demolitions are scheduled for 2019 to reduce industry numbers, while over 200 new vessels are currently on the orderbook through 2020.
At the time of this writing, the only option the industry has to avert a severe loss in the coming years once again is a rebound in oil prices, followed by stability in the $80 to $90 per barrel range for crude oil. The only problem is that oil has traded at 50% of this needed rate in recent days. As of January 2019, the price of Brent Crude stood at $60.48.
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