The announcement on the 28th February of Emas Chiyoda’s bankruptcy is the latest in a long line of vessel contractors to fall victim to the downturn since January 2015, according to Douglas-Westwood’s latest DW Monday report.
Multiple companies such as Cal Dive, Ceona, Cecon, Hercules Offshore, Harkand and Swiber have entered into administration, taking a significant number of vessels out of the active fleet, Douglas-Westwood continued.
In other cases, internal restructuring measures (e.g. Siem Offshore, Boa Offshore, Deepocean etc.) were/have been in order. Whilst current indicators of subsea activity (e.g. subsea tree orders) remain weak, DW said the industry sentiment is improving, with oil prices approximately 76% higher this February relative to the average WTI recorded in February 2016.
With a market equilibrium and a recovery in sight, 2017 represents an opportune time for substantial industry consolidation and opportunistic vessel acquisitions to support long-term business strategy objectives. For example, McDermott’s recent acquisition of the newbuild ‘Ceona Amazon’ at a significant 77% discount to the reported build cost, will serve to strengthen and rejuvenate its subsea fleet, putting the company one step closer to their ultra-deepwater expansion strategy.
The recent downturn has been one of the most trying times in the history of the subsea industry, DW claimed. However, the removal of non-competitive low-spec vessels and strategic moves by vessel contractors to acquire high-spec vessels at discount rates, will find themselves well positioned to capitalize as the market continues to stabilize.