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| EMAS' Lewek Constellation. Photo from EMAS Chiyoda Subsea. |
EMAS Chiyoda's bankruptcy announcement in late February is the latest in a long line of vessel contractors to fall victim to the downturn since January 2015, says analyst firm Douglas Westwood (DW).
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. In other cases, internal restructuring measures (e.g. Siem Offshore, Boa Offshore, Deepocean, etc.) were/have been in order.
DW says that while current indicators of subsea activity (e.g. subsea tree orders) remain weak, industry sentiment is improving, with oil prices approximately 76% higher this February relative to the average WTI (West Texas Intermediate) 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. 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.
The downturn has hit more segments than just vessel contractors. Find out the latest on the offshore rig market in OE's March issue, out now.
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