Tidewater's Strong Q4 Results: A Deep Dive into the Offshore Support Vessel Market

Tidewater Inc. (NYSE: TDW) has announced its Q4 and full-year 2024 earnings release for Thursday, February 27, 2025, after market close. The company will host an earnings conference call on Friday, February 28, 2025, at 8:00 a.m. Central Time, featuring President and CEO Quintin Kneen discussing the quarterly results. Investors can join via telephone at +1.800.715.9871 (US/Canada) or +1.647.932.3411 (international) using Conference ID: 5089610. A live webcast and replay will be available on Tidewater's investor relations website.

Tidewater's strong Q4 results reflect the robust demand for offshore support vessels (OSVs) in the deepwater oil and shallow water gas development projects. The company's fleet utilization and day rates have been on an upward trend, driven by the high demand and limited supply of vessels in the market. Fadi Diab, Tidewater's managing director for the Middle East, Africa, and India, highlights the key trends shaping the OSV market:

1. Rising demand from deepwater oil projects: Deepwater oil projects are driving the OSV market, with utilization expected to remain high for most of this decade. Energy companies are planning huge investments in oil developments in water depths beyond 1,000 meters in basins around South America, west Africa, and northern Europe, which will require a significant number of OSVs to support drilling rigs and energy production centers.
2. Shortage of vessel availability: There is a shortage of supply in the global OSV fleet, which is causing utilization and day rates to remain high. Tidewater's Diab believes that very few of the hundreds of laid-up OSVs will be reactivated, even if charter rates keep climbing, and few owners will be able to order many newbuilds due to high newbuilding costs, shortages of shipyards and newbuilding slots, and an unwillingness by banks to finance these projects without long-term guarantees for returns on their investments.
3. High day rates: Tidewater's average day rate across its fleet increased to $18,066 per day in the fourth quarter of 2023, which was $201 higher than in the third quarter of 2023. The company's composite leading edge term contract day rate stood at $29,511, which was $902 higher than the third quarter of 2023. This reflects the strong demand and high utilization rates in the OSV market.

Tidewater's strong Q4 results and the positive outlook for the OSV market indicate that the company is well-positioned to capitalize on the high demand and limited supply of vessels. As the offshore industry increasingly focuses on reducing its environmental impact, there is growing interest in OSVs equipped with energy storage systems, dual-fuel engines, or fuel cells for using alternative fuels. This is driving demand for OSVs with lower emissions and higher efficiency.

In conclusion, Tidewater's Q4 earnings release and conference call provide valuable insights into the offshore support vessel market and the company's strong performance. The high demand for OSVs, driven by deepwater oil projects, and the limited supply of vessels are key factors influencing Tidewater's operating margins and cash flow generation. As the industry continues to evolve, Tidewater is well-positioned to capitalize on the strong market conditions and maintain high utilization rates.