Clarksons Platou Securities is backing the OSV and rig sectors to pick up in 2019 as demand rises.
"2019 should mark the third straight year of rising project sanctions and commitments of capital, which should contribute to rising demand for rigs and offshore vessels, we argue," it said.
"With demand heading up and supply growth moving negative for rigs and OSVs, the overall market balance for offshore service sectors looks to improve in 2019."
Dayrates have already risen, especially for the units with the highest specifications, it said.
Clarksons Platou is expecting modest pricing gains from 2018 to extend in 2019 and potentially gain pace during the second half of 2019 as market balances tighten.
"After a tough end to 2018, risk-reward in offshore oil services stocks looks attractively skewed we argue with reset valuations and earnings that should broadly lift-off in 2020 on the back of higher offshore activity," it said.
Its top picks include rig company Transocean and US offshore shipping giant Tidewater.
Clarksons Platou argues that the industry is simply not investing in enough new supply to replace existing production.
"In fact, only one out of each three barrels produced offshore has been replaced on average in the last three years," it said.
"For 2018 the figures are somewhat better, but still below 50% of offshore production replaced by new investments, but significant further increases may be needed to avoid a potential supply shock in the mid-2020s."
