More merger and consolidation activity is likely in 2019 in the offshore support vessel (OSV) sector, Clarksons Platou Securities believes.
Following the combination with GulfMark last year, US giant Tidewater "may have a taste for further deals as long as they are paid with equity and justifiable from a relative valuation perspective," said Clarksons Platou's managing director of equity and credit research, Turner Holm, in his preview of the year.
He reiterated his view that Norwegian PSV investor SD Standard Drilling could see a sale as the best way to realise value, as it trades at "such a deep discount" to net asset value.
The Scorpio group moved in at Nordic American Offshore at the end of last year and could look to expand its scale with fresh capital, Holm said.
Then there is another US owner, Seacor Marine, which could remain active this year, and Harvey Gulf, fresh from the disappointment of losing out on the GulfMark merger.
Clarksons Platou speculated that a tie-up with Hornbeck Offshore Services might be a possibility.
Hornbeck has a $100m bond maturity in October 2019 and $367m due in April 2020, it said.
Outlook unclear
Holm views 2019 prospects as unclear for share prices, but said "much risk has been taken out of stocks and valuations are at very low levels relative to second-hand asset prices.
"2018 share performance was strong until October when equities crashed. All OSV stocks ended negative for the year," he added.
"Given low pricing levels, in our view one does not need to believe in a rapid offshore recovery to view shares as attractive."
The company believes higher activity should continue to translate into higher OSV rates, as seen in 2018, especially for high-end vessels.
Offshore rig count has been rising about 5% year-on-year, it said, and supply growth is no longer an issue as OSV fleet growth nears record-lows and is approaching zero on a net basis, it said.
Holm added: "The largest vessels are the first to gain work on improving demand and will likely continue to benefit from any incremental demand expansion.
"Smaller and older vessels continue to struggle with low utilisation and rates near opex in most regions, and may continue to see weak rates into 2019 as utilisation remains at deeply depressed levels."
