Page 19: of Marine News Magazine (September 2018)
panies have been working on speci? c synergies related to ize as much value from the combination as possible. this combination since the merger discussions began ear-
The call for more consolidation of the OSV industry lier this year. We highlighted during the merger announce- has been heard for some time. Your proposed trans- ment that we are very con? dent in achieving $30 million action carries this trend to reality. How much more in cost synergies. Much of this is related to the rationaliza- consolidation is likely in the sector and if more is to tion of shore base support and corporate overhead. Our occur, would the new Tidewater consider other simi- teams are working on a detailed integration roadmap now, lar opportunities?
so we are prepared to put these plans into motion as ef? -
More consolidation is needed in the OSV sector, but our ciently as possible following the completion of the merger. view is that it’s likely to be limited in the near term due to the signi? cant leverage among the majority of vessel own-
Talk about your combined ? eet. You’ll start out with 275 ers. We have been fairly vocal about our intent to pursue vessels. How many are actually in service today, and
M&A for much of the past year, and that any transaction many are idle? Benchmark the ? eet against the com- had to 1) come with assets that would be accretive to the petition.
quality of our existing ? eet, 2) not signi? cantly re-lever our
Taking into account statistics reported for both compa- nies as of June 30, there are 173 vessels currently active, balance sheet and 3) preserve our currently strong liquid- ity position. The combination with GulfMark checks all and 98 stacked. The average age of the combined com- pany’s currently active pro forma ? eet will be one of the of these boxes. The transaction with GulfMark has been structured speci? cally to ensure that the combined com- youngest at about 9 years. Taking into account stacked ves- sels, some of which won’t return to service as we continue pany would be positioned for organic growth opportuni- the process of rationalization, the overall pro forma ? eet ties (through funding reactivations of currently idle equip- ment) and additional M&A. Until more companies work average age is approximately 10 years. through the process of restructuring their debt the oppor- tunities for additional acquisitions is fairly limited, but we
The US Energy Information Administration recently will continue “aggressive window shopping.” predicted that Brent crude oil spot prices will aver- age $73/bbl in the second half of 2018 and will av- erage $69/bbl in 2019. Is that enough to sustain an Some analysts have said that even when the price of offshore recovery of any magnitude? crude oil rebounds to a more positive level – some- thing it seems to be headed for at moment – that
In our view, which is consistent with that of our custom- there is so much tonnage laid up in the U.S. GoM that ers, commodity prices have been above the level required it might take as long as 24 months to bring it all out. to support investment offshore for some time. Coupled
That might keep rates depressed for a longer stretch. with the work the offshore service sector has done to re-
What are your thoughts on that scenario?
duce costs and improve ef? ciency, the environment would
It certainly would seem to be a likely scenario. We feel appear to be good for increased investment offshore. It is that the ability for currently-stacked vessels to return to really not a question as to whether an offshore recovery will work will depend quite a bit on the timing and level of de- take place, but when.
Dissimilar operating cultures can often be the big- gest obstacle to any successful merger. Both ? rms are Gulf Coast-based. That’s a good starting point.
How would you assess the similarities between Gulf-
Mark and Tidewater in this way?
The two companies do indeed have a lot in common.
Not only are we both Gulf Coast-based, but we also have substantial expertise operating internationally, with corpo- rate and local management experienced with the complex- ities of dealing with varied laws and regulations, as well as customer requirements. Maintaining this talent and exper- tise will be important, as well as ensuring that we leverage the best processes and systems from each company to real- www.marinelink.com MN 19
MN Sept18 Layout 18-31.indd 19 MN Sept18 Layout 18-31.indd 19 8/27/2018 3:59:20 PM8/27/2018 3:59:20 PM