Page 23: of Offshore Engineer Magazine (Sep/Oct 2024)

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MARKETS OSVs of earnings multiples and steel values has more or less

Opportunities Arise in a Volatile Oil Market

Since the start of July, the sector has been trading down vanished over the last few weeks, making for an attrac- 24% as the Brent spot priced has turned from $87 per tive entry opportunity in the large-cap player. We expect barrel to $78, and even trading as low as $70 per barrel in Tidewater earnings to increase substantially going forward

September. With project break even prices sitting mostly as the company is churning through its legacy contracts.

Current average backlog duration sits at 1.5 years, in that well below $50 per barrel, we argue that an oil price envi- ronment above $60 per barrel should not impact project time frame we expect the average dayrate to converge with sanctioning and thus vessel demand. With the Brent price the current reported contracted rate.

All-in-all we are ?rmly keeping our Buy recommenda- in or near the 60’s however, the risk is starting to being tion on the sector, with current dayrate levels implying gradually factored in by the market even though it has lim- high pro?tability and enabling solid dividend potential. ited effect on earnings. This has created some very attrac- tive opportunities with sliding share prices, as long as the However, while oil market volatility has led to increased risk for OSV demand, we currently see this as a buying oil price is not turning for worse.

Trading at 3.5x and 2.0x 2025 and 2026 EV/EBITDA opportunity as pricing on earnings multiples and vessel we argue that the sector holds an attractive risk/reward. values has become attractive. With dividends on the table,

Moreover, on our estimates we have Tidewater, DOF, and we are currently set for a stage in the cycle where capital is ?owing back to shareholders, a welcoming sight to a situ-

SEA1 trading at 0.91x, 0.81x, and 0.76x year-end 2024 P/

NAV, respectively. Tidewater’s pricing premium in terms ation which was quite the opposite just some years ago. september/october 2024 OFFSHORE ENGINEER 23