OSV Industry’s Remarkable Rebound: From Trough to Triumph

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The offshore supply vessel (OSV) industry has experienced a strong revival after a challenging decade. Market conditions have improved, and corporate activities have recaptured investors’ attention. Standard Supply, a spin-off of Standard ETC, listed on Euronext Growth Oslo as a pure platform supply vessel (PSV) player and has been active in the S&P market. Tidewater has strengthened its position as the OSV giant through acquisitions of vessels from Swire Pacific Offshore and Solstad Offshore. Despite the revival, many OSV players still face high levels of indebtedness from the previous boom and subsequent downturn.

Dayrates for larger and high-demand tonnage have reached previous peak levels, and the subsea and offshore construction market is projected to reach even higher rates in the coming years. The supply side of the market has transformed over the past decade, with historically low orderbooks, long-term layups, and vessel scrapping leading to a finite and shrinking total fleet. Reactivations have provided some relief, but older units are unlikely to return to work. Secondhand asset values have increased due to higher dayrates and replacement costs.

Capital discipline and debt reduction are priorities for OSV owners, and while newbuilds are not currently on the table, some owners may consider ordering new vessels with multi-year term contracts at significantly higher dayrates. The offshore supply vessel industry is expected to continue its resurgence, supported by the growing offshore wind industry and improved supply-demand balance. However, global recession risk and rising cost of capital pose near-term macro risks. Overall, the industry’s fundamentals support a long-term upcycle for vessel owners.

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