COLUMN | (Extra)-Ordinary: Tidewater’s results; Mozambique LNG; Brazil boom as Shell’s Gato do Mato development approved [Offshore Accounts]

If you are British, Norwegian, Irish or Dutch you have probably had a hard time avoiding American singer-songwriter Alex Warren’s track Ordinary, which is number one in all four countries in the streaming charts at the time of writing.

The song talks about the feeling of loving somebody "who makes life extraordinary" and the video ends with Warren and his wife levitating above the earth.

This week, we have both the ordinary and the extraordinary.

Distinctly ordinary – Tidewater profits down

First, we have Tidewater’s recent results, which were distinctly ordinary.

For now, all you need to know is that the world’s largest supply boat operator reported its lowest net income (US$37 million) in five quarters. In the preceding quarter, it had reported net income of US$47 million, and it had hit US$50 million in the quarter ending June 30, 2024.

Leading edge blunted

Leading edge day rates for term contracts fell sharply quarter-on-quarter at the end of last year, by over 10 per cent for platform supply vessels (PSVs), and by 40 per cent for mid-size anchor handlers, as per the investor presentation.

The world’s most valuable publicly listed support vessel operator is making good money, but growth has stalled, as we warned it had in November, and the rates at which it is bidding its fleet for new contracts have fallen. Day rates are not the only things to be falling.

Since November, the shares are down another 20 per cent and its US$2.2 billion market capitalisation has halved since its peak last May. If you invested two years ago, you are at break even. The company’s stock is certainly not levitating, unlike Alex Warren.

Who’s buying and at what price?

But don’t worry, the millionaire senior management are queuing up to buy back tens of thousands more shares at around US$40 apiece as per the company’s SEC filings, having previously sold at over US$100 per share.

Anyone who thinks that share buybacks are a good idea should explain to me why Tidewater's CEO used over US$90 million of his company’s money for it to buy its own shares at an average price of US$65 in 2024, when they now trade at US$42, the price at which (surprise) he himself is buying. Yes, that’s US$30 million wasted through poor timing.

But the board has authorised another US$90 million of buybacks for 2025, so what could possibly go wrong?

Crew costs cut as day rates fall/Always look on the bright side

In the last quarter, the company was hit by a foreign exchange loss of US$14 million, whereas in the preceding quarter it had made a gain of US$5.5 million, so this depressed the net income, and it is definitely not all bad news for the company.

Tidewater is a strong and resilient company with low net debt of just over US$300 million. Margins remain strong, revenues were up over one per cent in the quarter, as legacy contracts continue to be renewed at higher rates.

The company anticipates revenue of US$1.35 billion this year, the same as last year. West Africa remains its standout region, with the 70 vessels working there making more net operating income than the 121 ships combined in the Americas, Asia-Pacific and the Middle East (which finally achieved a modicum of profitability).

Tidewater also slashed its total crew costs by US$7.7 million dollars in the fourth quarter compared to the third. That may explain why you got all those CVs in your inbox recently (or why you were sending your own CV out, if you worked for Tidewater).

For the second year in a row, ENI was Tidewater’s largest customer, perhaps a reflection of its failure to break into the Guyana market, where rivals Edison Chouest and Bourbon have made great inroads with ExxonMobil and their subcontractors in this fast-growing deepwater oil producing state.

Is age a problem?

We reiterate that the four youngest vessels in the Tidewater fleet were built seven years ago in 2018, and that the average age of the 191 PSVs and anchor handlers in the fleet remains over 12 years old. This is a company with a dominant market position being run as a cash cow, but living on borrowed time.

CEO Quintin Kneen noted that there would be no newbuilding PSVs delivered to the world fleet in 2025, so presumably he feels no compunction to order any now.

From the ordinary performance of one boat company, we turn to the extraordinary problems faced by one of Africa’s poorest but most gas rich nations.

Mozambique LNG – Extraordinary problems

Mozambique has had a rough few months. Actually, a rough few years, even a rough few decades and perhaps centuries.

Ten days ago, Tropical Cyclone Jude made landfall in Nampula province, bringing heavy rainfall and strong winds which destroyed or damaged over 70,000 houses and killed at least 16 people. Nampula and Zambezia were previously hit by Tropical Cyclones Chido (in December 2024) and Dikeledi (January 2025).

The country remains in political ferment with over 300 people killed in anti-government demonstrations that local security forces have violently suppressed, following the disputed presidential election in October.

Civil servants, nurses and teachers went on strike in January, whilst Islamist terrorist attacks have renewed in the north of the country, with jihadis beheading three people in January. The government has responded by trying to reduce fuel and electricity prices.

Defeated opposition presidential candidate Venâncio Mondlane has continued to travel around the country holding rallies attracting tens of thousands, but was turned away at Luanda airport when he attempted to visit a conference in Benguela in Angola.

His rival Daniel Chapo was sworn in as president at a heavily-guarded, and low-key ceremony in the nation’s capital, Maputo, in mid-January, cementing 49 years of continuous rule by the Frelimo party since Independence.

All the major opposition parties boycotted the event and eight people protesting against the inauguration were shot dead by police, the BBC reported. A week later, President Chapo fired the commander of the Mozambique Republic Police, Bernardino Rafael.

More punishments in the Tuna Bond scandal

The government in Maputo has struggled to put the US$2 billion Tuna Bond corruption scandal behind it. Former finance minister Manuel Chang was jailed in the US for his role in the scandal in 2024.

Last week, Lara Warner, the former Chief Compliance Officer at failed Swiss casino investment bank Credit Suisse, was fined CHF100,000 (US$110,000) for her role in failing to report the suspicious money laundering transactions related to the Mozambique scandal (see the wonderfully named FinCrime Central report). Efforts to sell the laid-up and never used tuna fleet failed late last year.

This month also saw the British financial regulator ban two former Credit Suisse grifters managing directors, Andrew Pearse and Surjan Singh, from working in financial services, saying that they had “lacked integrity” in the Tuna Bond case. Both are waiting to be sentenced after criminal convictions for wire fraud and money laundering in the USA. 

Second deepwater FLNG expected

Mozambique has huge proven deepwater gas reserves waiting to be exploited by TotalEnergies, ExxonMobil and ENI, discovered over a decade ago.

So far, its only offshore production comes from the Coral Sul Floating Liquefied Natural Gas (FLNG) facility, operated by ENI, and moored in 2,000 metres of water. This unit operates with capacity of 3.4 million tonnes of LNG per year, in the Rovuma basin in the north of the country in Area four, supported from Pemba island.

The Samsung-built FLNG unit is a beast, 432 metres long and 66 metres wide, held on location by 20 mooring lines weighing around 9,000 tonnes in total. ENI and its partners are now considering deploying a second, sister unit.

Onshore progress

But the bigger prize was always the onshore LNG plants each with triple the capacity of the FLNG at 13 million tonnes of LNG output a year. Unfortunately, a bloody Islamist attack in March 2021 in Cabo Delgado province near the construction site on the Afungi Peninsular led to Total declaring force majeure and suspending all onshore operations to build the LNG plant.

This suspension remains in force up until today. Rwandan and regional troops have been deployed to Cabo Delgado to stabilise the situation militarily.

This month saw a landmark decision to get the Mozambique LNG project back on track. The US Export-Import Bank (Exim) reapproved a US$4.7 billion loan for the project, which it had originally granted in 2020 during President Donald Trump’s first term. This is the biggest ever loan issued in the 91-year history of the Exim bank, the lender claims.

Estevão Pale, Mozambique’s minister for energy, told the Financial Times that (obviously) he welcomed the decision by Exim, which he said would “consolidate US leadership in development of a project that will significantly help global energy security.”

What’s in it for the US?

Why is President Trump, famous for his America First agenda, supporting billions of dollars of loans to a French-operated LNG project on the other side of the world in a dirt-poor African country?

Two reasons. Firstly, because if the US doesn’t support it, China could easily step in and fund the project in what would be a humiliation for American influence in Africa. The Chinese state-run Confucius Institute is already bringing Mandarin lessons to two secondary schools in Maputo. We are going to see developing countries increasingly trying to play off the US and Europe against China, just as they did in the Cold War.

Secondly, Exim funded the project because its analysis shows that over 16,000 American jobs are tied up in 68 American companies as subcontractors for the project. This Exim loan will support American jobs rather than foreign companies taking the work and giving it to foreign workers (can you imagine?!).

American companies like FMC, Schlumberger, and other contractors are expected to win work valued at up to 30 per cent of the LNG project’s capital expenditure. We can expect one of the big US-listed drillers will take the offshore drilling for the wells to supply the gas to the plants. I know the “up to 30 per cent” does a lot of heavy lifting there, but this figure seems plausible to me.

Prior to President Trump’s inauguration, TotalEnergies was reported to have contracted the Washington consultancy Primus Responsum to lobby Exim to confirm the financing. The energy company apparently offered a US$250,000 bonus to Primus if Exim managed to reapprove the loans in the final days of the Biden administration.

Progress on the first Mozambique LNG project will be followed by the second sister onshore project at a site next door to the TotalEnergies one, this second LNG project being led by ExxonMobil. Looks like Exim will also be lending to that project given ExxonMobil’s impeccable American credentials.

“Did you even say thank you?”

J. D. Vance, calm down, please! Having seen what happened in the White House, President Daniel Chapo has been at pains to express his gratitude publicly to the American government for the Exim approval. Chapo thanked Mr Trump in a public statement, which was widely covered in the local media.

“Your support plays a crucial role in advancing this crucial project," Mr Chapo said in a letter. "The Mozambique LNG project has the potential to generate 13 million tonnes of LNG per year and create 40,000 new jobs, including approximately 20,000 in the US.

“This support allows the participation of North American companies in Mozambique and contributes to global energy security, within the framework of a solid partnership between our two countries.”

Extraordinary times call for extraordinary "thank you" letters, clearly. Let’s see when TotalEnergies finally restarts activity, which will be a trigger for two deepwater drillships to be contracted long-term by the French major, and probably four or five large PSVs.

In the meantime, if anyone in Exim wants to lend Baird Maritime billions, rest assured we will write the biggest and most beautiful "thank you" letter ever.

Gato do Mato approved in Brazil

With Chevron laying off thousands of staff, one might think that perhaps the risk of an American recession and lower oil prices will be deterring investment in oil and gas.

No so, thankfully. Earlier this year, TotalEnergies confirmed Suriname’s first deepwater oil production project via a massive floating production storage and offloading vessel (FPSO) with 220,000 barrels per day (bpd) of oil production capacity.

Last week, Shell approved its deepwater, pre-salt Gato do Mato project Brazil’s Santos basin. This project is unusual in that there is no Petrobras share at all.

Shell operates Block BM-S-54 where it will deploy a 120,000bpd FPSO on Gato do Mato, holding a 50 per cent stake itself with Colombia’s Ecopetrol and TotalEnergies as minority partners.

The Gato do Mato FPSO is expected to begin production in 2029. MODEC will build and operate the unit, whilst Upstream reported that TechnipFMC is expected to be awarded the contract for the subsea umbilicals, risers and flowlines (SURF) system.

These deepwater, high-capacity investments are very supportive of future deepwater rig and PSV demand. Shell expects to drill 12 development wells on Gato do Mato, over two years of rig work.

Equinor also building FPSO

Whilst Petrobras remains the dominant operator in Brazil, operating over three million barrels per day of production (of which its own share is around two million barrels), Wood Mackenzie has predicted that Brazil’s private oil companies will increase oil production by 75 per cent from 1.2 million bpd to 2.1 million bpd in 2030, as per analyst Alex Kimani.

International oil companies headed by Shell with Gato do Mato, but also Norway’s Equinor, TotalEnergies and Repsol, will increase their deepwater production through new projects.

Equinor has the Modec FPSO Raia under construction at a Seatrium yard in Brazil, and it will be put into service at the Raia Manta and Raia Pintada fields in the pre-salt layer in the the Campos Basin, approximately 200 kilometres off the coast of Rio de Janeiro.

This FPSO will be permanently moored in a water depth of around 2,900 metres, showing how the international oil companies are now matching Petrobras in-country in terms of complex production projects. Additionally, smaller players like Perenco, PRIO and Enauta are seeking to rejuvenate the mature shallow water field, which Petrobras has sold as “non-core.”

Petrobras’ progress

But Petrobras will also increase its production. In February, it announced another major discovery in the deepwater, presalt Buzios field (boosting reserves to over 11 billion barrels of oil) and the new FPSO Alexandre de Gusmão arrived on Mero field, in Santos Basin’s pre-salt area. This FPSO will be the fourth unit deployed on Mero and is scheduled to commence production in a few months with the capacity to produce 180,000 bpd of oil and compress 12 million cubic metres per day of natural gas.

These are extraordinary achievements and extraordinarily large developments. Brazil will be driving deepwater rig demand in the next five years.

Background reading

We close with some helpful business tips. Facing a tough meeting with a difficult business partner? Maybe you are under sanctions and face financial stress? Perhaps you have been indicted at the International Criminal Court? Watch this quick primer from United States peace negotiator (and billionaire) Stephen Witkoff on how one world leader convinced another of his sincerity. A local priest, prayers, and an oil painting are all you need!