![COLUMN | Judge me by my results: eight takeaways from Tidewater's reporting [Offshore Accounts]](http://media.assettype.com/bairdmaritime%2F2026-05-11%2Fs6s51cj0%2FUntitled.jpeg?w=480&auto=format%2Ccompress&fit=max)
The start of May sees reporting season for the first quarter results for offshore companies in full swing.
Transocean reported last week that its net income was US$71 million, whilst net cash provided by operating activities was US$164 million and free cash flow was US$136 million. Its takeover target Valaris reported a net loss of US$18 million for the quarter on the back of a US$28 million tax charge, compared to net income of US$37 million in the fourth quarter of 2025, after stripping out a huge one-time tax benefit three months ago.
Importantly, Valaris did not mention any rig suspensions or contract cancellations in the Middle East caused by the war between the US and Iran. Valaris stated that it suffered from higher insurance costs for its fleet of jackup rigs in the region, and reported an US$8 million hit from more expensive premiums there.
But this is manageable and is consistent with what we are hearing from other boat and rig owners. For the most part vessels and jackups remain on hire in Saudi Arabia, Qatar and the UAE, even if units cannot exit the region and even if the status future of projects is unclear. Everything is unclear in the region, what with the UAE pulling out of OPEC (surely to maximise future oil production), Iran and the US engaged in mutual blockades and desultory attacks, and 20,000 seafarers stranded on vessels in the Persian Gulf under intense mental stress.
The winner for the quarter amongst the drillers was Noble, which announced net income of US$121 million, net cash provided by operating activities of US$273 million, and free cash flow of US$169 million. Later this year, two Noble deepwater rigs will start 16 well contracts for TotalEnergies in Suriname, whilst in August the drillship Noble Gerry de Souza will start a two-year firm programme for ExxonMobil in Nigeria.
Noble also reported success for its semisubs with Noble Courage winning a 1,115 days contract extension with Petrobras with net incremental backlog of US$339 million and Noble Deliverer being awarded a five-well contract with Woodside in Australia valued at US$121 million over the firm scope, excluding additional services and potential rig upgrades, plus options for up to two additional wells. All three drillers reported higher backlogs of future contracts.
The tenor of the results is that drilling rates are above break even, but that the cycle has yet to deliver super returns on a cash flow basis. Lower oil prices of around US$60 in 2025 (which seems hard to believe now) depressed investment from the big oil companies, and activity was more muted than many hoped.
That said, investors have made out like bandits over the last year on the back of higher oil prices, which have driven up stock values across the whole sector. Transocean shares are up 145 per cent since May 2025, Valaris’ rose 149 per cent, and Noble shares surged 110 per cent.
However, the improvement in the actual business results has lagged the stratospheric stock returns. Yes, the drillers have mostly returned to profit, but those profits certainly aren’t supersized, even though we are now four years on from the start of the bloody Russian invasion of Ukraine, which led to a spike in oil and gas prices in 2022, and the Strait of Hormuz has now been closed for two months.
The Securities and Exchange Commission wants to abolish mandatory quarterly reporting, which I think is a negative. A lot can happen in six months, as we have seen with the recent geopolitical crises and quarterly reporting provides welcome transparency and accountability, especially when markets are volatile.
If there is a large population of listed drillers in both the United Stated and Norway, the offshore support vessel (OSV) market is much more limited. There are many more supply boat operators than there are drilling rig operators. The population of drilling rigs in the world is around 500, but there are 1,225 active platform supply vessels (PSVs) in the global market and 1,141 active anchor handling tug supply vessels (AHTS), plus around 460 laid-up vessels of both types in total.
When it comes to publicly listed players in the sector, there is only one show in town: Tidewater, the undisputed industry leader, especially in the PSV market, where it operates 138 vessels, and it also owns 52 AHTS vessels.
Like the drillers, the company has been on a roll, with shares up 95 per cent over the last year, again driven by expectations of higher future profits from the tighter oil market, and the desire of oil-consuming countries to diversify their sources of supply away from the troubled Persian Gulf.
Last week, Tidewater shares closed at US$81; five years ago, they stood at US$14.
Tidewater also reported its first quarter results last week, and released a new investor update presentation. Reading the two documents together gives us a fair indication of the state of the OSV market and of Tidewater’s performance, plus some clues about its future strategy.
What are my seven takeaways?
1. Unquestioned industry leadership
Firstly, the investor presentation sets out the sheer dominance Tidewater has achieved in the sector through the Pac-Man style acquisitions of Solstad’s PSV fleet and the fifty-vessel Swire Pacific Offshore gobble-up in 2022. It operates a fleet of 190 PSVs and AHTS, compared to 118 operated by Edison Chouest and just 85 by Bourbon, as the impact of the ICBC auctions and other vessels disposals shrinks the French company’s fleet. There is another auction of an anchor handler, Bourbon Tong Kam in Southeast Asia on May 26 on the shipbid.net website, followed by several PSVs in June.
Third-placed China Oilfield Services operates 111 vessels, but nearly all of these are working in China and do not compete with Tidewater and the international operators, who are closed out of the Chinese market.
Fourth-placed Vallianz has 92 vessels, but these are nearly all in the Persian Gulf and many are locked into low value contracts with Saudi Aramco. Vallianz has struggled to generate cash and has a large pool of laid-up ships that require capital to reactivate.
Hornbeck is sixth-placed with 61 vessels, and will shortly merge with Helix Energy Solutions, as we discussed last month. Hornbeck was once considered a potential takeover target for Tidewater, but the merger with the more complicated well servicing and robotics business of Helix makes that much harder and more implausible.
Seventh-placed CBO has a fleet of 58 AHTS and PSVs after its merger with OceanPact, but operates almost completely in Brazil. Eighth-placed ADNOC Logistics and Services has 52 OSVs in its fleet, but these are almost entirely on long term charter in the Emirates with its Abu Dhabi state oil company parent. Ninth-placed Britoil has 49 vessels and is a genuine international player, albeit a quarter of the size of Tidewater.
Tidewater’s competitors are fragmented and regional. Two potential rivals have effectively exited the PSV segment: DOF, which acquired Maersk Supply Service in 2024; and Solstad, which has been the subject of a bitter shareholder lawsuit. Its other Norwegian PSV rivals like Havila and Rem Offshore are now mainly focused on their home market, and Seacor has meanwhile exited the anchor handling segment.
Tidewater is king.
2. Unimpressive first quarter results
Given this dominance, Tidewater’s first quarter results, like that of the drillers, were remarkably unremarkable. Maybe the senior management should try their luck with a food cart or consider driving an Uber instead. Why do I say that?
The company reported net income of just US$6 million on revenues of US$323 million. Revenues were down compared to the US$331 million achieved in the same quarter in 2025, when the company reported US$43 million in net income.
Remember that Tidewater has 190 OSVs in its fleet. That net income for the last quarter is equal to just US$350 per vessel per day, less than what many senior officers make. There are taxis and hot dog stands that make more profit per day than Tidewater was making on a US$30 million state-of-the-art dynamically positioned PSV or a 220-ton anchor handler between January and March.
For a company with a market capitalisation of US$4 billion, a US$6 million net income is… disappointing.
To be fair, this figure was depressed by a US$35 million income tax expense, which partially offset the US$167 million tax benefit the company reported in the previous quarter. However, even discounting the one-off tax element, for the first quarter, the profit per vessel was only US$2,400 per day – better, but no cigar.
3. Low operating cash flow
Underpinning the problem was poor cash generation capacity. Tidewater generated just US$19.2 million in cash flow from operations from its fleet, just over US$1,100 per vessel, compared to US$80.4 million of cash flow from operations in the same quarter a year before. No matter how you present it, Tidewater is a long way away from previous cycle highs.
In the market surge of 2006, Tidewater’s then CFO Keith Lousteau summed up the company’s position:
"What a great time to be associated with Tidewater. It’s kind of, come to the office in the morning, get a wheelbarrow to bring the cash to the bank. It’s just been a real nice position."
Quintin Kneen, Tidewater’s current CEO, and Samuel Rubio, its current CFO, can probably make do with a small rucksack for the current cash flow, rather than Mr Lousteau’s wheelbarrow, even if the stock price reflects an expectation that heavy duty cash lifting equipment will be needed in future.
Again, this isn’t a concern for now. We stress that Tidewater has a rock-solid balance sheet, with US$552 million of cash in hand on March 31. Around US$240 million will be needed to fund the acquisition of Wilson Sons Ultratug Participações in Brazil and its fleet of 22 PSVs, which Tidewater says it expected to close towards the end of the current quarter, so likely next month. Tidewater will also take on around US$260 million of WSUT’s debt.
4. Softer market (when will it turn?)
The investor update presentation highlights Tidewater’s problem. The market is softer and the weaker rates of 2025 have impacted on the company’s business. The graph of PSV time charter (TC) rates shows the problem:
The single largest category of vessels in Tidewater’s fleet is PSVs with clear deck space of over 900 square metres, of which the company owns 70. In the second quarter of 2025, it was winning term contracts for these ships at US$30,932 per vessel per day. In the first quarter of 2026, it was winning work at only US$27,448 (ten per cent lower) and its actual average charter rate for the segment across all vessels was US$25,917.
For its 47 smaller PSVs with clear deck space of between 700 and 900 square metres, the change was even more marked. A year ago, Tidewater was signing contracts for these ships at an average day rate of US$28,292; in the last quarter, it was winning charters at only US$20,240, nearly 30 per cent lower.
The position for anchor handlers was better. These rates appear to be simply flat over the year, but PSVs are where the company has its biggest investments and its largest fleet. The challenge for Tidewater going forward is how quickly it can jack up rates and assert its commercial dominance again in the PSV space, especially in Africa, as we shall see.
We reiterate that in most of the world, Tidewater faces only local and regional competition, so when activity picks up, the company should be in a position to benefit disproportionately.
5. Middle East impact muted
Long-term readers will know that I am not a fan of Tidewater’s 45 vessel exposure (US$208 million of assets) to the Middle East, where its fleet faces abusive customers with low rate expectations and harsh contractual terms. Now, the war in the region has further complicated the situation.
The fleet is back at break even, approximately, making combined regional operating profits of US$6.6 million for the quarter, but excluding the allocation of head office costs and interest charges.
Like Valaris, Tidewater reported that none of its contracts had been cancelled but that it did face higher crew costs, presumably due to war risk bonuses, and higher war risk insurance premiums.
Whilst having 45 vessels trapped in a conflict area is not good, and must be very stressful for their crews, at least the vessels are still working and are safe. Tidewater has reported no attacks against its ships, thankfully. Let’s hope it stays that way.
6. West Africa remaining as the core
So, what has been dragging down the Tidewater results?
Its strongest region remains West Africa, where Tidewater operated 53 active vessels in the first quarter at 85.5 per cent utilisation and an average day rate of US$20,732. Rates were down there, but operating costs were also down and utilisation was up, quarter by quarter.
When you think about Tidewater, it pays to think of it as a West Africa business, where just over a quarter of the fleet in that region produces just under half its profits – and remarkably without operating in Nigeria after historic issues there.
It is not clear from the regional breakdown which region is not generating as much cash now, but West Africa is most likely the culprit simply on account of its relative size.
7. The way forward in the Gulf of Mexico?
The revenue and profit mix will change when the WSUT purchase boosts the share of the Brazilian fleet in Tidewater’s total, taking its in fleet in country to 28 vessels.
I also expect Tidewater to make another Americas acquisition in the next year. Hornbeck is off the radar, I know too little about Otto Candies to hold an opinion, and buying smaller player Guice Offshore would not move the dial.
That just leaves Harvey Gulf and its fleet of 27 vessels, mostly US-flagged vessels, ten of which are already being circulated for sale by brokers. There are egos involved but acquiring Harvey Gulf would seem to be the missing piece of the Tidewater jigsaw puzzle.
Having fleshed out its regional dominance in the Western Hemisphere – or at least having emerged as a viable competitor to Edison Chouest – Tidewater can then focus on fleet renewal. We reiterate that the company’s fleet average age is now over 13 years, the mid point of vessel life and just seven years away from client age bar restrictions.
Tidewater will need to invest in newbuildings in the next five years, significantly. Consolidating old vessels could only go so far, and the clock is ticking.
8. Venezuelan claim
Finally, the Tidewater quarterly report contained an intriguing reference to some possible upside. The legal equivalent of buried treasure in Venezuela.
I let the SEC filing do the talking:
“In 2009, on behalf of the Venezuelan government, Petróleos de Venezuela (PDVSA), the national oil company of Venezuela, took possession of our assets and operations in Venezuela. In connection with this expropriation, we fully wrote-down our Venezuelan assets and initiated international arbitration. In 2019, we converted our final international award into a US federal court judgement, which we perfected pursuant to a writ of attachment against the shares held by PDVSA in PDV Holding (PDVH), the parent company of CITGO Petroleum Corporation.
"The Delaware District Court ordered a public sale of the PDVH shares to satisfy the various judgments against Venezuela in Crystallex International Corporation v. Bolivarian Republic of Venezuela, No. 17-mc-151-LPS (D. Del.). On July 2, 2025, the court-appointed special master filed its final recommendation for the winning bid for the PDVH Sale, which included listing the Tidewater subsidiaries holding judgment as the second most senior creditor.
"On November 25, 2025, the court approved the special master’s recommended purchaser; however, an appeal is pending before the US Court of Appeals for the Third Circuit, with a hearing set for August 10, 2026. Closing of the PDVH sale and the collection of our judgement, if at all, are highly uncertain and present significant practical and legal challenges, including, without limitation, satisfaction of numerous closing conditions, including regulatory approval by the Office of Foreign Assets Control, and the positive final outcome of numerous claims filed by other parties opposing the PDVH sale.
"We can provide no assurances regarding the timing or ultimate outcome of this case. As of March 31, 2026, the value of our judgment, including interest and US$4.4 million of reimbursable fees we have paid to the special master, was approximately US$84.8 million. However, given the collection uncertainty, no amount had been recorded in our financial statements related to this gain contingency.”
Always nice to see some hidden upside. Maybe the company can generate returns above your average hot dog stand going forward.
It would be ironic is a payout from the Venezuelan nationalisation was used to pay for the company’s much needed newbuilding programme.
Background reading
Our past articles about Tidewater are here.
