Matthew Rigdon, Executive VP and COO

There has been some prevailing doubt about the sustained recovery in the US OSV market. At this point, I feel comfortable stating that the recovery is being sustained. What is taking place globally and in the US GOM looks similar to past recoveries that followed industry downturns. It’s not identical, but what is playing out now rhymes well with historical recoveries.

Since the offshore oil and gas industry moved into the deepwater in the late 1990’s and early 2000’s, the three regions of the US GOM, West Africa, and Brazil have formed a golden triangle. In the last few decades, the boom and bust cycles have impacted these three key markets in the same ways but with variances in timing. Historically, the US GOM has led the other two regions into a downturn, meaning, the market conditions deteriorate there before West Africa and Brazil. Conversely, the US GOM has led the other two regions into recovery with market conditions improving first.

The US GOM began to show signs of a real and sustained recovery in late 2021. Through most of 2022 its OSV market continued to firm, but West Africa and Brazil had not yet begun to follow with the same rate of market improvements. By the end of 2022, however, the West African market in particular began to become very tight with vessel demand increasing at a significant rate. In a recent report by Chart Shipping, a UK based ship broker, the availability of West African vessels on the spot market was described as “having evaporated” and that for the next few weeks the market was sold out. This has also resulted in averages rates for large OSVs in the region rising from approximately $21,000/day up to $30,000/day.

Seeing these trends in vessel demand and charter rates across regions is further evidence that the recovery in the US GOM will be sustained at these levels for the mid-term, assuming no exogenous events occur. I remain very optimistic about our industry and how we are positioned to benefit from the prevailing market dynamics.