The Dead Sea awakens

It’s been a rough go for the past year or so in the workboat industry and, arguably, offshore service vessel operators have suffered the most.

To their relief, business appears to be picking up. The U.S. Gulf shelf rig market has been steadily gaining strength since November, due mainly to an increase in jackup activity. And the deepwater and ultradeepwater rig market continues its steady growth, with several newbuild drillships and semis expected to enter the market this year and early next year.

Other positive signs include the unstacking of Gulf vessels. SEACOR Marine recently reactivated several anchor-handlers from cold-stack, with other companies planning to do the same. At the same time, day rates are finally on the rise again. Rates for small supply vessels (under 200′) in March averaged $4,325, according to WorkBoat ‘s monthly OSV day-rate survey. That’s up from $3,870 in November but still below March 2009 when rates averaged $6,250. Rates for larger supply vessels (over 200’) have also been gaining ground lately, jumping over $2,100 a day in the past two months to $12,830. Though day rates are still about 20 percent below last year for deepwater OSVs, the trend has been positive.

For operators on the shelf, the good news is the increase in the number of working jackups, which hit a low of just 16 in July 2009. That’s an anemic marketed utilization rate of 37 percent. Since then, the number of working jackups has more than doubled, posting its seventh consecutive monthly increase in March. There are now 35 jackups working in the Gulf.

Still, there are reasons to be wary. One is the dismal outlook for natural gas prices. In late March, the natural gas futures strip was below $5 per mcf until December 2010, then with small increases projected into 2011. Weak gas prices do not bode well for future drilling. Another worry is overbuilding. Some operators fear that too many OSVs were built for the deepwater market. Others, however, say there are some short-term spot shortages of deepwater OSVs.

Still, the overall picture is much better than it was a year ago. Let’s hope the market continues to improve and more vessels go back to work.

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Workboat Staff

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