The business environment continues to rebound from the recession that officially began in late 2007, with several sectors continuing to see an increase in vessel demand. Though utilization has dipped a bit among some vessels, activity has remained steady offshore (see page 64), with rigs continuing to return to the Gulf. Shipyards, especially on the Gulf Coast, continue to benefit as they work off backlogs of offshore service vessels. Tug operators continue to build Z-drives, but the big push now is the replacement of old oceangoing long-haul tugs (see page 60), and the inland waterways is tale of two markets with tank barges leading the way (see page 50). Passenger vessel operators are optimistic, as leisure and corporate business continues to improve, nearing pre-recession levels with strong advance bookings for the 2014 summer season (see page 53).
Construction continues at U.S. shipyards
By Ken Hocke, Senior Editor
The pace of newbuild and repair work at shipyards across the U.S. has increased slightly over the past year. And that’s saying something.
The last two and a half years have been a boom time for many yards, particularly on the Gulf Coast following the rewriting of drilling permit rules and regulations following the Deepwater Horizon tragedy. Once the federal government began issuing new drilling permits, activity in the Gulf of Mexico blossomed, and new equipment needed to support that activity led to big business for boatbuilders.
However, newbuild contracts in the oil and gas industry in the U.S. are beginning to move away from the multiboat agreements of the past several years and into one-off specialized vessel construction. Yet there are scores of vessels from those multiboat contracts that are scheduled to be delivered over the next two to three years, so there are still plenty of backlogs to work off.
“We’ve had a great run the last several years in the energy sector but that sector is starting to slow down quite a bit because of all the orders that have been made there. I now see quite a bit of demand on the larger, more sophisticated vessel side than on the lower-end side,” said Richard McCreary, vice president, commercial business development, BAE Systems Ships Repair, Mobile, Ala.
UNIQUE BOATS
BAE is building one of the specialized vessels McCreary mentioned, a subsea support vessel for deepwater and ultradeepwater work for Oceaneering International.
The 353'×72' DP-2 vessel will be powered by GE Tier 4i-emission compliant engines. One of the boat’s major features will be a 250-ton, active-heave-compensated crane capable of reaching depths of 13,000’. The vessel will also be outfitted with two 13,000'-rated Oceaneering remotely operated vehicles. The satellite communications system will be capable of transmitting streaming video for real-time work observation by shore personnel.
BAE is also in the midst of a multiboat contract with Jackson Offshore Operators to build four 252'×60'×25'3”"platform supply vessels. The first of the PSVs, the Breeze, was expected to be delivered in late June.
“I think [the U.S. domestic shipyard industry] is in a pretty good place,” said McCreary. “We’re now seeing a resurgence of equipment in what I call the traditional Jones Act trade — more the tankers, containerships, the bulkers, the articulated tug/barge units driven, in part, by the amount of energy being taken out of the ground that has to be transported. And there are military contracts out there that are going to be awarded soon and so on.”
Speaking of military contracts, Dakota Creek Industries, Anacortes, Wash., is building twin 238'×50' Ocean-class, auxiliary general oceanographic research (AGOR) vessels for the U.S. Navy’s Office of Naval Research. The Neil Armstrong and the Sally Ride will each feature Siemens diesel-electric propulsion systems that include four Cummins diesel generators that each produce 1,044 kW of primary power for all of the boat’s electrical needs, including variable-speed motors for the two controllable-pitch propellers, a 686-kW bowthruster and a 620-kW stern thruster for dynamic positioning. The contract is worth $145 million.
Meanwhile, Eastern Shipbuilding Group, Panama City, Fla., recently signed a $140 million contract to build the first trailing suction hopper dredge ATB for Great Lakes Dredge & Dock Co., Oak Brook, Ill. The dual mode ATB unit will consist of a 433'×92'×36' dredge barge and a 158'4"×52'×32'9" tug. The dredge is based on an Ocean Tug & Barge Engineering ATB design.
The tug’s main propulsion will come from two MAK 12M32C-T3 diesel engines, producing 7,831 hp each, connected to Schottel props through Overton Chicago marine gears. The MAKs will also power, through a generator take-off system, twin 6600VAC gensets, sparking 2,500 kW of electrical power each. The tug will boast 15,600 hp and be capable of pushing the dredge ATB along at 12.5 knots.
LABOR ISSUES
One cloud that has consistently hung over the shipyard industry during good times is the labor shortage. McCreary said the average age of a welder across all sectors of the construction industry is 55. “That just amazed me,” he said. “It’s my single biggest concern. We have to find a way to grow our own because right now they’re just not out there.”
Shipyards across the U.S. are trying to curtail the labor shortage problems by creating partnerships with community and technical colleges, upgrading their individual training facilities and working with local and state governments to entice high school graduates to give the shipbuilding industry a look. “You can come out of high school and, with some basic welding skills, within five years be making $50,000,” said McCreary.
In Louisiana, secondary schools stress college degrees over working in a shipyard or other industrial, blue-collar environment, and this influence is hard to overcome, Chris Bollinger, president of Bollinger Shipyards, said during a WorkBoat webinar in September.
About 20% of Louisiana high school students go on to college right out of high school. “So we have an opportunity to reach 80% of these students, but the school system here in Louisiana is so focused on college that trying to get them to support what we’re trying to do in a career path, whether its blue collar or white collar, in the shipyards is not very congruent,” Bollinger said.
YEARBOOK:
INLAND WATERWAYS
A tale of two markets for barge operators
By Pamela Glass, Washington Correspondent
It was a difficult year for the inland tug and barge industry caused by many factors beyond its control.
Operators struggled with shifts in the energy market, which created new opportunities for tank barges in crude and natural gas, but cut demand for coal for dry operators, and tough weather challenged fleet operations.
“Except for liquids, everything was troubled,” said Brent Dibner, president, Dibner Maritime Associates, a maritime consulting firm in Chestnut Hill, Mass. “There was reduced domestic coal, the Europeans reduced their demand for U.S. coal (pushed by environmental policies), there was a weakened grain market, and other commodities just muddled along.”
The past year once again saw extremely tight federal budgets that permitted few improvements to the nation’s aging and often failing inland waterways infrastructure.
On the bright side, there was progress in Washington to remedy the problems inherent in the current system of evaluating and funding inland projects, to streamline and toughen TWIC credentialing, and to address manpower shortages by easing the way for veterans to serve in the maritime industry.
LIQUID MARKET
Tank barge operators saw record profits as they increased their exposure in the burgeoning crude oil transportation market and added to their tank barge fleets. Thanks in large part to the Bakken shale oil boom in North Dakota, business is brisk for operators transporting crude from the Midwest to refineries on the Gulf Coast. This has produced a big increase in crude traffic along the Mississippi River and other central U.S. inland waterways. Barge and tanker shipments of crude from the Midwest to the Gulf, which were almost nonexistent in 2005, soared to 21.5 million bbls. in 2012, according to the U.S. Energy Information Administration.
Tank operators have responded by ordering new equipment. Houston-based Kirby, the nation’s largest tank barge operator, announced in March that it will add 29 additional tank barges this year, in addition to 37 inland tank barges it committed to build in 2014. Kirby will spend approximately $135 million for the construction of the 66 tank barges and one inland towboat. In 2013, the company acquired 70 new tank barges.
Meanwhile, dry cargo operators saw a slump in the coal business as demand from U.S. electric power generating plants softened. Barged coal shipments to power plants marked the fifth consecutive year of declining volume in 2013 and hit its lowest level since 1990, according to River Transport News. The drop in coal shipments is due to low natural gas prices and the effects from the recession that weakened power demand.
Last year, however, the drop in coal shipments came as natural gas prices increased and coal-fired generation also increased “in both absolute and relative terms,” RTN said. Coal-fired electricity generation increased almost 5% from 2012 to 2013. Meanwhile, natural-gas-fired electricity generation dipped over 9% in 2013. Despite the increase in power generation, coal shipments declined last year because power plants had big coal stockpiles, a result of the low gas prices and drop in coal-fired generation in 2012.
RTN predicts that coal shipments will rebound this year due to the cold winter in the East and Midwest, which caused electricity demand to soar and resulted in a major increase in natural gas prices. Already, RTN says, open hopper barge operators report plenty of demand for their equipment to rebuild depleted power plant stockpiles.
Other highlights:
• Weather caused many operational headaches. Spring came late, delaying the beginning of the farm season, and then a severe winter set in late last year and well into this year. Thick ice on many rivers from the Upper Midwest to New England halted or slowed barge traffic and in some cases the Coast Guard deployed icebreakers. This year’s start of the navigation season was the latest on the Upper Mississippi since 1970, with the exception of 2001, which was disrupted by major flooding.
• Funding for lock and dam construction, maintenance and operation continues to be a big concern. Although Congress responded last year to calls for a stronger budget for the Corps of Engineers with a $5.5 billion appropriation, the administration has come back with a fiscal year 2015 request of $4.6 billion, 17 percent less. “The drastically different numbers are a stark reminder to the water resources community of the importance of touting the value of the civil works program to the nation,” according to the National Waterways Conference.
• Inadequate budgets means deferred repairs and construction delays on waterways projects. Steven L. Stockton, director of Civil Works at the Corps, told members of the National Waterways Conference in March that the Corps infrastructure is “on an unsustainable glide path of benign neglect, devolving from a paradigm of ‘preventing failure,’ to one of ‘fixing after failure’ and towards even ‘failing to fix.’ ” Lockage outages are on the rise, and vessel delays at locks have doubled since 2009. There were roughly 770,000 hours of delays last year, Stockton said.
• There’s no plan yet for keeping Asian carp out of the Great Lakes, but an Army Corps of Engineers study suggested eight options, including erecting a permanent barrier between the Great Lakes and Mississippi River watersheds, at cost of $18 billion over 25 years. This option could cause big disruptions to barge traffic. “Severing a critical part of the nation’s water transportation network is too high a price to pay for a solution that is not guaranteed to stop the spread of invasive species,” said Tom Allegretti, president and CEO of the American Waterways Operators.
• Congress was expected to finish up its final version of the Water Resources Development Act (WRDA) and send it to the president for his signature some timein May. WRDA, the first since 2007, contains many reforms to the inland waterway evaluation and funding programs, including a reduction in the share of funds from the Inland Waterways Trust Fund for the Olmsted Locks and Dam, thus freeing up more money for other inland projects.
• Several sectors of the maritime industry continued to experience manpower shortages, especially for qualified engineers. The 2014 Coast Guard Authorization Act, which is moving through Congress, would make it easier for veterans to work in maritime jobs. It would permit the Coast Guard to issue merchant mariner credentials to veterans who have served at least three months on a qualifying vessel no more than seven years prior to their job application.
• Looking ahead, the Coast Guard is developing a policy for transporting shale gas wastewater by barge, the industry is working with the Maritime Administration on a study to assess the economic impact of the tugboat, towboat and barge industries, and the Coast Guard is expected to come out with the final rule for a first-ever towing vessel inspection program by year’s end.
YEARBOOK: PASSENGER VESSELS
Operators inch back to pre-recession levels
By Dale K. DuPont, Correspondent
What’s vital to real estate seems to hold true for passenger vessels as well — location, location, location.
The miserable winter in much of the country sent folks to California or left those who couldn’t escape itching to get out as soon as possible. The energy-fueled Texas economy buoyed spirits and bottom lines, the South Florida market is heating up, and the rivers — especially the Columbia and Snake – are getting more congested.
Greg Bombard has detected a bit of a return to pre-recession numbers. “We’re gradually seeing a growth back up. It’s moving slowly,” said the president and CEO of Catalina Express, which offers daily high-speed service on eight vessels from Southern California to Catalina Island.
Part of the uptick may be attributed to California’s pleasant weather this past winter drawing people from other parts of the country or Golden State residents from their homes. “It got people out moving,” he said.
The great freeze in the Midwest made a difference to Patricia Carrothers, too, owner and president of Diamond Jack’s River Tours, Detroit. The company’s three vessels, which have capacities of 125 to 250 passengers, offer sightseeing and charter cruises from May to October.
“Everybody’s looking to get out,” she said, so advanced bookings are up. “Detroit’s woes haven’t impacted us. We’re pretty much weather dependent.”
In Texas, the local economy is strong, which has made a big difference for Star Fleet Yachts, located in Kemah, Texas, near Houston. As a result, they had a “fantastic December because of a number of company holiday parties,” said Amy Alton, owner and president, whose company has five vessels offering charter and public cruises. Weddings also have been a very consistent niche. Alton expects about a 10 percent growth overall this year over last.
“We really didn’t struggle too much with the recession compared to other markets,” she said.
The company repowered their flagship 150-passenger 90' Star Gazer last year, are repowering the 30', 11-passenger catamaran Star Cat this year, and selling the 90-passenger 65' Star Spirit because “she doesn’t fit well into our type of events,” Alton said.
FLORIDA MARKET HEATS UP
In South Florida, a big player from the north has moved in with the acquisition of a longtime yacht charter business, and a distinctive yacht, which started out working the coast from New England to Florida’s west coast, has anchored in Miami.
Entertainment Cruises, which operates 30 dinner/excursion vessels in Chicago and along the East Coast, recently purchased Fort Lauderdale, Fla.-based Windridge Yacht Charters for an undisclosed amount.
Entertainment Cruises wanted to come to South Florida “because it is such a big boating market,” and the company may bring some of its northern fleet south in winter, said spokesman Megan Sterritt. Two years ago, the Pritzker Group, a Chicago-based private investment firm, bought Entertainment Cruises, and CEO Michael Higgins said at the time the company looked forward to growth opportunities the deal offered.
Founded in 1976, Windridge has the 430-passenger 149' Lady Windridge built in 1989, and the 149-passenger 97' Windridge K built in 1977. The vessels dock at various locations from Palm Beach, Fla., to Miami, and have sailed from in front of some of the major hotels in Miami Beach such as the Fontainebleau. While the vessels are strictly charter now, the company is considering adding public cruises, Sterritt said.
The purchase announcement came about the same time that SeaFair, ExpoShips floating arts and entertainment vessel, began year-round cruises and charters from Miami’s Bayfront Park.
Lee Ann Lester, ExpoShips owner and vice president, said they took a year to “explore the booming Miami market for corporate events and art events.”
SeaFair can accommodate up to 750 passengers at dining, sightseeing cruises and dockside events. “We’ve had a tremendous response,” she said. “People want something a little more uber-luxe.”
Built by Nichols Brothers Boat Builders, Freeland, Wash., in 2006, the $40 million, five-deck, 228'×46' yacht was designed as a floating gallery for fine art with galleries, restaurants and bars, and a 6'5" draft so it could ply the Intracoastal Waterway.
Another vessel with a different lease on life is the 360', 223-passenger Empress of the North. Officially renamed the American Empress, she started sailing the Columbia and Snake Rivers from Vancouver, Wash., in April. She is the second vessel for Memphis, Tenn.-based American Queen Steamboat Co., which also operates the 418', 460-passenger American Queen. Both boats built with Title XI loan guarantees and were turned over to the Maritime Administration after the 2008 collapse of Majestic America Line. The company bought the American Queen from Marad for $15.5 million and the Empress for $5.8 million.
Two years ago American Queen Steamboat and American Cruise Lines (ACL) brought regular overnight cruising back to the U.S. inland river system, cashing in on one of the fastest growing niches in cruising.
Guilford, Conn.-based ACL introduced the 230', 150-passenger newbuild Queen of the Mississippi and has committed to four new riverboats, two of which are under way at Chesapeake Shipbuilding in Salisbury, Md. The first, 280'×54'×8' Hull 104, will start cruises in the spring of 2015 and carry 150-200 passengers. The others will enter service between 2015 and 2017.
ACL, which also has several coastal cruisers, recently announced that its 120-passenger Queen of the West has significantly increased its Columbia and Snake river cruises to 34 — up from 13 when they began the route in 2010.
The northwest itineraries are so popular that Un-Cruise Adventures in Seattle said it was nearly doubling the number of cruises on the Columbia and Snake in 2015 aboard the 88-passenger S.S. Legacy, a replica coastal steamer.
And Cornel Martin said he is inching closer to getting the historic Delta Queen steamboat back to river cruising. The former Delta Queen Steamboat company executive is working with a group of investors and said he expected a purchase agreement in June contingent on approval of critical federal legislation.
Last fall, the U.S. House of Representatives in a 280-89 vote approved a 15-year exemption to safety regulations that require passenger vessels with a capacity of 50 or more to be made of fire-retardant materials. Built in 1926, the steel-hulled Delta Queen with its wood and steel superstructure had been kept alive with a series of exemptions. She stopped sailing in 2008 and is currently a dockside hotel in Chattanooga, Tenn.
The Senate measure has bipartisan support but has not advanced. Senate sources say sponsors are optimistic about passage but are reluctant to give a timetable.
“We feel very comfortable where we are,” Martin said, noting they plan to push for additional cosponsors.
He would not discuss the purchase price but said they plan about $5 million in renovations including boilers, generators and HVAC systems.
YEARBOOK: TUGS
Older long-haul tugs are being replaced
By Bruce Buls, Technical Editor
While new construction of Z-drive tugs for harbor/escort work continues at shipyards like Washburn & Doughty, Patti Marine, Main Iron Works, Diversified Marine and Nichols Brothers, the rush to switch from older, conventional, twin-screw tugs to higher-powered ASD tugs is largely history. There’s still some older hulls out there doing harbor work, but essentially every big U.S. port is well equipped with “tractor tugs.”
It’s the long-haul oceangoing tugs that are really due for a generational upgrade. “There’s no arguing the fact that most of the long-haul fleet in the U.S. is very, very old,” said Jonathan Parrott, a naval architect at Jensen Maritime Consultants (JMC) in Seattle.
“People keep talking about building them, and it’s around the corner,” said Bob Beegle, president of Marcon International, Freeland, Wash, “but they’re still making due with all the beaters.”
Foss Maritime, Seattle, is one company that is upgrading its long-haul fleet with the construction of three Arctic-class tugs at its shipyard in Rainier, Ore. Designed by Glosten Associates, Seattle, the 132'×41'×20' twin-screw tugs will be powered by Caterpillar C280-8 Tier 2 engines, each rated at 7,268 hp. Bollard pull is expected to be over 100 MT. The tugs will have a 122,000-gal. fuel capacity. The first tug is scheduled for delivery next December, followed by yearly intervals for the second and third boats.
Crowley Maritime is also updating its long-haul fleet. It recently added four new Ocean-class tugs built by Bollinger Shipyards in Louisiana. The 150-MT (bollard pull) tugs have been moving rigs and providing other offshore support in the Gulf of Mexico and elsewhere.
In addition, Crowley is leasing two new JMC-designed oceangoing tugs from Hyak Maritime, Seattle, a new company formed by towing industry veterans Gordon Smith and Robert Dorn. Built by JT Marine, Vancouver, Wash., the 120'×35'×21' Hawaii and Washington are powered by pairs of 2,679-hp (at 900 rpm) GE 8L250 engines turning Schottel Z-drives. Fuel capacity is 158,000 gals. Bollard pull is about 83 ST. The Washington has been used to tow barges between the Gulf of Mexico and Africa.
Sometimes called the Titan class, the design was jointly developed by JMC and Western Towboat, Seattle, which builds its own boats for towing barges between Puget Sound and Southeast Alaska.
“These 120-footers are the template,” said Ron Burchett, an industry consultant from British Columbia. “They can tow at 10.1 or 10.2 knots while being super fuel efficient. And with the Z-drives, they can dock barges a whole lot easier without needing assist boats.”
Accommodations are also important for any new long-haul tugs. “How do you get the guys to live in an old crock?” Burchett asked. “These boats have individual heating and air conditioning in all the staterooms, which also have floating floors and are very quiet. The accommodations are first class.”
Construction on the Montana, the third boat in this series, has just begun.
The Bob Franco, another tug built to this design by Oregon’s Diversified Marine, was delivered last summer to Harley Marine Services, Seattle, and is now working the Tesoro refinery in Cook Inlet, Alaska. The Bob is powered by Cat C175s.
NEW TUG DESIGNS
JMC has also been developing several other long-haul designs, including a 150-footer (46 meters) that can be built with either conventional propulsion or Z-drives. “One of the things we wanted to do was maximize their flexibility,” said Parrott. “It could also be diesel-electric, or a hybrid mechanical-electric or straight mechanical, it all depends on the mission.”
Parrott said marine surveyors and big oil companies are looking for more powerful boats for offshore barge work. “They’re looking at the existing boats and saying, hey, your long-haul fleet is 40 to 50 years old, and some of it’s single screw, a lot of it is twin screw, but they’re all 50-60 maybe 70 metric tons bollard pull. They’re beginning to say that’s not quite enough. Their requirements have been slowly creeping up, and I think they’re settling on about 100 metric tons for some of these big barge long hauls. Whether or not they need to be that much, it’s hard to say, but it’s a target that we’ve got.”
Although about the same size as the Ocean-class tugs, the 46-meter design would have about 70% of the power or 110-115 MT bollard pull.
Stability for new long-haul tugs is another important factor. Beegle said Marcon, which brokers tugs, barges, OSVs and other workboats, has run up against U.S. Coast Guard and Transport Canada objections to the stability of older tugs.
“They’re saying they don’t match the stability regs unless you carry umpty-ump gallons of fuel and keep that fuel on board as expensive ballast or rebuild the pilothouses. If this continues to be the case with older tugs, it could be something that pushes newbuilding.”
Stability is another plus for the Titan-class tugs. “They’ve got lots of reserve buoyancy in that raised bow,” said Burchett, “which also provides more accommodation space. You could have a gymnasium in there.”
YEARBOOK: OFFSHORE
Outlook still strong for the U.S. Gulf
By David Krapf, Editor in Chief
Despite recent softness in the U.S. Gulf of Mexico, all signs point to a healthy second half of the year and a steady 2015.
Most attribute the sluggish market to a temporary flattening out of the deepwater rig count concurrent with the addition of about 20 or so new high-spec OSVs that have entered the Gulf market since 2013. Also, G. Allen Brooks and other analysts point to a “new era of austerity” for majors’ capital expenditure budgets.
Ensco, the world’s second largest offshore driller and operator of the largest fleet of active premium jackup rigs, believes that the recent downturn in the floater market “will have a relatively short duration.”
“We continue to believe customer demand going forward will be positively influenced by stable commodity prices that are well above break-even levels for our customers to continue drilling, healthy E&P spending that is necessary for customers to achieve their production targets, appraisal and development drilling that will follow successful new discoveries over the past few years and favorable activity in terms of new offshore lease sales, including the most recent round in the U.S. Gulf of Mexico,” David Ethan Hensel, Ensco’s senior vice president of marketing, said during the company’s April 29 quarterly earnings call.
In the U.S. Gulf, Ensco currently operates three drillships, six semis and eight jackups. The U.S. Gulf is the company’s biggest market for floaters.
Worldwide, 27 new floaters and 32 new jackups are scheduled to be delivered in 2014, according to IHS Petrodata. Of those, there are 13 floaters and 24 jackups that are still seeking contracts. The marketed utilization for the global rig fleet is 95% for floaters and 94% for jackups.
MARKET POTENTIAL
As Hensel said, interest in the U.S. Gulf is still strong, especially in deepwater. This was evidenced by March’s lease sale of 329 Gulf tracts covering some 1.71 million acres that brought in over $872 million in high bids. The bids confirm an ongoing and robust market potential in the Gulf.
Jez Averty, senior vice president for North America exploration for Statoil, told WorkBoat that the prospects in the deepwater Gulf “rank highly in global prioritization” of the company’s portfolio. “It’s the value creation potential of this basin that drives us to explore.”
Almost all major operators have interests in the deepwater Gulf
“The facts are indicative of a strengthening market,” Todd Hornbeck, CEO of Hornbeck Offshore Services said during the company’s quarterly conference call in May. “As we push deeper into this year and into 2015, the first indicator we look at is the drilling rig count. We have seen an overall improvement in the average active rig count from a year ago … from 33 to 36. As we sit here today, we feel pretty confident that we are going to pick up about 10 additional floating rigs in the Gulf of Mexico during 2014. We also believe that the working rig count is likely to grow further in 2015.”
Hornbeck discussed another positive development related to the drop in rig rates. “We have seen indications that as rig prices decline demand may increase, especially among some of the independents,” he said. “In fact, we have already seen incremental interest by independents no doubt spurred by the opportunity to take advantage of improved rig pricing.”
This new demand from independents might help keep a couple of rigs in the Gulf of Mexico whose contracts are set to expire during the year.
“Existing rig customers might also want to take advantage of better pricing and renew expiring contracts,” Hornbeck said.
At WorkBoat’s OSV Design & Technology regional summit held in Houston in April, Richard Sanchez, senior marine specialist for IHS Petrodata, said he believes the near-term outlook is positive for the OSV market. In mid-2015, a lot of newbuilds will be entering the market, but Sanchez said he is not overly concerned about oversupply, especially for the bigger high-specification newbuilds.
If you are a large OSV operator, the world looks good, and you should see “four to five quarters of good revenues” for your fleet, Sanchez said.
Hornbeck Offshore also is not too concerned about oversupply and was not surprised by the short-term market softness, something they had been anticipating for some time.
“We believe that the worst may be behind us,” Jim Harp, Hornbeck’s chief financial officer, said during the May earnings call. “Hopefully, if our active rig count forecast continues to prove accurate, we have reason to believe that each of the remaining three quarters in this fiscal year should get progressively better than the last as we head into what we believe is the sweet spot of the up cycle next year and beyond.”
Recently, Hornbeck has seen early signs that the market is improving. The company saw a “considerable amount of forward contracting activity during the quarter.”
Since the company’s previous earnings call in February, contracting days for the remaining three quarters of 2014 grew by 44%. Hornbeck has now contracted 60% of its available remaining vessels days in 2014.
