It is likely that we will continue our relationship with E&P Magazine so keep a look out in the magazine and on our blog for future articles.

Offshore Support Fleet Steering a Positive Course

After troubled times for some regions, the OSV market around the world looks set to enjoy better times as offshore support vessel operators move to meet growing demand from oil and gas companies.

The worldwide market for offshore support vessels (OSVs) has been in recovery mode since the financial crisis of 2008 and the resulting plunge in oil prices, with some regions recovering better than others. Now, the offshore industry is seeing positive outlooks around the world in 2012.

This has been primarily because of the recent high and stable oil price, with Brent Crude peaking in May 2011 at more than US $126/bbl. It has remained above $100/bbl, which has been fueling increases in oil company confidence and spending. With forecasters predicting that the oil price will average around $110/bbl this year, oil and gas companies will once again be able to pursue more marginal fields in far deeper waters that would not be profitable otherwise.

The rise in oil company spending on E&P has a “waterfall” effect on the whole offshore industry, with E&P companies requiring more drilling rigs, which in turn need supplying and moving. This is where the offshore support sector comes in.

Other industry sectors also are having a knock-on effect on the offshore industry such as renewables, where there is an overlap in the tonnage required for certain tasks, especially construction and installation. This has tightened some markets, especially in the North Sea and Europe, where vessels are able to compete for jobs in both industries – and are therefore less reliant on just one or the other.

US Gulf of Mexico

The US market has faced many problems over the past few years: the financial crisis, the fall in oil prices and – just as the industry had started to recover – the Deepwater Horizon disaster, which put a halt to activity in the US Gulf of Mexico (GoM) region.

With the moratorium on deepwater activity instituted as a result of the oil spill, rates for supply vessels plummeted , and many vessels were laid up or relocated to other regions. When the moratorium was lifted in October 2011, it took some time for activity to begin increasing because of the complicated nature involved with applying for deepwater permits.

These hurdles were eventually overcome, and activity is now steadily increasing. And, because of the number of vessels that left the region for greener shores, there is a shortage of good quality DP2 PSVs, and rates have started to rise. The industry also has started to see increased rates for anchor handlers, but not as much as had been seen before the Macondo disaster in the GoM when they were in extremely short supply.

There is an expectation that 2012 is the beginning of a new revival for the GoM as many owners are starting to renew their new-build programs, and some substantial orders have been placed. Hornbeck has ordered 16 PSVs and Harvey Gulf also has a number on order. In total there are around 50 PSVs on order, which will be delivered over the coming months and years from US-based shipyards.

Another positive note for US and Mexican players is the further development in talks between both governments regarding cooperating on offshore fields, where legal ownership has been a contentious issue near the maritime border. Once this is fully resolved, oil companies will finally be able to explore offshore regions where there is massive potential for discoveries.

North Sea

The North Sea is among the most mature offshore markets in operation today and benefits from many years of experience where the major E&P players have endured tough times before. The market for OSVs has managed to remain fairly buoyant. The 2011 summer season had proven to be especially favorable for vessel owners, with rates finally reaching the heights that were seen before 2008.

The North Sea spot market for OSVs is often used as the benchmark for regions around the world, but it is often more volatile than the others because of a number of factors. The main factor is the weather, which can cause many vessels to suddenly become available, while at other times when the weather is good, rates can rocket upward because charterers are looking to get their work completed before the weather becomes inclement. In the North Sea, a significant number of orders have been seen for large DP2 PSVs, which are due for delivery over the coming months. This could have a significant impact on demand and supply, which has been fairly balanced over the past few years. A number of the vessels delivered since January have had little effect on the market because they have been chartered on long-term contracts or taken out of the North Sea and relocated to regions such as Brazil.

Anchor handlers saw an influx of newbuild vessels, especially extra-large tonnage vessels, a few years ago. These vessels have been in high demand because of their high specifications and variety in capabilities such as ROV support. The industry might start to see a new round of orders over the coming years as confidence has increased. This was evidenced by the impressive day rates seen toward the end of the 2011 summer season, when some vessels were chartered for as much as $308,700/day.

West Africa

The West African offshore market is one where traditional trends do not seem to apply, due in part to the special make up of the region where there is an emphasis on trying to include local content. However, these indigenous companies are still developing and sometimes lack the stability of other regions as governments can change quickly. Some local companies also lack the experience that those from other countries often draw on.

To counteract local content laws in this region, international contractors might form joint venture (JV) partnerships with local companies so their vessels can operate without hindrance.

The creation of companies such as Sonatide (a JV between Tidewater and Sonangol) have allowed companies like Tidewater, Bourbon, and Sanko Shipping to dominate the West African market because of their high-quality tonnage (fairly young DP2 tonnage), which is in high demand in the region. These vessels often are quickly snapped up by oil companies on long-term contracts.

Piracy is another factor that plagues the region, especially around Nigeria where attacks are almost an everyday occurrence that do not just affect the shipping industry. As well as affecting the vessels, the attacks also increase insurance costs and deter other companies from investing in the region.

Meanwhile, East Africa is a region showing immense growth potential and opportunity, but there are signs that this area will take a few more years to fully mature. This is because of security concerns and the lack of clarity in the region in terms of local content laws that could arise. With Somalia so close to countries like Mozambique and Tanzania, where exploratory work is accelerating, many owners are wary of the region and will want to stay clear until the situation resolves itself.

Asia Pacific

In the lead up to the 2008 financial crisis which led to many oil and gas companies significantly reducing their spending budgets, operators active in Southeast Asia and the Pacific already had a significant number of vessels on order and many being delivered at the same time.

This led to massive market oversupply with little activity occurring, which has left many newbuilds idle. Anchor handlers were the worst hit among the offshore fleet with the 5,150 BHP design the most popular in this region because of its shallower waters.

It has taken a long time for activity to rebound, but the industry is seeing signs of this, especially in Malaysia and Australia, where the majority of offshore projects seem to be focused on the present . Projects such as Gorgon and Ichthys in Australia have been a lifeline for some operators, with large injections of cash from Shell and the other oil companies. But quarantine laws around Australia have not made matters easy, and few operators qualify for some of the work.

Orders for newbuilds are on the rise, however, and activity levels are expected to continue rebounding through 2013 as other regions such as Vietnam increase their activity levels.

Looking ahead

When oil companies are more confident, this allows the service and supply industry to budget in line with them. While this growth in confidence and activity is occurring in some regions globally, it is only now starting to happen in others where specific market conditions have not allowed recovery until the present time. The overall outlook for the OSV market, meanwhile, looks to remain on a steadily improving course for the remainder of 2012.

If you would like to discuss getting more information regarding the above article or are looking for some research on the Offshore markets please do not hesitate to contact us at Derrick Offshore on:

Tel: +441483 538 336

And ask to speak to Dan Quarm (dan@deroff.com) or Ian Coates (ian@deroff.com)

Offshore Support Fleet Steering a Positive Course – E&P Magazine is a post from the Derrick Offshore Blog.

Barclays Capital published its annual E&P Spending Survey late last year which is summarized in the below graph. From its survey, it estimates that E&P spending will reach almost $600 billion during 2012 which is a 12% increase on their estimate for 2011 ($529 bn) and a 10% increase on actual spending during 2011 ($544 bn). This increase in spending has largely been driven by the high oil price that has been seen throughout 2011 and is expected to continue throughout 2012.

They also predict a larger increase for international spending compared to North America which is likely because of large projects such as Gorgon in Australia and more aggressive spending from National Oil Companies like Petrobras in Brazil. Pemex is another company that is likely to be aggressively spending in 2012 after some of its more mature fields saw a decline in production.

Other fringe countries in the Latin American region are also planning on ramping up their E&P schedules during 2012 with Colombia’s Ecopetrol budgeting around $8.4 bn in 2012. China is another area where massive growth is expected over the next few years with the national oil company (CNOOC) pledging to spend $1.5 trillion by 2015 with offshore expected to receive the majority of this.

For the six supermajors (BP, Chevron, ConocoPhillips, Exxon Mobil, Royal Dutch Shell and Total), they are all planning on increasing their budgets compared to 2011 with Exxon Mobil planning to be the largest spender again with a total CAPEX of $37 billion. Exxon plans to spend this amount for the next several years but if oil prices remain as high as they are long term this may increase further. Chevron and Royal Dutch Shell are the next big spenders with $33 bn and  $30 bn CAPEX respectively with around 80% of this dedicated to E&P spending. Total are planning to spend $24 bn with again, approximately 80% of this going towards E&P and finally ConocoPhillips have set their CAPEX budget at $16 bn with $14 bn of this put towards E&P. BP have yet to announce their CAPEX budget for the year but are likely awaiting the final outcome of the Macondo court trials before committing funds elsewhere. We expect somewhere around $20 bn would be in line with the other supermajors but this could be reduced or increased depending on any fines or payouts they incur.

The graph above shows how oil company E&P budgets have been linked with the change in oil price over the years with the clear example of what happened when the oil price crashed as a result of the financial crisis in 2008. This led to severe cut backs on the part of oil companies who were also feeling the effects of the global recession. The world is yet to fully recover from that recession with many other areas still remaining flat but because of the consistently high oil price over since 2010 oil companies have increased in confidence and we have seen at least 10% growth in budgets every year since.

If the oil price were to crash again it is likely that oil companies would restrict their budgets and we would see a similar situation as seen in 2009.

Oil & Gas 2012 E&P Budgets Review is a post from the Derrick Offshore Blog.

North Sea

• Anchor handlers faced a rocky month as there was often a considerable amount of available tonnage in both Aberdeen and Norway
• PSV’s were also available in abundance throughout the month as larger vessels saw their margin reduced compared to smaller vessels

West Africa

• Issues with the availability of DP tonnage remain across the region, especially for PSVs
• Security issues are also increasing with the higher frequency of attacks, especially around Nigeria

Asia Pacific

• There was an increase in activity last month but rates remain flat as there still remains an oversupply
• The outlook for the market is becoming more positive as there is expected rise in E&P

US Gulf

• A further strengthening in market utilization and dayrates is apparent in the USGOM for high-spec DP-2 PSV’s based upon recent market fixtures for these vessels

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The Derrick Offshore Rate Commentary is delivered in its entirety to our subscribers. It covers the OSV markets in the North Sea, West Africa, Asia Pacific and the US Gulf and provides a detailed commentary on the events that have transpired over the previous month in each region. The extensive experience and knowledge at Derrick Offshore as well as our partners ensures that the monthly report provides a commentary that is all encompassing and gives our clients an up to date overview across all of these markets.

Other items that are provided in the full version include:

• Fleet summaries of the major offshore support owners
• Analysis of charter rates for PSVs and AHTS over the past 12 months
• Commentary on charter rate movements over the past month
• Outlook on expected charter rate movements over the coming months
• Major news items from the relevant regions

If you have any questions about the Rate Commentary or any other services that Derrick Offshore provide do not hesitate to contact us using the details below.

Dan Quarm or Ian Coates

Tel: +44(0)1483 538336

Email: dan@deroff.com or ian@deroff.com

Worldwide Offshore Support Vessel Market Summary – November 2011 is a post from the Derrick Offshore Blog.

North Sea

• A volatile month for AHTS as rates peaked at £200,000 per day whilst fluctuating availability also resulted in lows of around £30,000 per day
• PSVs also had a more subdued month as availability kept rates low although they did recover towards the end of the month

West Africa

• A number of requirements and tenders this month kept the market busy
• A lack of suitable tonnage, especially DP capable vessels, is beginning to take its toll on the market

Asia Pacific

• Another flat month as the market tries to absorb the excess tonnage.
• Forecasts predict that oversupply will persist until the end of 2012

US Gulf

• A strengthening in market utilization and day rates is apparent in the USGOM for high-spec DP-2 PSVs

_________________________________________________________________________________

a

The Derrick Offshore Rate Commentary is delivered in its entirety to our subscribers. It covers the OSV markets in the North Sea, West Africa, Asia Pacific and the US Gulf and provides a detailed commentary on the events that have transpired over the previous month in each region. The extensive experience and knowledge at Derrick Offshore as well as our partners ensures that the monthly report provides a commentary that is all encompassing and gives our clients an up to date overview across all of these markets.

Other items that are provided in the full version include:

• Fleet summaries of the major offshore support owners
• Analysis of charter rates for PSVs and AHTS over the past 12 months
• Commentary on charter rate movements over the past month
• Outlook on expected charter rate movements over the coming months
• Major news items from the relevant regions

If you have any questions about the Rate Commentary or any other services that Derrick Offshore provide do not hesitate to contact us using the details below.

Dan Quarm or Ian Coates

Tel: +44(0)1483 538336

Email: dan@deroff.com or ian@deroff.com

Worldwide Offshore Support Vessel Market Summary – October 2011 is a post from the Derrick Offshore Blog.

North Sea

• NOK 1.5 million (£180,000) dayrates were achieved this month for large anchor handlers although this did not last long.
• It was a consistent month for PSVs as availability remained tight and dayrates stayed at around £20-30,000 for larger units and £10-15,000 for smaller units.

West Africa

• Quiet September across all sectors
• The end of the month saw a number of requirements and tenders so October should see increased activity

Asia Pacific

• Utilisation improving but rates remain flat
• Australia becoming increasingly busy, especially in the North West.

US Gulf

• A strengthening in market utilization and dayrates
• October 3, 2011 BOEMRE splits into two separate agencies – BOEM and BSEE

The Derrick Offshore Rate Commentary is delivered in its entirety to our subscribers. It covers the OSV markets in the North Sea, West Africa, Asia Pacific and the US Gulf and provides a detailed commentary on the events that have transpired over the previous month in each region. The extensive experience and knowledge at Derrick Offshore as well as our partners ensures that the monthly report provides a commentary that is all encompassing and gives our clients an up to date overview across all of these markets.

Other items that are provided in the full version include:

• Fleet summaries of the major offshore support owners
• Analysis of charter rates for PSVs and AHTS over the past 12 months
• Commentary on charter rate movements over the past month
• Outlook on expected charter rate movements over the coming months
• Major news items from the relevant regions

If you have any questions about the Rate Commentary or any other services that Derrick Offshore provide do not hesitate to contact us using the details below.

Dan Quarm or Ian Coates

Tel: +44(0)1483 538336

Email: dan@deroff.com or ian@deroff.com

Worldwide Offshore Support Vessel Market Summary – September is a post from the Derrick Offshore Blog.

The offshore industry has remained fairly immune to this in recent times due to several supply problems like the North Sea maintenance schedule and the Libyan civil war, which has kept oil prices consistently high. Brent has remained above $100 per barrel for the whole of 2011 with the peak in April of $127 per barrel. This has made marginal fields attractive and kept exploration plans on track.

Now however, this consistently high price does not seem so certain. The financial crisis has had significant downward pressure on oil prices all of this time and as supply issues begin to resolve themselves, such as the reintroduction of Libyan oil, it is possible that prices could begin to fall. Obviously, OPEC will try to avoid this by cutting its production but this is often more difficult in practice.

If the financial markets continue to remain volatile and the advanced economies of the world do enter another recession we may encounter some serious problems in the oil industry as energy demand growth will unlikely meet current expectations and oil companies pull back on their exploratory plans to focus on cheaper production. Oil companies in the North Sea have already begun to re-evaluate their situation as well due to the changes in the UK tax regime.

 The offshore renewables industry could also face significant issues if the UK government cannot incentivise Utility companies sufficiently in order to progress current planned wind farm projects. A double dip recession will seriously hamper the ability of any government to subsidise its renewables projects to the extent that it has been in the past.

However, it’s not all doom and gloom with the amount of deepwater drilling rigs being ordered creating plenty of opportunities within the offshore industry, especially subsea. In our view, the outlook for 2012 and beyond still remains positive where there remain plenty of opportunities, not just in the North Sea, and not just in Oil & Gas.

Man on a Ledge is a post from the Derrick Offshore Blog.

North Sea

• Another tight month in the North Sea although there were a few blips.
• Smaller PSVs saw a slight drop off in rates whilst anchor handler rates continued to climb.

West Africa

• The many problems across the African region are still plaguing the market with little progress in trying to rectify them.
• Rates remain stagnant with little or no change.

Asia Pacific

• There is an increasing amount of activity in the region but this is not yet reflected in a day rate improvement.
• Clough has announced that they are to sell their offshore marine construction division to SapuraCrest in a deal worth A$127 million.

US Gulf

• There has been a strengthening in spot market utilization and dayrates during August.
• BOEMRE has announced plans for USGOM lease sale in December 2011.

The Derrick Offshore Rate Commentary is delivered in its entirety to our subscribers. It covers the OSV markets in the North Sea, West Africa, Asia Pacific and the US Gulf and provides a detailed commentary on the events that have transpired over the previous month in each region. The extensive experience and knowledge at Derrick Offshore as well as our partners ensures that the monthly report provides a commentary that is all encompassing and gives our clients an up to date overview across all of these markets.

Other items that are provided in the full version include:

• Fleet summaries of the major offshore support owners
• Analysis of charter rates for PSVs and AHTS over the past 12 months
• Commentary on charter rate movements over the past month
• Outlook on expected charter rate movements over the coming months
• Major news items from the relevant regions

If you have any questions about the Rate Commentary or any other services that Derrick Offshore provide do not hesitate to contact us using the details below.

Dan Quarm or Ian Coates

Tel: +44(0)1483 538336

Email: dan@deroff.com or ian@deroff.com

Worldwide Offshore Support Vessel Market Summary – August is a post from the Derrick Offshore Blog.

The below summary provides a brief snapshot of what is included in the main report. Other items that are provided in the full version include:

• Fleet summaries of the major offshore support owners
• Analysis of charter rates for PSVs and AHTS over the past 12 months
• Commentary on charter rate movements over the past month
• Outlook on expected charter rate movements over the coming months
• Major news items from the relevant regions

Rate Commentary Summary – July 2011

North Sea

• The AHTS market began slowly with low rates and few fixtures. The second half of the month saw rates and activity rise due to a tightening of availability, although rates did not reach the heights seen last month.
• For PSVs, rates remained fairly constant over the month although there was a slight improvement as the month progressed as fewer vessels were left available.

West Africa

• The market is still plagued by long running issues causing rates to remain flat.
• There is an extreme shortage of PSVs available in Nigeria and Angola with rates not attractive enough to tempt owners away from other regions.
• There have been a number of tenders of late but larger foreign owners with local connections still tend to dominate the market.

Asia Pacific

• Seasonal activity has caused a slight improvement in rates across the region.
• Indonesia has extended the deadline for foreign flagged vessels operating there which has buoyed hopes for some in the area.

US Gulf

• USGOM currently in an “upside-down” day rate market as term rates exceed spot rates.
• The rate of deepwater permit awards is still slow but steadily improving after BOEMRE issued a guidance document on how to successfully apply for drilling permits.

If you have any questions about the Rate Commentary or any other services that Derrick Offshore provide do not hesitate to contact us using the details below.

Dan Quarm or Ian Coates

Tel: +44(0)1483 538336

Email: dan@deroff.com or ian@deroff.com

Monthly Worldwide Offshore Support Vessel Market Summary is a post from the Derrick Offshore Blog.

On behalf of direct clients Centrica Energy, we have been exclusively authorised to market the attached DNV certified 300-t Kenz pedestal crane for sale.

The crane can be inspected in Rotterdam. The crane comes with the normal spares package and in addition to this we can develop more comprehensive extra spares package which includes some long lead items i.e. spare slew bearing etc which are to be sold under separate negotiation.

Stephen Sorby
Derrick Offshore

Tel:  +44 1483 538336

300-t KENZ CRANE FOR SALE EUROPE is a post from the Derrick Offshore Blog.

SeaHold GEOSHIPS has secured good utilisation of the ‘Stril Explorer’ since the commencement of their long term charter.

RBG chartered the DP2 ROV/Survey vessel from 4^th May on several air diving projects (for clients including Apache, Subsea 7 and ConocoPhillips) and has nearly secured 100% utilisation for the vessel so far. RBG shall complete her charter this week and the vessel shall then proceed to Shell for in-house diving work.

In addition to the Stril Explorer, RBG currently has the MPSV ‘Olympic Triton’ on charter from Canyon Offshore to carry out air diving services for Maersk.

GEOSHIPS recently began their 18-month charter of the vessel from Simon Mokster Shipping, and aligned Hallin Marine and NCS Survey to provide the ROV/ROV personnel and survey equipment/personnel respectively.  Hallin has mobilised a Quasar Compact ROV on the vessel, and NCS has put on a survey positioning spread.

The unique design of the Stril Explorer makes it ideal for diving and ROV work, with workable deck area below as well as the main deck. The DP2 vessel has two hangars; one full length hangar midship and one smaller hangar towards the stern where RBG mobilised their air diving spread.

GEOSHIPS has a strong focus on offshore renewable energy projects, whilst also being able to offer services in support of subsea oil and gas related projects. It is expected that Geoships shall be adding one or two more vessels to its fleet in the near future.

RBG has a portfolio of marine and subsea services, and uses multi-purpose / compliant vessels and equipment to provide air diving services to the global oil and gas industry.

SeaHold GEOSHIPS Secures Strong Summer! is a post from the Derrick Offshore Blog.