Blog: Gulf Coast OSV bankruptcies

The Emas Chiyoda Subsea bankruptcy found its way onto the front page of the Houston Chronicle’s business section Feb. 28. ECS is owner and operator of a group of subsea construction vessels. It wasn’t good news for the firm’s 200 Houston employees or the offshore service vessel (OSV) industry. But more troubling is the growing number of bankruptcies and financial hardships, and the likelihood it will continue as oil prices remain below 2014 levels. Depressed oil prices are “expected to average $57.52 a barrel in 2017, even if OPEC extends its supply cuts and global demand continues to improve,” says Reuters, and likely will sustain the progression of bankruptcies and financial distress. It is particularly intense on the Gulf Coast. It was quite obvious at New Orleans-based Tidewater, the largest OSV operator in the world. Last summer, CEO Jeff Platt warned that Tidewater may default on part of its debt, despite having received payment extensions on some of its notes. Bankruptcy was mentioned. A second set of waivers, effective until March 3, was granted. The firm continued to report quarterly losses that weren’t encouraging. Clearly, things must change for OSV operators. Bankruptcy threats are a hovering cloud over the Gulf Coast, with no front in sight to clear it out. (Source: Work Boat blog 03/02/17)