COLUMN | Summer shopping: Saudis snap up Shelf; Tidewater buys its own shares; nothing sells in the ICBC vessel auction [Offshore Accounts]

Tidewater showed quarterly revenue of US$341 million against US$333 million in the first quarter, a two per cent improvement, and free cash flow was at US$97.5 million against US$94.7 million in the first quarter, a three per cent improvement. Average day rates were US$23,166 per vessel per day against US$22,303 in the first quarter, a four percent improvement.

With its fleet of 189 platform supply vessels (PSVs) and anchor handling tug supply vessels (AHTS), Tidewater is undoubtedly the clear market leader in offshore supply and it is still moving forward, albeit slowly and mainly through rate resets of vessels on legacy contracts.

What drove the stock price 20 per cent high was the news that the company planned a US$500 million share repurchase program, which would represent around 20 per cent of the current market capitalisation. After the company refinances its Nordic bonds into a new US$650 million note due payment in 2030, Tidewater has the flexibility to buy back more of its own shares, and the market loved the idea.

The Saudis are shopping for rigs, whilst Tidewater is shopping for its own shares.

There are also rumours that Tidewater will make an acquisition in the Americas in the coming year, with either Hornbeck or Harvey Gulf being the possible targets. That would be a gamechanger. CBO in Brazil has also been considered in the past, we understand, but there is a valuation gap too large to bridge, apparently.

The evidence of stock buybacks is mixed. They do nothing to improve the underlying business performance, and they typically reward management who hold stock options and make out like bandits by using the company’s money to reduce the number of outstanding shares, thus driving up earnings per share, simply because there are fewer shares in the denominator.

Perish the thought that this could be the rationale at Tidewater.

We believe the money would be better spent buying laid-up vessels from Bourbon in the current auction process and scrapping them ostentatiously to quash supply, or in newbuilds, given the continued fleet age issue that Tidewater faces.