Tidewater accelerates repair work

News - August 11, 2000

Announcing its first quarter earning at the end of July, offshore shipping specialist Tidewater Inc revealed details of the accelerated dry-docking programme on which it has embarked in order to prepare its fleet for the improved market conditions the company anticipates. In the first quarter of 2000 alone, Tidewater's ships were dry-docked on 50 different occasions.

Tidewater provides a range of service vessels to the offshore oil and gas industry, where fleet size, utilisation and vessel day rates primarily determine revenues and operating profit because operating costs.

Apart from fuel and crew-related costs, repair and maintenance account for a large proportion of the company's operating costs, so the timing and of repair jobs and the extent of work required are critical.

Whenever possible, explains Tidewater, its ships are dry-docked seasonally, in order to minimise the impact on vessel operations, and are only carried out if economically justified, given the vessel's age and physical condition.

This year, the company decided to significantly increase the number of vessels it put into dry-dock in the first and second quarters of Fiscal Year (FY) 2001, in order to have the equipment ready for service in anticipation of improvements in the marketlater this fiscal year.

No less than ships were 50 dry-docked during the first and second quarters of FY 2001, and approximately 35 more are scheduled for the second quarter of fiscal 2001.

Tidewater says the decrease in its operating profit in the first quarter was due primarily to increases in repair and maintenance costs incurred from such an intense dry-docking programme.

Twenty-five ships were dry-docked in the second quarter of this year whilst vessel demand and average day rates in the domestic market remained low, thus sacrificing short-term profitability in anticipation of higher average day rates when market conditions in the Gulf of Mexico improve. Another 25 ships were dry-docked outside the US, says Tidewater.