‘Lack of urgency’ in the drilling market softens OSV demand

With offshore rig utilisation set to fall in the second half of 2025, offshore support vessel owners are anticipating near-term headwinds to vessel demand for the remainder of the year.

After reporting strong earnings and record quarterly day rates in the first half of 2025, Tidewater president, chief executive and director, Quintin Kneen, sees “a bit softer” vessel demand over the next two quarters.

This softness is due to macroeconomic and geopolitical turmoil injecting uncertainty into the offshore rig market, with oil developers slow-walking projects. Ongoing conflicts in the Middle East and Ukraine, Russian sanctions, global trade wars, tariffs and inflationary costs make for a challenging investment climate. Additionally, the price for a barrel of Brent crude has dropped by almost 17% over the last year, falling from US$80.86 in August 2024 to US$67.12 in August 2025.

Offshore drilling rig utilisation hit 81.9% in Northwest Europe in May but had fallen to 72.1% in August, according to data compiled by Seabrokers.

Mr Kneen said Tidewater was unaware of any project cancellations and noted customer conversations remain constructive. “But nonetheless,” he said “we seem to be in a period that can be characterised as lacking any sense of urgency related to commencing committed capital expenditures.” He shared his outlook with investors during a Q2 2025 earnings call in August.

As the world’s largest OSV owner, Tidewater has a global footprint, with tonnage operating in every major offshore drilling market. It has a total of 210 active OSVs (both AHTSs and platform supply vessels) operating in the Americas, Asia Pacific, Middle East, Europe, the Mediterranean and West Africa. Examining Tidewater’s earnings and outlook provides a global view of the health of the OSV market.

While rig utilisation levels are expected to moderate in the second half of 2025, Tidewater still sees its own OSV utilisation levels rising in Q3 and Q4, but at a slower pace than it had projected earlier in the year.

The US-based OSV owner’s Q2 2025 earnings benefitted from a 4% bump quarter-on-quarter in average day rates, climbing by US$1,300 to US$23,166. The increase in average day rates, Mr Kneen noted, was the result of vessels “rolling onto higher leading edge day rate contracts, bolstered by foreign exchange rates that largely strengthened against the dollar during the quarter.”

Tidewater’s vessel utilisation levels slipped quarter-on-quarter, falling from 78.4% to 76.4%. Globally, Tidewater reported it had just six vessels stacked.

Looking at individual regions, the Americas, Europe and the Mediterranean showed healthy jumps in revenue of between 27-28%, driven by increased day rates and utilisation, while vessel revenues in Africa fell 22%.

“The UK sector semisub rig count is a cause of concern”

But Mr Kneen remains upbeat, and Tidewater is “comfortable” with its full year guidance of revenues between US$1.32Bn and US$1.38Bn. He noted strong subsea and production-related activity will attract vessels, alleviating the near-term dropoff in the drilling market.

This in turn “reduces the number of vessels available to satisfy the increase in drilling activity we see shaping up nicely in 2026,” he said. He sees this developing into another opportunity to aggressively push vessel day rates higher.

Like Tidewater, Christen Sveaas-led Sea1 Offshore sees robust subsea activity and is projecting a moderate reduction in rig utilisation in the near term, with a gloomy outlook on activity in the UK North Sea.