If you want to build and operate an offshore-energy rig, you'll either have to deal with companies like Tidewater
The business of providing service boats for the offshore-energy industry saw more smooth sailing during Tidewater's fiscal third quarter. Revenue rose 25%, but excellent cost containment led to a tripling of net income. Yeah, I know I talk a lot about "excellent cost containment," but what else do you call it when a company grows revenue by 25%, boosts utilization rates, and has its operating costs go down from the previous year?
Not to give short shrift to what management is doing here, but the story really isn't all that new or exceptional. The energy industry wants and needs boats, there aren't quite enough of them to satisfy the demand, and Tidewater is raking in the bucks.
In the international business, which provides three-quarters of the company's operating profit, revenue rose 26% on top of a slight increase in utilization (from 72.8 to 75.5) and a 20% jump in the blended average dayrate. Domestically, revenue was up 73% as utilization climbed from 57.2 to 65, and dayrates jumped almost 52% (again, a blended average). In both domestic and international waters, deepwater vessels are seeing high utilization and very high dayrates.
The bear case here is the same as it is for most energy-service companies ranging from Schulmberger
For more Foolish thoughts on the energy sector:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares). He hopes those Tidewater workers recently kidnapped and held in Nigeria are OK and quickly released.