The Corporate Restructuring Report-Gulfmark Offshore Inc (GLF) Update
On November 14th, 2017, Gulfmark Offshore Inc. (NYSE:GLF) successfully completed its restructuring plan and emerged from Chapter 11 bankruptcy. In our note dated November 20th, 217, we had a positive view on the company and continue to remain bullish on its prospects. At emergence, Gulfmark had access to a total liquidity of ~$93 million. This should give Gulfmark a runway into late 2020 without any market improvement or drawing on a new credit facility. The offhore support vessels (OSV) may have bottomed out and is seeing signs of early recovery. The PSV North Sea term fixtures and utilization levels are rising, pointing to improvement in the market outlook. The consensus outlook is suggesting utilization levels for industry to rise by ~85% by 2020 (vs. the current 65%). This could mean day rates climbing to ~75-80% of their peak seen in 2013-2014.
The US EIA has raised its oil price outlook for 2018 and beyond amid fresh signs of global market rebound. The higher price could attract more capex, which should support demand for OSVs. The supply glut faced by the industry may be coming to an end. The company anticipates only 60% of new vessels on orders to be delivered and also expects many stacked vessels not to return to service.
With a relatively young fleet (average age of 10 years), we believe Gulfmark is well-positioned to benefit from an eventual industry recovery. In our view, Gulfmark is undervalued at current levels.
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