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Workboat and offshore marine markets have been gaining strength over the past three years. A re- surgence of oil production in the Gulf of Mexico has brought orders for new vessels, major oil companies are ramping up their presence in the region, and Gulf-oriented state governments are aligning to encourage offshore growth. Merger and Acquisition volumes have generally expanded in the US along with this growth as strategic companies seek to strengthen their positions in niche competencies (Figure 1). As always, a trickle of less strategic deals has materialized in response to opportunistic conditions such as regulatory changes and cases of Þ nancial distress. A recurring theme in our quarterly studies of the marine deal-making landscape, particularly in North America, is the domi- nance of inland and offshore workboat markets. The graph in Þ gure 2 shows the consistency and general outperformance of the inland/offshore public stock indices in comparison with other marine segments, and the S&P 500 this year. Despite continuous regulatory challenges, upward momentum in both domestic oil production levels and petroleum price levels are likely to sustain the positive trends for at least the near future. Recent Deals in the Oil Patch The Þ rst deal we examine is a strategic asset deal, as Gen-esis Energy L.P. (GEL) announced its acquisition of Horn- beck Offshore Services? (HOS) ß eet of oil-transport barges and tug boats for about $230 million in July. Genesis operates a ß eet of inland barges and tugs, as well as terminal facilities and oil pipeline systems. The addition of the Hornbeck ves- sels adds to GenesisÕ ocean-going capabilities and expands the companyÕs presence in the GOM, northeastern US and Great Lakes region, despite some customer overlap. Shares of pub- licly-traded limited partnership Genesis are up more than 30 percent since the beginning of 2013. HornbeckÕs shares are up more than 50 percent in the same period, and the sale of the transport vessels dovetails with the companyÕs strategic shift to focus on oil and gas exploration and production. Order books for newbuilds have been strong this year. After acquiring BollingerÕs Bee Mar OSV operating company last year for $243 million, Harvey Gulf International Marine again made headlines in May with the signing of three agree-ments totaling $540 million for construction of 14 new ves- sels. These and other orders will keep yards such as Eastern Shipbuilding Group in Panama City, FL busy for quite some time. LEEVAC Shipyards , another growing ship repair and building company, answered calls from their customers for a facility east of Lake Charles by acquiring the Quality Ship-yards subsidiary of Tidewater, Inc. (TDW). The asset deal includes 35 acres on 2,500 feet of waterfront, four drydocks, several cranes and 100,000 square feet of covered production facilities. Tidewater stock is up about 20 percent this year, and the company continues to focus on ownership and operation of its multifaceted ß eet serving the worldwide offshore energy industry. Tidewater crews operate more than 340 vessels, pro- viding a wide range of services in support of offshore petro- leum exploration, Þ eld development and production. In May, through a wholly-owned subsidiary, Tidewater entered into an agreement with HitecVision to purchase NorwayÕs Troms Offshore Supply AS (ÒTroms OffshoreÓ). The acquisition will expand TidewaterÕs global footprint into the Norwegian sector of the North Sea and supplement TidewaterÕs experi- ence and vessel ß eet operating in harsh environments, includ- ing cold climates. The approximately $395 million deal im- plies a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) of 33X. Another player that has been very acquisitive in building a marine energy presence is NGL Energy Partners (NGL), which most recently acquired the assets of Crescent Termi- nals, LLC along with Cierra Marine, LP and its afÞ liated companies. The Cierra Marine acquisition doubles NGLÕs cur- rent ß eet of tow boats and crude barges, while the Crescent fa- cility adds 130,000 barrels of storage capacity by Eagle Ford shale in South Texas, and 20,000 barrels per day of capacity Maritime & Offshore M&A Regulatory, Financial & Operational changes drive strategic deals in the crowded Workboat markets By Harry Ward Insights16 I Maritime Professional I 3Q 2013MP #3 1-17.indd 16MP #3 1-17.indd 169/10/2013 10:37:54 AM9/10/2013 10:37:54 AM
