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Was only a matter of time.

Bad tidings for The Indicator’s junk bond.

Years ago I bought that stock during the IPO.and sold it sometime later. Kinda lost track of it. The oilfield boat business is extremely boom and bust. The oilfield was already starting to slow down. The demand destruction for gasoline that is going on right now is unprecedented.

Scrap it or sell it off in pieces. The GOM is completely oversaturated with vessels and most likely will never get back to a high enough activity.

Yea it is a shame. The HossMax series are nice vessels. At one point we picked up a 315fter on contract for 15k a day. That doesn't come close to even covering their daily run cost.

I think they have 35+ new generation 300s that went straight from the shipyard to stack. Never worked a single day. That's from their Tigershark class newbuild program

Why would they build boats that didn’t have a buyer? Or do they lease them all out? I don’t understand producing more then you have current demand for? I get you have to build your infrastructure and hire more employees, but I don’t understand having too much product? Is it truly the nature of the business or is the money just soooo good when it’s boom everyone gets greedy?

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Why would they build boats that didn’t have a buyer? Or do they lease them all out? I don’t understand producing more then you have current demand for? I get you have to build your infrastructure and hire more employees, but I don’t understand having too much product? Is it truly the nature of the business or is the money just soooo good when it’s boom everyone gets greedy?

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Hornbeck was a public company, gotta keep building to keep your shareholders happy. They also want to keep the average age of your fleet as young as you can, the only way to do that is to build more boats. The oil companies started dictating the age of the boats and they wanted all new state of the art technology, ie DP-2 and such. Once those boats turned 20 years old, they became obsolete for the majors. The smaller market started to dry up and then there was not much work for some of those boats. HOS has been running on fumes at 40-45% utilization for about 5 years now. Their stock was around .30 the last time I checked.

All those boats will go into bankruptcy court/Marshall’s Sale and someone will scoop them up for pennies on the dollar and either sell them overseas out of GOM competition or scrap them.

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Make the majors take the depreciation hits on the new stuff,

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The majors dictate rates in times like this when there is a saturation of vessels.

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then when you own the older boats outright you sell them overseas or to other industries for a profit.

If you can’t do that, there was essentially never a business anyway. It was a house of cards.

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Stacking vessels and not selling them is a way to control the market. It’s the boat companies way of driving rates up.

Once a boat is cold stacked and it loses its coast guard COI and ABS Certs it can cost $100k or more just to bring it back into compliance. You gotta have that cash on hand. Then you have to get the crew and get the boat ready to work, as well as float the expenses for 90-120 days because that’s how the oil companies pay.

Unless you can secure a long term contract, it makes zero sense to take one of the boats out of cold stack just to work the spot market.

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its costing more like a million bucks to get stacked boats back in working condition. Some of those boats have been stacked so long they will never work again

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You are 100% correct. The bigger the boat the more it cost, and you’re right. They may work again in a different Industry but not the oilfield. We’ve seen a lot of these boats being sold off and converted into yachts, fishing vessels, fish tenders, survey vessels, cargo vessels, etc. but no oilfield