The Gulf of Mexico has been “brutal” for Offshore Supply Vessels. The North Sea market is “depressed.” The Brazilian market “remains subdued,” exploration and production is Southeast Asia have declined since 2014, leading “to an unprecedented number of bankruptcy filings,” while the Middle East is the only region where OSV demand is holding steady.

It’s no wonder that a recent report from Alix Partners concludes that “offshore supply vessel (OSV) owners have been navigating rough waters for many years.”

Oil prices are still below $50 a barrel, despite projections earlier this year of price increases. Exploration and production companies have reduced their numbers of active rigs and demand for OSV services have plunged.

Alix Partners’ study of 44 major companies in the OSV sector shows they are carrying rising debt burdens, up 24 percent to a total of $25 billion since 2011, making it unlikely they will be able to generate positive cash flow. “For the next few years, OSVs will have to confront their new reality,” said the report, “lower demand, shorter charter contracts, and reduced day rates.”

During the past two years, the number of active rigs has declined by over 30 percent leaving the OSV fleet with utilization levels of between 65 and 70 percent.

One analysis indicated that 1,000 vessels need removed from service through scrapping or otherwise to achieve market balance by 2020, but the current scrap rate is about 13 percent of what is needed.

“Companies will have to be diligent and take radical steps to survive,” the report concluded.

Some operators have made strides in reducing their costs and mergers and acquisitions that provide opportunities for synergies are on the rise.

But the best news for OSVs? “Low oil prices will not last forever.”