Stressed Out: The Ebb of Tidewater Will Leave You Stranded

 | Jan 29, 2016 | 4:00 PM EST
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Stock quotes in this article:

tdw

,

bp

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pbr.a

This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.

Pressure bursts pipes, and the pressure is mounting for stressed-out Tidewater (TDW). As falling crude prices take their toll on the oil industry, the offshore drilling vessel manufacturer has felt the brunt of the downturn.

On Thursday after the closing bell, Tidewater announced that its board approved management's recommendation to suspend the company's quarterly dividend and common stock repurchase program. The company will save about $47 million in cash on an annualized basis and the $100 million that previously was authorized for share repurchases; the buyback authorization was set to expire June 30.

A slew of oil exploration companies have slashed billions from their cpaital spending budgets and laid off thousands of workers as the industry attempts to weather a storm of its own creation. The refusal of the industry's gatekeepers to cut production has resulted in a supply glut that has depressed prices more than 70% over the last 18 months.

The Deal: Petrobras in advanced talks to sell slice of gas distribution unit to Mitsui

Recently, oil giant BP (BP) cut 4,000 jobs while Brazil's Petrobras (PBR.A) reduced its 2015-to-2019 spending budget by a quarter to $98.4 billion from $130 billion. In 2016 alone the company reduced its budget to $20 billion from $27 billion.

Tidewater itself has fallen 82% over the past year. The company acknowledged that the drop in customers' exploration activity due to oil's decline is directly responsible for its income troubles. The company reported a debt load of $1.5 billion during a December presentation, and while the bulk of the notes come due in 2020, its ability to meet those obligations during prolonged low oil prices could be tenuous.

For more on Real Money's 20 distressed companies to watch:

Stressed Out: Introducing Real Money's Distressed Index

Stressed Out: Petrobras and 2 Other Fallen Angels From Abroad

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