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Golden Close Maritime Corp. announced [on Tuesday] the sale of their only drilling rig, the Deepsea Metro I, to an Asian buyer.
The drillship, built in 2011 by Hyundai Heavy Industries and managed by Odfjell Drilling, has been warm stacked in Malaysia since 2017 after seeing its most recent contract in disputed waters offshore Vietnam cut short due to force majeure. Since then, the rig has been a primary transaction candidate.
Although the buyer isn’t confirmed, it’s likely to be Turkish Petroleum (TPAO). TPAO acquired the Deepsea Metro I’s sister rig, Deepsea Metro II, (now called Fatih) in November 2017.
Bassoe Analytics shows a value range of $222–246 million for the Deepsea Metro I compared to the acquisition price of $262.5 million.
In an update last week, we wrote that values for modern ultra-deepwater drillships (6th and 7th gen) have risen by another (approximately) 5%. This upward movement is primarily sentiment-based and not driven by current utilization and dayrate trends. And we expect transactions in the near-future to clear at or above these levels.
Although this deal isn’t purely sentiment-driven – it’s an example of a state-owned entity who’s developing their own offshore activities and who wants to operate their own offshore rigs – TPAO seems interested in timing the market right.
Considering that the rig is likely to be well-maintained and will be owner-operated (assuming TPAO is the buyer), we believe the sales price is fair, if slightly more favorable to the seller today. But in time, this deal could end up looking great for the buyer.
For reference, Bassoe Analytics values the newest and highest-spec 7th generation drillships in the fleet at $329–364 million. At the other end of the segment, most older 6th generation drillships have moved up to around $215–238 million.
As the rig will likely not continue competing in the international ultra-deepwater market, the transaction can be seen as positive for other drillship owners. The price level also adds real support to values for similar assets.
There really isn’t much to say about the drillship market right now. It’s sort of better than it was a year or two ago, but utilization (slightly above 50%) and new fixture dayrates remain gridlocked. Most new contract fixtures are in the $140,000–200,000 range depending on the region and asset.
But there’s a growing number of rig owners and investors who agree with us that the market will experience significantly higher utilization which could cause dayrates to double. The problem is that nobody’s been right yet on when that’s going to happen.
Some companies, like Northern Drilling, have tried to take advantage of low drillship values and time the market’s return to greatness. If that happens within a reasonable timeline, they’ll generate strong cash flows. That’s what’s driving values now, and we expect it to continue.
With several other ultra-deepwater drillships in play right now (Bolette Dolphin and Pacific Zonda, among others), look for more reference points to come.
Offshore Energy Today has shared the article above with permission from the author. Original Post Here
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Offshore Energy Today.Â
Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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