Northern Drilling announced it has exercised the option for Cobalt Explorer, a 7th generation DP3 and ultra-deepwater drillship from Daewoo Shipbuilding & Marine Engineering Co. Ltd (DSME) for a total consideration of $350 million and flexible delivery until end Q1 2021.
Cobalt Explorer is a high-spec Tier 1 UDW drilling ship being purchased at close to 50% discount to the previous owner’s estimated total project cost of $660 million. Cobalt Explorer is the only stranded UDW drillship from Korean yards that comes with additional spare parts including two blow out preventers, which are conservatively estimated to have an additional value of $25 million each.
- The consideration of $350 million is split as follows:
- $12 million paid in December 2018
- $93 million will be paid in five payments of $18.6 million over ten months, beginning June 2019
- $245 million final installment at delivery
- With back-end loaded payment terms and flexible delivery schedule, the Company can comfortably wait for further market improvements in the benign deep water market before electing to take delivery. The market for Tier 1 drillships continues to strengthen with several data-points of day rates approaching $300,000 per day for start-up in 2020 and beyond. The Company believes the fundamentals will continue to tighten and is ideally positioning itself with three high-spec drillships due for delivery in 2021.
Scott McReaken, CEO, commented:
“With the Cobalt Explorer acquisition, Northern Drilling continues to execute on our strategy and adds to our premium fleet of Tier 1 drillships, all acquired at a substantial discount to replacement cost. The Company’s two harsh environment rigs were acquired on a similar forward delivery basis and we have successfully secured contracts with premium operators at leading day rates in the North Sea. The deepwater market is showing clear signs of a recovery providing increased confidence our drillships will continue to appreciate in value and secure attractive contracts by their delivery in 2021.â€
Cobalt Explorer is an ultra-deepwater drillship ordered by Vantage Drilling and built by Daewoo at Okpo shipyard, South Korea. The drillship construction was terminated in August 2015 by Vantage Drilling.
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