Sunday, July 26, 2009

Diamond Offshore CC

Joitain poimintoja DO:n Q2 CC transskriptistä:
"At the same time, in the quarter we did take our three Matt jack-ups, and have idled those and stacked them in the Gulf of Mexico in a cluster, which is typical in the industry and have a skelton crew to keep powered and keep the rigs up to snuff, but for the movement we’ve elected not to beat our heads against the Matt jack-up area.

The market for jack-ups here in the Gulf of Mexico was obviously very severely impacted. It’ll be difficult. I think you’ll have to go all the way back to 1986 to see as few jack-ups operating as though we have currently."

"Well, we would be more than pleased to look at the number that you’ve spoken about. I think that may have been a unique situation and I just don’t have all the facts on that. Numbers that we have been talking about are one, given what we paid for, we would be more than pleased to get a number in the fours. What we obviously want is higher day rate as we can and it would all depend upon whatever market it ended up"


Q: "My next question is, I hate asking you jack-up questions, but kind on the newer builds you’ll have on the fleet, what would you say leading edge for something of that caliber would be in the international community for the 350-footers?

Larry Dickerson


Well, again it varies by market, but they are certainly down from the rates. Our two units, we had a rig in the 190s and we’ve got a rig still in Australia working in the 200s and I don’t think we’re going to see those type rates, because you have a number of the new builds; the new generation of jack-ups that they are rolling and you continue to have new units delivered.

Q:
So, would you just say closer to 100 or closer to 150?

Larry Dickerson

I think you could bracket it in that. I think in some circumstances you could exceed the 150, probably in little ways away from 100."

"Q:One of your competitors recently sold a jack-up for about $175 million, which seems pretty high or seemed very high. Do you think that was more of a one-off situation? I don’t know if you have any insight there and would you care to guess on maybe where the market would be for the type of rig that was sold?

Larry Dickerson

Yes, I thought that was a little high and my understanding is there maybe some circumstances around there that helped put it into that place. So I would think, the market would seem to me for new construction rigs to be below that number.
"


Yhteenvetoa:
-DO näkee udw dr:t 400 000 tienoilla
-ns. kilpailukykyisien jackuppien dr: matkalla $100-150 000
-West Ceresin myyntihinta oli DO:n mielestä yläkanttiin

Ceresin kauppaan liittyy joitakin kysymysmerkkejä ja hinta on yksi niistä. Jos ostaja oli iranilainen niin USA:n viralliset ja epäviralliset kaupankäyntirajoitukset ovat saattaneet vaikuttaa hintaan, kuten myös Scorpion Offshoren omistusjärjestelyt.

Transkripti löytyy Seeking Alphasta ja alkuperäinen audio DO:lta.

9 comments:

Anonymous said...

Why would 175 seem high when a new premium today probably will cost over 200 with several years delivery time?

And is it not positive from a long term perspective that no more orders for new ju's are being placed?

Spicer said...

Thanks for the comment!

Ultra premium to be precise. If I remember correctly premiums include those rated for 250 feet, ultras are rated for 300 and deeper.

My understanding is that the rig prices correlate with the expected day rates. 100 000 dollar day rate and the price of 175 million would equate a P/CF of 10(rough number crunch), with a $150 000 dr the P/CF would be ~5. So if you expect the rates for competitive jackups to fall into the $100k range 175 million on the price would seem expensive, in the $150 000 case 175 million would be acceptable.

The lack of or the scarcity of new j-u orders is of course a good thing for j-u owners, however some new orders have been placed(five I think this year, but all orders have been placed in less reputable yards(Chinese & Vietnamese)).

Anonymous said...

Hi. How u Spicer see quality between asian (chinese / vietnam etc..) rigs and european / american made rigs?

Spicer said...

A longish reply, which hopefully includes an answer to your question.
The great majority of drilling vessel hulls are made in Singapore(Keppel & Sembcorp) and in South Korea (Samsung, Hyundai, Daewoo). The quality of those five yards is most definitely in par with the European yards. Heck, I don't know if there are any European yards besides Technip left(smaller yards like Ulstein and Vulcanos build smaller vessels e.g. OSVs and seismic vessels, but they don't build drilling rigs).
The Chinese haven't produced too many vessels to non-Chinese companies, Ocean Rig's Eirik Raude and Leiv Eirikson are probably the most profilic Chinese made rigs.

There have been some quality and schedule problems(Awilco-COSL, MPF) with the Chinese yards, but the volume of drilling vessels produced by the Chinese is still quite small.
Because equipment failures and delays can incur massive costs to the drilling contractor most rigs are ordered from yards with a good track record and so yards without it can only get orders by offering massive discounts.

The actual drilling equipment and power systems are supplied by European and American companies(NOV, Aker, Cameron, FMC Tec, GE, Caterpillar, Wärtsilä), the yards just manufacture the hull and outfit it with the gear. The Chinese have been gaining a foothold in the drilling equipment business.

Virtually all rigs under construction globally are listed in the following site:

http://shipbuildinghistory.com/world/highvalueships/rigsonorder.htm

The link to the Shipbuilding History-site is also available in the blog's link bar.

Anonymous said...

Regarding construction prices for ju's, this is from Oslo listed MIS a couple of weeks ago:

The last order for jack-up rigs was placed in September and there are no signs that new orders will be placed for at least the next 18 to 24 months, a senior executive at a 30-year-old UAE-based rig construction company said.

Finding finance for new projects has become "very difficult", said Hudson. "We secured financing for our projects last year. We did not take on any project this year that will require financing."

Though the demand for rigs has bottomed out and national oil companies (NOCs) in the region are looking at closing new deals at lower costs, construction costs have not come down substantially, said Hudson. "Labour costs have remained the same. There was a slight reduction in cost for iron and a base metal like copper," said Hudson.

http://www.zawya.com/Story.cfm/sidZAWYA20090713050735/No%20new%20jack-up%20rig%20order%20expected%20for%20two%20years

Spicer said...

Thank you for the comment!

My mistake. The number of j-u orders placed this year is at least 11:

"Zhenhua bags $2.2bn rig bounty
(Wednesday, 22 July, 2009)

"Shanghai Zhenhua Heavy Industry has won $2.2 billion worth of orders from Spanish explorer Arborec Desarrollos Sociedad Anonima for the construction of drilling rigs and floating cranes.

The order covers the construction of 10 jack-up drilling units, seven land rigs and two floating cranes..."

http://www.upstreamonline.com/live/article183884.ece

Seems like Global Petrotech might be behind this order, they might get rid of the SCORE stake if they get the rigs they're after elsewhere.

Vietnam yard to build LeTourneau jack-up(June 1, 2009)

http://www.marinelog.com/DOCS/NEWSMMIX/2009jun00010.html

Anonymous said...

"Sources said the Spanish company is acting on behalf of the National Iranian Oil Company (NIOC)."

-Is there any connection between NIOC and Global Petrotech?

GPT claims to be a privately-owned company?

Spicer said...

Another mistake on my behalf. The original article where I read about the order didn't contain a reference to the NIOC and I didn't read the piece on UPSTREAM, I that linked through.

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