Drill rigs are being sold at historic low prices

PRESS RELEASE – VesselsValue sounds the alert on MODU (Mobile Offshore Drilling Unit) values following the sales of two modern premium jack-up units to separate buyers at historic lows.

Ravi Mehrota backed Foresight Drilling has picked up the 2013-built Keppel super B design Dynamic Vision from creditors for a knockdown price of USD 56 million, while the true value lies around USD 65 million, according to VesselsValue.

“This is a benchmark sale at a historically low level”, says Robert Day, Head of Offshore at the firm. He suggests the same rig would have commanded in excess of USD 80 million just six months ago.

At the same time, Shelf Drilling has announced the purchase of 2007-built Maersk Completer at USD 38 million against a VV value of USD 38.8 million.

“We are seeing day rates for premium units not far above operating costs and charterers and oil majors can afford to be selective, this is having a knockdown effect on asset values”, Day said.

“There are now a number of units for sale either by auction or on the open market and this is not helping the situation. There are, however, some positive moves being made and we have seen a healthy level of scrapping over the past 2 years”, Day adds.

VesselsValue data shows that 22 MODU’s (10 jack-ups, 6 semi-subs and 6 drillships) have been sent to the breakers in 2019, compared to 39 the year before (17 jack-ups, 15 semi subs and 7 drillships).

“This healthy level of scrapping is exactly the kind of responsible action that we need to see from the major owners and operators to facilitate a recovery going forward to aid a future recovery”, Day comments.

Drillships have been the worst affected with two vessels under 10 years old going for demolition in recent months and one further unit of 7 years of age looking to go the same way.

“This is significant, especially considering these units were contracted in the boom years between 600 – 800 million excluding upgrades for fieldwork”, Day concludes.

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