VesselsValue sounds the alert on MODU values following 2 sales of modern premium jack up units to separate buyers at historic lows.

Ravi Mehrota backed Foresight Drilling has picked up the 2013 blt 350 foot Keppel super B design Dynamic Vision from creditors for a knock down price of 56 million against a VV value of usd 65 mill.

“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 mill 6 months ago.

At the same time Shelf Drilling have announced the purchase of 2007 blt Baker Marine Pacific 375 design Maersk Completer at usd 38 mill against a VV value of usd 38.8.

“We are seeing day rates for premium units not far above operating costs and charterers and oil majors can afford to be selective and this is having a knock on 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”.

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

“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.”

Drillships have been the worst affected with 2 x vessels under 10 years old going for demolition in recent months one further unit 7 years of age looking to go the same way.

“This is significant” says Day “especially considering these units were contracted in the boom years between 600 – 800 million excluding upgrades for field work”
Source: VesselsValue