Available assets, lack of capital, and sluggish fundamental market improvement are keeping rig values under pressure.

Illustration purposes only; Source: Pixabay
Due to several factors including lack of liquidity (transaction activity), less willingness by investors and banks to finance rig acquisitions, expectations of a prolonged low-dayrate environment, and additional distressed or available supply in the market, offshore rig values have decreased across all segments in Bassoe Analytics.
It should be noted that the sale and purchase market is not functioning well at the moment. Volatile gaps in bid/ask spreads make valuations difficult to predict and unstable, and could prevent certain transactions from clearing apart from cases where assets are distressed or where the buyer has a committed drilling contract.
As such, values have been reduced to reflect potential downside risk even if many sellers may continue to wait to sell assets at higher levels if they’re able to.
Ultra deepwater values hit hardest
Non-harsh ultra-deepwater floating rig asset values have decreased by 20% on average. This significant repricing comes after recent cancellations of newbuild contracts by Transocean and Northern Drilling’s cancellation of their purchase agreement for the West Cobalt which was acquired earlier this year at $325 million (plus $25 million for a second BOP). As a result of these cancellations, there are three additional ultra-deepwater drillships available, and these assets are less likely to be sold until values rise or will be sold at levels lower than where they were in late 2018 and early 2019.
Jackup values under pressure from distressed assets
Apart from ultra-premium harsh environment rigs (CJ70 and N Class), jackup values have decreased by 3–10% depending on age, specification, and design. While the fundamentals in the jackup market are outperforming deepwater, downside pressure to values remains. And with the availability of a number of distressed assets including those being sold by creditors of Oro Negro, Aban Offshore, and Dynamic Drilling, as well as a newbuild rigs still at shipyards in China and Singapore, market clearing levels for jackups are unlikely to gain significant momentum in the near-term.
Harsh environment semisubs performing well, but affected by investor malaise
Harsh environment semisub values have decreased by 3–5% to reflect the general deterioration in the capital market. Values for this segment remain at or slightly above previous transaction levels due to high utilization and expected upside in dayrates, but acquisitions at a premium to current values are not likely to occur.
Offshore Energy Today has shared the article above with permission from the author. You can read the original post at Bassoe.no.
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.
The Best Tourism Digital Marketing Company.
The Helpful Trend It Service.
How TOP Platform Solves A Need For Influencers Marketing.
With TOP You Can Find Expert Service For Press Release Distribution.
3 Ways TOP Helps With Online Reviews
The significance of influencer marketing.
Finding The Best Help In Digital Marketing.
4 Reasons All Photographers Need To Sign Up With TOP.
3 Reasons Top Is A Leader For Ebooks To Read.
3 Reasons To Advertise With TOP as Soon As Possible.
1 Easy Way To Make Money Doing Reviews.
2 Main Reasons To Think About Going With TOP Translation Platform
2 Main Reasons To Opt With TOP For Online Reputation Repair.
Why All Advertisers Should Consider TOP Platform.
3 main Reasons to Go With TOP for Content Creation Needs of Any Kind
Trump blasts Scaramucci and tweets video of his former aide praising him.
Trump on trade war: China wants to negotiate and we will be ‘getting back to the table’.
Trade war to drag on as Trump says long way to go and China strikes hard-line tone
Nintendo to release two Pokemon titles for Switch console in late 2019.
Oil falls but losses capped by hopes of easing trade tensions.
Billionaire James Dyson reportedly buys $54 million penthouse in Singapore.
Inside the NRA’s scandals and financial troubles.
By: David Carter Shinn, Bassoe Offshore