In Celestial, his upbeat tune of three years back, musician Ed Sheeran highlights the uncertainty inherent in every relationship:
“You see, tonight, it could go either way
Hearts balanced on a razor blade…”
As we survey the offshore landscape, these words ring true. This week, we look at a few of the binary outcomes possible across the industry, where hearts, business plans, and balance sheets are, as in the song, balanced on a razor blade.
The year 2024 was one of hope and optimism for Colombia. Left wing President Gustavo Petro, who assumed office in 2022, had confounded fears that he might be a Colombian version of the populist former President of Venezuela, Hugo Chavez, who destroyed democracy there and ruined the economy.
The Colombia economy grew steadily in 2024, the President was engaged in peace talks with the remaining guerrilla groups in the country, and state oil company Ecopetrol and Brazilian operator Petrobras had announced the discovery of the six trillion-cubic-foot (170 billion-cubic-metre) reserve Sirius gas development in Block GUA-OFF-0 located in around 800 metres of water in the Colombian Caribbean, the nation’s largest ever offshore discovery.
This find was important because Petro, ironically given his name, has placed a ban on new fossil fuel exploration, and the country has not issued any new licences for drilling, which has led to growing reliance on imported natural gas.
Fast forward eight months and the situation looks a lot more fragile.
Last week, Colombia was rocked by two attacks from dissident elements of the rebel group FARC, which signed a peace treaty with the government in 2016. At least 18 people were killed after a car bombing and an attack on a police helicopter.
In the southwest city of Cali, a vehicle loaded with explosives detonated near a military aviation school, killing six people and injuring more than 30 on Friday. Twelve military personnel also died in the attack on a helicopter in Antioquia in the north of the country. A drone believed to be operated by left wing guerrillas struck the helicopter, which was being used in the government’s campaign to destroy the coca leaf crop (coca leaf is the raw material used to make cocaine).
These latest attacks and surging production of cocaine threaten to plunge the country back into the violence it experienced in the 1990s and early 2000s before the signing of the peace accord. As per the UN Office on Drugs and Crime, Colombia produced an estimated 2,664 tonnes of pure cocaine in 2023, a 53 per cent increase from the previous year. Rising drug production and narcotics exports are once again stimulating political violence just as the country prepares to select candidates for the 2026 elections in which Petro cannot run again.
On August 11, one aspiring candidate, Senator Miguel Uribe, died from his wounds two months after he was shot in an assassination attempt in the capital, Bogota. His mother Diana Turbay had been killed in 1991 when the security forces botched an attempt to rescue her from Medellin Cartel kidnappers. His father has now announced he will stand for the presidency.
President Petro himself has struggled to provide any leadership and any clear successor from his own government. Earlier this year, the finance minister Diego Guevara resigned after Petro failed to agree to a plan to reduce the country’s increasing budget deficit, which stands at six per cent of GDP, whilst the former foreign minister Álvaro Leyva accused the President of being a drug addict who had skipped meetings in Paris in order to get high.
Colombia remains heavily dependent on onshore oil revenues for its government income, and produces around 700,000 barrels per day, generating US$15 billion of exports in 2023. Petro added another one per cent tax on fossil fuel production earlier this year, even as foreign investment has fallen.
Unfortunately, two weeks ago, Petrobras and Ecopetrol announced that their third exploration well, Buena Suerte-1, which was drilled by the semi-sub Noble Discoverer, was a dry hole with no commercial hydrocarbons present. The partners will keep the rig on hire for another year working on the appraisal wells for the Sirius field.
To make matters worse, Colombia’s former President Álvaro Uribe (no relation to the assassinated senator) was sentenced to 12 years of house arrest and fined US$578,000 at the start of this month, after he was convicted of witness tampering and bribery.
Uribe, who was President between 2002 and 2010, was also barred from public office for eight years and he has said he will appeal the case. This has divided public opinion – to many Colombians he is a hero who crushed the leftist rebels militarily, but many others believe he colluded with right-wing death squads and brutal militias and has blood on his hands.
Nobody wants Colombia to slip back into the dark days of the 1990s when large areas of the country were controlled by narco-trafficking guerrilla groups and heavily armed cartels, when tourism was dead, over 220,000 Colombians were killed from 1966 to 2016 in the various internal conflicts, and millions more were displaced from their homes.
The 2026 presidential election will be critical. Petrobras’ Sirius discovery has highlighted the prospectivity of the country’s Caribbean waters, but without a U-turn on the new drilling ban, Colombia will face increasing dependence on foreign gas until Sirius is brought online around 2030.
Without a resolution to the rising power of the drug producers, the country faces more violence and less investment. It is balanced on a razor blade.
We have oft pilloried The Metals Company, the start-up that aims to harvest polymetallic mineral nodules from the deepwater abyssal plain of the Clarion-Clipperton zone of the Pacific Ocean backed by the governments of Nauru and Tonga.
The company released its second quarter 2025 financial results and a corporate update recently. Following the news that it is seeking the approval of the American government’s National Oceanic and Atmospheric Administration (NOAA) for its mining plans in international waters, which fall under the jurisdiction of the International Seabed Authority (ISA), the company’s stock price rallied to over US$7 per share.
This was based on the expectation that Washington would fast-track approval and protect the company against the obvious breach of international law that it was seeking to exploit. A year ago, the shares stood at just US$1.
Now they are back down to US$4.86 on Friday after the Metals Company reported a net loss of US$74.3 million for the second quarter, a significant increase from the net loss of US$20.2 million reported in the same period last year, and project delays.
The company burned through another US$10.6 million of cash, but has total cash on hand at the end of the quarter pf approximately US$116 million following an investment of US$85.2 million in exchange for 19.6 million common shares at US$4.34 per share in June by Korea Zinc.
Additionally, the company announced a US$37 million registered direct offering (RDO) led by existing investors, including Michael Hess and Brian Paes-Braga.
On August 4, 2025, the Metals Company published technical report summaries highlighting what it said was a combined net present value (NPV) of US$23.6 billion for its NORI-D polymetallic nodule Project, and other areas. The company’s current market capitalisation and enterprise value is around US$2.6 billion, a massive discount to that NPV.
Founder, CEO and Chairman Gerard Barron told investors he now expects to commence commercial production from the NORI-D Area in the fourth quarter of 2027, with an average annual production rate of 10.8 million tonnes of wet nodules per annum from 2031 through 2043, and an expected 18-year life of the subsea mining operation in the permits. The delays relate to both regulatory approval and upgraded needed on Allseas’ nodule collecting mothership, the converted drillship Hidden Gem.
Could the Metals Company become a billionaire maker for its backers and Mr Barron?
Better call Ed Sheeran. It seems that the company is also balanced on a razor blade.
Readers will recall that investment researchers at Iceberg have shared our scepticism on Mr Barron’s company, which has consistently rewarded its managers and directors lavishly, and has consistently failed to achieve any of its previously stated timelines. Both the economic challenges of mineral recovery in the remote Pacific Ocean in depths of 4,500 metres using brand new technology, and the environmental challenges of extracting nodules in a pristine and barely studied marine environment, remain.
No sooner had the Metals Company published its rosy, if delayed outlook, and its stellar project NPV, then Iceberg was dissecting them with clinical efficiency, here. The headline, “The Pre-feasibility Study Assumptions Confirm that TMC’s Economics don’t Work,” says it all.
It is worth your time to read the entire report. Critically, Iceberg highlights that crucial sections of the pre-feasibility study (PFS) for the NORI-D project are written by either company employees or by small consultants with only one or two clients, including the company. This creates an obvious conflict of interest.
For example, the market studies section, which includes the vital metals price assumptions, is signed off by Anthony O’Sullivan, the Metal’s Company’s Chief Development Officer. He is also the former COO of bankrupt subsea miner Nautilus Minerals.
Mr O’Sullivan has been awarded over one million shares in the Metals Company in the last 18 months, according to regulatory filings. The shares are now worth around US$5 million today, Iceberg highlights.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” as journalist Upton Sinclair commented in 1934.
His large personal shareholding in the Metals Company means Mr O’Sullivan cannot be entirely objective in his preparation of the PFS. Obviously.
The revised PFS offers not a lot to the people of Nauru, much less than the company had proposed under the ISA’s model, which the company has walked away from.
Iceberg notes that only US$194 million is earmarked in the NORI-D PFS to be paid to Nauru.
An additional US$465 million is paid to Low Carbon Royalties as a two per cent gross overriding royalty on all and any future revenue derived from the NORI mining area. Note that Brian Paes-Braga, an investor in the Metals Company, is the Chairman and CEO of Low Carbon Royalties.
The Metals Company itself, “contributed a future revenue royalty on its NORI project,” in return for a 35 per cent strategic stake in Low Carbon Royalties and US$5 million with CEO and Chairman Gerard Barron joining the board of directors of the Canadian company as per the 2023 press release.
The cross shareholding and cross directorships make the relationship between Low Carbon Royalties and the Metals Company, er, problematic.
It is clear that Mr Paes-Braga and Mr Barron will do a lot better from the override royalty deal compared to the people and Government of Nauru. If there is US$5.5 billion NPV from the NORI-D project as Mr Barron claims, then, the upside to Nauru is paltry.
It is not at all clear to me why Nauru doesn’t withdraw from the agreement and insist that exploration proceeds under the auspices of the legal regime of the ISA, rather than the US government. Nauru seems to be getting three per cent of the NPV for its consent to the physical tearing up of the seabed and the metaphorical tearing up of the international law of the sea.
Peanuts.
In the PFS, the cost of production has increased by 27 per cent compared to 2021 estimates from the company, and the volumes of recoverable metals have fallen to 164 million wet tonnes (wmt), down 90 million wmt from the initial estimate of 254 million wmt. Surprise!
Remarkably, the company has assumed that despite the American government providing the licencing for the project, it bases the NPV on zero US royalties payable. As a comparison, Iceberg highlights that the US imposes an 18.75 per cent royalty on offshore oil and gas production.
When Iceberg crunched the NPV itself using today’s metal prices at market levels, applying a 10 per cent US royalty rate and a nickel recovery rate of 83 per cent, not the 97 per cent used in the PFS, and a 15 per cent discount rate it found a negative NPV of US$1.5 billion. Allseas’ CEO had previously indicated that 75 per cent nickel recovery was a realistic expectation. Either way, there’s no net present value under the Iceberg model, only a negative present value.
Even assuming zero American royalties, the project’s NPV remained negative in Iceberg’s calculations, at minus US$571million.
Do your own research, readers. Maybe cobalt prices will surge, maybe millions of tons of manganese could be produced by the Metals Company without reducing global prices. The next line of Ed Sheeran’s song Celestial is the following:
“We are designed to love and break
And to rinse and repeat it all again.”
Mr Barron has loved and broken one subsea miner, Nautilus Minerals, and made a fortune selling out before it ran out of cash. Now it seems he intends to rinse and repeat it all again at the Metals Company.
It is almost the end of the holidays, and I am acutely aware that I have still not given any holiday shorts on books to read apart from Moby Dick by Herman Melville, the epic nineteenth century whaling yarn, which everyone in the marine industry should try and read once in their lives.
Now there is a recommendation. Released just this month, Homo Criminalis is written by Professor Mark Galeotti, one of the world’s leading experts on crime in Russia, who has been banned from the country since 2022. He highlights the history of organised crime, showing that the corruption, violence and blurring of state authority and private, vested interests is neither new, nor unusual.
In a world with 36 million drug addicts, as Galeotti claims, millions of recreational users of prostitutes, narcotics, bootleg booze and counterfeit goods, and where Colombia is producing nearly 3,000 tonnes of pure cocaine per year (as we saw above), the line between what he describes as the underworld of criminals and the “upper world” of law-abiding citizens like our readers is not as clear as it might be. All that dirty money needs to be laundered somewhere and somehow.
Thus, banks in Dubai (it is always banks in Dubai, it seems to me), lawyers in London (ditto) and politicians in numerous countries (Serbia would be a good example, so sue me, Mr Vucic) often find themselves face to face with individuals offering them payments from which the source of funds perhaps should be investigated more deeply.
However, as with the Metals Company and the approval of its mineral price estimates, the Upton Sinclair quote that, "It is difficult to get a man to understand something, when his salary depends upon his not understanding it," holds good for much of the issues tackled in Homo Criminalis, too.
Reading Galeotti is actually rather like listening to the intense insight of someone completely off their face on something spicy. The author jumps around from medieval Europe, modern day Latin America and Qing dynasty China, throwing out anecdotes and facts on everything from the corrupting influences of eighteenth-century English tea smugglers escaping import duties via caves and seaborne transfers late at night, to today's cartels operating cocaine submarines.
"We have to recognise that our banks are full of dirty money, our foreign policy depends on deals with kleptocrats, our supply chains are packed with counterfeit, our glittering cities are built on foundations of stolen sand and speculative fraud, and our consumer goods and raw materials alike are produced by trafficked labour," Professor Galeotti concluded.
That’s depressing, but true, but it doesn’t have to be that way. We’ll keep calling out malfeasance and conflict of interest, corruption and embezzlement, wherever we find it.
We should also highlight the podcast Targeted (www.targeted.com), which tells the stories of people impacted by abuses of power – and of Gaurav Srivastava, who is in a category of his own, involved in a strongly contested case about alleged oil smuggling and sanctions with his former partner in Switzerland.
Our longtime contact, SBM Offshore whistle blower Jonathan Taylor, recently shared his story on the show. Mr Taylor is the former SBM in-house lawyer who, in 2012, uncovered over US$275 million in bribes paid by the floating production company to secure contracts in Brazil, Angola, and Equatorial Guinea.
As we have previously covered, this resulted in a decade of legal wrangling for him, and hundreds of millions of dollars of fines for the company.