On the first day of Christmas my true love gave to me… a partridge in a pear tree, according to the ancient English carol. At Baird Maritime, however, that's the cue for a dozen topical features about the marine industry through December, once again.
Lovers of festive traditions get scrolling, as, for the sixth year in a row, we are running through the Twelve Days of Christmas from an offshore energy perspective.
Last Sunday, November 30, was celebrated by Christians as Advent Sunday, so let’s kick off. In 2024 (here), we opened with three dry wells in Bulgaria, two Namibian jailbirds, and a Scottish ferry in a pear tree.
What has my true love given to me this year? Surely not another arrest warrant for Isabel Dos Santos, the daughter of the late Angolan president, our 2022 feature?
No. Like pouring hot brandy over a Christmas pudding, someone has set their stock price on fire, selling a rig. Their stock, not their Christmas stocking.
Northern Ocean’s share price rose nearly 40 per cent in Oslo when the company announced the sale of its harsh environment semi-sub Deepsea Bollsta to Norwegian compatriot Odfjell Drilling last month. Odfjell’s share price has also risen 11 per cent over the last month too, suggesting that this was a genuine example of a win/win.
Deepsea Bollsta has been managed by Odfjell since early 2022 and recently began a firm contract with Equinor in Norway until early 2028. In addition, Equinor has five further one-year optional contract extensions, which could take the rig through to 2033.
Northern Ocean sold the rig for US$480 million, far above its contract free market value (which I would estimate at US$380 million), after it started the contract, locking in hundreds of millions of dollars of additional backlog for Odfjell, and setting out a path for growth for the company.
Odfjell already owns four harsh environment semisubs of its own, and manages other third-party units for Chinese owners and SFL. The company has a strong position in Norway, where all four of its own rigs work on term charters, but has been perceived as capacity constrained because neither of its major competitors in the Norwegian sector, Transocean and COSL, are sellers of their Norwegian compliant rigs and the orderbook is small.
The sister rig Deepsea Mira is also owned by Northern Ocean but managed by Odfjell and is working in Namibia on a short-term drilling programme for independent Rhino Resources.
If and when it wins a long-term contract, we can expect it to also be sold to Odfjell, and Northern will dividend out the final cash in the company, giving its Norwegian billionaire owner more cash to play with in other shipping ventures.
The largest shareholder in Northern is Hemen Holdings, an, "entity ultimately controlled by trusts established by John Fredriksen for the benefit of his immediate family members."
The sale of Deepsea Bollsta is a serious reward for patience for Mr Fredriksen – recall that Northern acquired the rig in 2017 for US$400 million, with half that price paid to the Korean yard in December 2017, and half on delivery. In absolute terms, the returns on the assets have been less than inflation over the last eight years, and less than the returns from keeping the cash in a money market fund.
Now that Northern owns just one rig, it joins the fragile club of single rig owners, all of whom should exit the business at some point. Go big or go home.
In 2026, I fully expect Northern to sell Deepsea Mira to Odfjell and exit, Vantage Drilling to sell its sixth generation drillship Platinum Explorer and exit, and Deep Value Driller to sell its eponymous rig to its bareboat charterer Saipem.
Brazil also remains a mess of sub-scale drilling contractors owning or two vessels and we can expect some combination of them to emerge and rationalise the market. I would expect Eldorado to sell its drillship Atlantic Zonda to its manager Ventura, and Korean yard Hanwha to sell its Tidal Action (former West Libra) probably to its manager Constellation Oil Services.
Alternatively, some form of combination could finally occur between restructured Brazilian players Ventura, Constellation, Foresight and/or Etesco.
It is lonely being a single partridge in a pear tree, so don’t expect there to be as many singletons a year from now.
With a market capitalisation of over US$800 million, newly listed Taiwanese player Dong Fang Offshore is on a roll, with its stock price up 10 per cent since it made its debut on the Taipei stock market last month.
It’s not yet Christmas, but Dong Fang is now on the receiving end of a re-gifted ship.
If Arctic Securities (rival to Pareto, Fearnleys and Clarkson for the crown of Norway’s greatest offshore finance house) is to be believed, Dong Fang has now signed a “newbuild” contract for an, er, incomplete subsea vessel with Westcon Yards in Norway. Under the agreement, Westcon will take over and finish the suspended hull already under construction, Arctic’s weekly newsletter reports, with delivery scheduled for early 2027.
If this is true, this closes a story that we first covered way back in January 2021. Finally, a credible player emerges to complete the former Cecon Excellence, a hull originally commenced in 2008 (yes, that would be 17 years ago) as hull 718 at Davie Shipyard in Canada, which promptly went bust.
The hull then embarked on a peregrination across the Atlantic, was nearly bought by Micoperi of Italy and Gelibolu shipyard in Turkey, but was then towed to Bulyard in Varna, Bulgaria, before ending up in Westcon in the middle of 2020 (photo of the vessel on a heavy lift ship here).
Potentially, this is an excellent hull, as the ship was designed as a sister ship to the Boka Pride, the only Cecon vessel to actually be delivered. We understand that the original dimensions will be unchanged – the hull measures 130 metres long and but the ship will now be outfitted with a 4,000-ton cable carousel for Dong Fang, as well as the original 250-ton crane.
I say “potentially” because the hull will be 20 years old when the ship is finally delivered. Max Verstappen was younger when he won his first F1 grand prix.
Dong Fang has a burgeoning newbuild orderbook and a "go west" strategy backed by a breathless and hardworking public relations team. In addition to its existing cable layer Orient Adventurer, which is chartered by DeepOcean firm to the end of 2028 in Europe, with further options until 2031, the company also owns the subsea vessel Pacific Constructor (former Seabed Constructor) which it purchased for less than US$30 million in 2021 and on which it has fitted a walk to work gangway.
Dong Fang's new build orderbook now stands at five large vessels, excluding the jackup wind turbine installation vessel for which the company signed an MOU with Lamprell in the UAE earlier this year but has not yet progressed to a firm newbuild contract.
It has one construction support vessel with a 250-ton active heave compensated offshore crane and cable repair capability already on order at Vard (to be named Orient Trailblazer), and three windfarm commissioning service operation vessels on order at Vard in Vietnam, with delivery beginning next year.
Dong Fang also operates one DP1 survey vessel, two anchor handling tugs, seven crewboats, one cargo barge, and one newly acquired DP2 vessel.
With all this cable repair and cable lay capacity coming online from the country’s largest national player, one might almost imagine that the Taiwanese Government expects hostile action against its critical subsea infrastructure in the coming years.
Surely not? From whom?
The company’s full fleet listing can be found here.
It’s lovely that I have covered Dong Fang in such detail, but this is a Twelve Days of Christmas piece, and the former Cecon Excellence may have lived nine lives even before she is completed. But she is one vessel, not two.
Perhaps I could shoe-horn in CF Formidable, another unfinished subsea beauty that Dutch owner Chevalier Floatels is completing at the Holland Shipyards Group for delivery in 2026? That was announced in January, so it doesn’t count, unfortunately.
Instead, I will highlight another new entrant to the crowded subsea orderbook. Stay tuned for part two this Wednesday.