![COLUMN | Back to school: Cadeler's €100 million cancellation fee; Transocean's scrapping; ICBC's Bourbon vessel sales continue [Offshore Accounts]](http://media.assettype.com/bairdmaritime%2F2025-09-01%2F29a8ib0c%2FUntitled.jpeg?w=480&auto=format%2Ccompress&fit=max)
COLUMN | Back to school: Cadeler's €100 million cancellation fee; Transocean's scrapping; ICBC's Bourbon vessel sales continue [Offshore Accounts]
It’s the Labour Day federal holiday in the United States, a country that decided that May Day was a risky date following the fatal 1886 Haymarket Riot in Chicago when seven police officers were killed by an anarchist, so the workers should wait until the first Monday of September to enjoy their break.
Many American schools return the next day, but it is not just kids who should be returning to the classrooms this week. Investors might want to check out some lessons from the offshore industry, too.
This week, we look at recent announcements from wind turbine installation vessel (WTIV) owner Cadeler in Denmark, and from drillship titan Transocean, as well updating you on the protracted efforts of the Industrial and Commercial Bank of China (ICBC) to auction its fleet of offshore support vessels on which French owner Bourbon has defaulted.
Cadeler's good news was bad news
On Tuesday, August 26, Cadeler announced incredible interim financial results for 2025. The press release trumpeted that the company, "deliver[ed] financial performance above expectations," highlighting, "disciplined project execution, and a sharpened strategic focus on operations and maintenance, as well as significant compensation in connection with the termination of a long-term agreement."
Baird Maritime’s summary of the results focused on Cadeler’s revenue for the first six months of 2025 more than tripling to €299 million, (US$348 million), marking an increase of €217 million (US$252 million) or 265 per cent compared to the same period in 2024. The company’s gross operating profit rose to €213 million (US$248 million) representing a year-on-year increase of €191 million (US$222 million).
Profit for the period reached €168 million (US$195 million), compared to €200,000 (US$230,000) in the same period last year. As of August 26, Cadeler’s orderbook stood just under US$3 billion, the same as on March 31, 2025.
Champagne all round!
Hieronymus Bosch – due to be flogged for being wrong?
What was there not to like? Surely, I should be eating humble pie and wiping the egg off my face, apologising to CEO Mikkel Gleerup, and investing in some of Cadeler’s stock myself at the first available opportunity?
Err, no.
“If you work in either journalism or politics...you will be flogged for being right and flogged for being wrong, and it hurts both ways, but it doesn't hurt as much when you're right," the American journalist Hunter S. Thompson once said.
It is true that the Cadeler first half 2025 results were a significant improvement from the company’s dire financial performance in the first half of 2024. However, when Cadeler eked out a miniscule profit, there was one huge red flag embedded in the August 26 announcement, and one that the company seemed to be trying to hide.
Significant compensation, but not in a good way
It goes back to that reference to, “significant compensation in connection with the termination of a long-term agreement.”
The fees related to the June 30 news that that troubled Danish windfarm operator Ørsted had terminated a long-term contract for one of Cadeler’s WTIVs, which had been due to work on the 2.4GW Hornsea Four offshore wind project in the UK from the first quarter of 2027 through to the end of 2030, just under four years of work.
This was meant to be one of the biggest contracts in the company’s history, but now it is not happening. The cancellation of Hornsea Four follows a similar decision by Swedish developer Vattenfall to cancel its 1.4GW Norfolk Boreas wind farm in the UK in 2023.
The outlook darkens as Trump strikes
Cadeler said it was now free to deploy the vessel on alternative projects that it said were currently under discussion with third parties. So far, it has not announced any alternative projects of which I am aware, and the last two months have seen a drastic deterioration of the outlook for the offshore wind industry.
A combination of hostility from the Trump administration for all offshore wind projects and cost increases to new projects around the world have led to the scaling back of expectations for future work for WTIVs.
Today, Cadeler has two WTIVs working on projects in the United States. It is safe to say that they will not be there in 2027 as President Donald Trump’s moratorium on new development halts all new WTIV activity in the US, and his supposed “national security” concerns even threaten the 80 per cent complete Revolution Wind project, which Ørsted and its partner Skyborn Renewables have begun off Rhode Island.
The government stopped all work on Revolution Wind for very spurious reasons, even though all the foundations are in place, along with 45 of the 65 turbines. This move was described by a spokesperson for the Global Wind Energy Council as, “the kind of stuff that happens in third-world countries.”
How much was paid by Ørsted?
How much would the Hornsea Four cancellation compensation that Cadeler received be exactly? How much of the higher profit came down to the one-off payment from Ørsted?
It is hard to tell from Cadeler’s announcement and published financial presentation. As a foreign issuer, the company doesn’t file a proper 10-Q form with the US Securities and Exchange Commission (SEC); Mikkel Gleerup simply signs a paltry 6-K declaration attaching the interim results.
There is no footnote or breakout of the data from the investor slideshow presentation. One of the downsides of being an anonymous correspondent under a pseudonym is that I can’t register for the management call on the results to ask the CEO and CFO, without drawing attention to myself.
Why the silence?
Perhaps there is no obvious number given because Cadeler signed a non-disclosure agreement with Ørsted. This would be unusual, because these agreements usually exclude figures that have to be disclosed to the SEC or other stock exchanges, as obviously investor transparency in regulatory disclosures should have priority over corporate secrecy when it relates to events with a material impact on results.
Or perhaps the sum was so large that disclosing it would reveal the continued underperformance of Cadeler’s fleet and spoil the rosy picture painted by the company, in which case, it would definitely be material and should be disclosed transparently.
There are clues, even if Cadeler itself is not explicit.
Note three on page 22 of the interim report itself states that the company’s, “other revenue, including fees earned for early termination of contracts by customers” rose from €13.9 million (US$16.3 million) in 2024 to €120.4 million (US$140.8 million) in the first half of this year."
Even allowing for the increase of the company’s fleet to seven vessels in service in the period, which might increase those mysterious other revenues that weren’t the Hornsea compensation cheque, it seems safe to say that at least €100 million (US$117 million) of Cadeler’s interim profits came from the Hornsea Four termination fee. Yet it is unclear why this can’t be spoken of in the investor presentation.
Take out that six-digit compensation figure and the net profit from the seven WTIVs in service looks less impressive. It falls to just €68 million (US$80 million), or around US$11 million per WTIV in service for the six months. This net profit almost matches the company’s free cash flow from operations, which came in at €71.5 million (US$83.6 million).
The one-off payment from Hornsea appeared not to have been paid on the day the termination was announced, and was bundled into “changes in working capital” in the cashflow statement.
There is some cause for champagne
We can see that there was underlying improvement in Cadeler’s performance year on year. Free cash flow from operations in 2025 was more than four times higher than it was in the prior year first half. The fact that the company produced this profit level with just 67 per cent utilisation of its fleet provides upside for investors if it can get more of its WTIVs on hire.
But at the same time, I am anxious for the future. Why?
We’ve seen these cancellation fees before
I was around in the offshore oil and gas industry in 2015 and 2016, when sentiment turned rapidly against deepwater drilling as oil prices fell, much as sentiment has soured on offshore wind now. Back then, oil companies were paying out huge cancellation fees to rig owners to terminate their rigs.
The biggest ever seems to have been when Freeport-McMoran terminated the contracts for the drillships Noble Sam Croft and Noble Tom Madden in the Gulf of Mexico and paid Noble US$540 million just to go away. Noble achieved a large operating profit for 2016, but 80 per cent of this came from that one termination fee.
Other drillers also received large fees, but this was not a cause for celebration for investors, nor should it be in the case of Cadeler.
The Ørsted cupboard is bare
The termination of the Hornsea contract means that Ørsted thinks it has no other projects to which the Cadeler WTIV could be transferred. If there was other work in Poland, Germany, Denmark or Taiwan, or anywhere, of course, Ørsted would have proposed transferring the vessel to work there, and, of course, Cadaler would have accepted the change of project location.
If Ørsted foresaw a possibility that it could find work for the WTIV later in 2027 or even 2028, it would have proposed a delayed commencement, and of course, Cadeler would have accepted and possibly charged a standby rate.
But it seems that there is nothing in the Ørsted pipeline for 2027 that would warrant using the vessel. The world’s largest windfarm developer appears not to have confidence in the future, so little confidence that it is willing to pay Cadeler something in the region of US$117 million not to turn up.
That might change if new projects are approved, but, at the moment, existing projects are being cancelled rather than new ones being approved.
Ørsted’s share price has collapsed by 90 per cent since 2021 and it is attempting to raise DKK60 billion (US$9.4 billion) of fresh capital to stay afloat, supported by its majority shareholder, the Danish Government.
If Ørsted has so little confidence, then investors in Cadeler should be worried, very worried. Indeed, many of Cadeler’s other customers do not have the same majority government sugar daddy to bail them out if the offshore wind outlook darkens even more.
This is a company that is taking on more than US$2 billion of debt to build brand new WTIVs, which may not find work. This will take several years to play out, as it did for the drillers when the collapse in 2015 was followed by widespread bankruptcy five years later.
I hope I am proved wrong, but the lessons of the oil and gas downturn of 2015 to 2020 suggests that Cadeler getting a big cancellation fee is a warning sign that should not be ignored in offshore wind.
Mitsubishi walks away in Japan, Equinor in Australia
Adding to the sombre mood in wind, the day after the Cadeler results announcement, Mitsubishi announced that it would be cancelling three Japanese offshore wind projects because of huge cost increases since the projects were awarded.
“A Mitsubishi-led consorti[um] won the first state auctions for the three wind farms in Chiba and Akita prefectures in 2021. The farms had projected capacity of 1.76 GW and were set to start operations around 2028 to 2030.
"Mitsubishi Chief Executive Katsuya Nakanishi on Wednesday said cost increases had far exceeded projections, including construction prices more than doubling since the 2021 bidding phase.”
Also last month, Equinor announced that it was pulling out of the 2GW Australian Novocastrian offshore wind farm project, which was planned for a location about 20 kilometers offshore from off Newcastle in New South Wales.
The Norwegian energy giant had partnered with local company Oceanex on the AU$10 billion (US$6.5 billion) floating wind project, but Oceanex is too small to continue alone so the project will be cancelled, as per ABC News.
At the same time, Equinor announced the cancellation of all its offshore wind projects in Spain and Portugal, as well as Vietnam.
Cadeler may have finally produced a decent operating profit, and it may delight and surprise on the upside in the second half of the year, too.
But just as Noble Corporation’s bumper payout in 2016 presaged disaster, the WTIV segment should be battening down for a harder outlook ahead.
Noble itself went into Chapter 11 in 2020 unable to service its billions of dollars of debts, despite operating one of the most modern and highest-specification fleets of drilling rigs in the industry.
Transocean: the Lannisters of the drilling industry
Transocean was one of the few international drilling companies not to go into Chapter 11 restructuring during the brutal industry downturn of 2020, unlike Noble, Seadrill and Valaris. Those companies wrote down billions of dollars of debt and also wrote down the value of their rigs by billions of dollars.
Transocean did neither, weathering the storm and always paying its debts, like the Lannister family in the HBO drama Game of Thrones.
A few billion here, a few billion there as nine rigs scrapped
On Wednesday, August 27, Transocean announced that it intends to dispose of, likely scrap, four lower-specification deepwater drillships – Discoverer Clear Leader, Discoverer Americas, Deepwater Champion, and Discoverer India, which have been laid up in Greece for the better part of a decade, going into cold stack between February 2016 and July 2020 – and the semi-sub Henry Goodrich, which was built in Japan in 1985 and has been stacked since March 2020.
As a result of this scrapping decision, Transocean announced that it expected its third quarter 2025 results to include an estimated non-cash charge of approximately US$1.9 billion associated with the impairment of these assets.
This wasn’t the first such impairment this year. In June 2025, Transocean announced its intention to dispose of the deepwater drillship Discoverer Luanda and the semi-sub GSF Development Driller I. Together with what Transocean described as “the incremental impairment” of the semi-sub Development Driller III and the drillship Discoverer Inspiration, which were previously classified as held for sale, the company recognised an additional aggregate loss of US$1.14 billion in its second quarter results.
From an industry perspective, it is excellent that Transocean is scrapping rigs that have been laid up for years and that will not be economic to return to service. The remaining seventh generation drillships the company has in Greece are estimated to cost between US$100 million and US$200 million to reactivate, but nobody knows the true cost. Scrapping these five reduces the overhang of idle rigs and reduces the cash holding cost to Transocean.
Send the auditors back to school
Great, but the fact that the company can suddenly discover that nine of its assets were actually worth US$3 billion less than it had valued them on its balance sheet suggests a serious failure by the company’s auditors.
When Transocean completed the sale of Discoverer Luanda and GSF Development Driller in July 2025, it received aggregate net cash proceeds of US$26 million. How is it not also impairing the trio of deepwater drillships Ocean Rig Apollo, Ocean Rig Athena and Ocean Rig Mylos, which have been cold-stacked in Greece since 2016 and 2017?
If scrapped, they will fetch between US$10 million and US$15 million each, and even if they were fully ready for service, they would sell for only US$300 million maximum based on the recent sale of Eldorado’s two units to TPAO of Turkey, with reactivation costs taking at least half of the sale price.
Transocean had around US$5.8 billion of long-term debt at the end of June, and its assets were worth US$17.8 billion, so it has ample room to be realistic and face the truth. Its entire fleet is unlikely to be worth its book value if the impairment of these eight rigs is anything to go by, and likely, it never has been worth book value since the Covid crisis of 2020. Then, the company faced an existential crisis, and I get it why fudging book values had an enormous benefit.
Transocean's auditors and its board would better serve investors by resetting the company's balance sheet to values that reflect the market of 2025, not the depreciated build cost of 2014.
Back to school, please.
ICBC: two more Bourbon ships sold last week
There is a continuation in the efforts by ICBC to sell the forty thirty-three or so vessels that it owns under leases upon which French marine player Bourbon has defaulted.
Last week, the 80-ton DP2 anchor handler Bourbon Kaimook, which was stacked in Batam, was sold for US$8.32 million, above the US$7 million reserve price, whilst the platform supply vessel (PSV) Bourbon Horus was finally sold for a reduced price of US$4.41 million to a single bidder.
The PSV was originally being offered at US$6.6 million at the end of June in lay-up in Abidjan, Ivory Coast. Horus was built in 2009 with 2,890 DWT and 675 square metres of clear deck space.
September 2 will be auction central
Tomorrow, September 2, will see seven ships auctioned, six reduced to clear units that previously did not sell, being offered at lower prices, and the modern, in service PSV Bourbon Calm with 4,120 DWT being offered for sale in Willemstad, Curacao.
Subsea vessel Bourbon Evolution 803 is now being offered at the lower price of US$18.5 million. Our view is it needs to be priced around $15 million to sell, whilst the obsolete Bourbon Liberty 100 series ships in lay-up should really be priced at less than US$2 million each, in my humble opinion.
This means that over the course of two months and multiple price reductions, ICBC has now managed to sell seven ships from the 13 originally offered, less than one per week. Until prices get lower, this could take a while.
The current state of play of the auctioned fleet is as follows:
