COLUMN | The twelve days of offshore Christmas: Cairn Energy, Vantage Drilling, Esvagt, Shearwater, Swire and Seacor! – Part One [Offshore Accounts]

Sangomar FPSO (Photo: Woodside)

Forget the partridge in the pear tree, the two turtle doves, and the five gold rings. Instead, the twelve days of this Christmas for the offshore sector have been packed with deal-making, vessel sales, and news. So much so, that we have a two-parter this week, but featuring fewer lords-a-leaping and maids-a-milking than the original, sadly. Let’s take the first six days now…

One special dividend at Cairn Energy

Cairn Energy was hot off the mark with its declaration of a special dividend of US$250 million, which will be paid to shareholders in January 2021, after the completion of its deal to sell its 40 per cent stake in the Sangomar oilfield off Senegal, to the field operator Woodside. The 32 pence per share pay out by the London listed company means Cairn will be just about the only listed oil company to increase its pay-out to shareholders in the first half of 2021, after Shell, BP and many others slashed their dividends in response to the slump in oil prices in March.

Cairn said that it expects the sale of its Senegalese assets to complete before the end of this year. Woodside will pay Cairn US$525 million, which consists of US$300 million for the stake, and US$225 million for the reimbursement of spending on the assets since the start of 2020. Upon completion, Woodside will own 75 per cent of the field.

Cairn could also receive an additional US$100 million after first oil from Sangomar, depending on when the oil flows, and on the average price of Brent oil price for six months afterwards.  Cairn had initially struck a deal to sell the assets off Senegal Lukoil in July, before Woodside exercised its pre-emptive right to match the Russian offer.

This same week Modec confirmed that it had won the operations and maintenance contract on the Sangomar FPSO, which it has designed for the field. Progress with Sangomar is important to Senegal, which will become an important energy exporter in the second half of the decade, as BP’s major liquified natural gas project also comes into production through a Golar regasification vessel moored at a manmade breakwater offshore.

After years of frustration, fighting off a billion-dollar Indian government tax claim, and funding a futile series of very expensive, dry exploration wells off Greenland, Cairn’s shareholders deserve the gift. Woodside, meanwhile, avoided a massive decommissioning cost (which we reported here) and saw its CEO Peter Coleman announce his retirement this month, with effect next year, after a decade running Australia’s largest oil and gas producer.

Two wells off Equatorial Guinea for Vantage

Last week, Vantage Drilling announced it had been awarded a contract for its Sapphire Driller jackup by Trident Energy off Equatorial Guinea for two firm wells. The company stated that the unit will kick off the work in the second quarter of 2021, and that Trident also holds five option wells. This marked the first new drilling programme in the region following the wave of cancellations after the Covid pandemic.

ENI also announced that it was recommencing operations off Mozambique with Saipem 12000 and Vroon put out a release that its two large PSVs had secured the support work with the Italian major (as we reported here).

Rating agency S&P stated in September (here) that it believes that Vantage will have to restructure its debt within the next twelve months, given the miserable state of the drilling market. Vantage’s updated fleet status profile can be viewed here and reflects the fragile situation for offshore drillers.

The company has some good news, though. The jackup Topaz Driller is mobilising to the Adriatic to commence the first well offshore Montenegro for ENI in early 2021, whilst Emerald Driller remains on long-term contract in Qatar with Total.

Analysts at Bassoe Offshore are reported to estimate that the day rate for Sapphire Driller is around US$75,000.

Three windfarm support vessels for Esvagt

This festive month also saw Havyard Group deliver the first of a trio of new wind farm service operations vessels (SOVs) ordered by Esvagt. The newbuilding was handed over to the Danish support services company on Friday, December 18.

Havyard confirmed that work is underway on the second vessel, and that the unfinished hull of the third is being towed to Havyard’s shipyard in Leirvik, Norway for fitting out. Both are scheduled for delivery in 2021.

Earlier this year, Esvagt had contributed to a rescue package for the beleaguered Havyard shipyard, and Esvagt accepted a delay in the delivery date in the series of three SOVs, caused by what the Norwegian company described as “financial whirlwinds.”

The three new sister vessels are built to Havyard’s own 831L SOV design. They all have forward charters in the renewables space of up to fifteen years with MHI Vestas, and will service the Borssele III and IV wind farms off the Netherlands, and the UK’s Triton Knoll and Moray East wind farms. Nice work if you can get it.

In November, Havyard New Ship Technology announced that it would be restructuring its operations into only a repair and service yard, and would reduce the number of staff by around 100, once the orderbook of the three Esvagt units and three other hulls under construction were completed.

Group CEO Gunnar Larsen said that new orders for, “newbuilds may be an option in future, but for now, we will primarily concentrate on adding a new string to our bow: repairs, maintenance and modification.” Another loss to European shipbuilding.

Four hundred million dollars of debt refinanced at Shearwater

Shearwater GeoServices has now signed new debt and guarantee facilities totalling US$437 million, as part of the planned refinancing of the company’s maturing debt – news release here. When Shearwater bought the marine seismic acquisition assets and operations of WesternGeco from Schlumberger in November 2018, Shearwater took on a US$325 million bridging loan. This has now just been refinanced.

“We enjoy continued confidence from our lenders whose long-term backing has supported Shearwater in driving the necessary consolidation in the market,” said Andreas Hveding Aubert, the CFO of Shearwater. “The agreed financial structure provides us with a flexible and robust financial platform for pursuing our long-term strategy and solidifies our position for a market recovery.”

The new facilities with two- and four-year maturities have been signed with DNB Bank, SpareBank 1 SR-Bank, DVB Bank and GIEK. They replace approximately US$500 million of debt under the old structure, effectively refinancing all corporate facilities, except for the net liabilities assumed as part of the acquisition of CGG’s five seismic acquisition vessels in January 2020, which we reported here.

Additionally, Shearwater said its existing shareholders will contribute US$25 million of new equity as part of the refinancing. The lucky Shearwater shareholders dipping into their pockets are Rasmussengruppen, GC Rieber Shipping, Schlumberger, and Eidesvik Offshore.

The company has reported some successes in key frontier markets in recent months, with contract wins for 3D seismic acquisition contract for Reliance Industries in the Bay of Bengal, announced this month, as well as a 4D ocean bottom node survey for Petrobras, and a 3D survey for Total in Senegal, both announced last month.

Since Shearwater is private, it is not clear how it is performing financially, since its results are not public and are not consolidated by any of its shareholders.

Five months to first hydrogen-powered workboats from Windcat closing

We thought Seacor Marine would be taken private and then relisted when market conditions improve (here). Not yet. Once again CEO John Gellert has surprised us with the news that Seacor Marine has decided to sell its wholly-owned subsidiary Windcat Workboats and all of its North Sea crew transfer business to Compagnie Maritime Belge (CMB).

CMB has agreed to pay Seacor Marine £32.8 million (US$44.6 million), and the new Belgian owner will also take on debts of approximately £20.4 million (US$27.8 million) under Windcat’s existing revolving credit facility. You can read the press release here.

Windcat owns and operates, directly or through its joint ventures, a fleet of 46 crewboats in the European offshore wind sector. It is headquartered in Lowestoft, in the UK, and Ijmuiden, in the Netherlands, and has joint ventures with FRS Windcat Offshore Logistics in Germany, and with TSM Windcat in France. The existing management team will be retained, CMB claims.

The transaction is expected to close on or around January 12, 2021, which means that it will only be five months between closing the deal and the first hydrogen-powered crewboat Hydrocat becoming operational, which CMB expects to happen as early as June 2021.

The Saverys family, which controls CMB, is a great proponent of hydrogen as the green fuel that will revolutionise shipping, so it is also considering the construction of hydrogen refueling stations in dedicated Windcat ports as well.

“The acquisition of Windcat fits into CMB’s strategy to diversify its business portfolio into the fast-growing offshore wind market and scale up the deployment of hydrogen ships and engines,” said Alexander Saverys, CMB’s CEO. “CMB wants to grow Windcat’s business by building on its strong market-leading European platform whilst expanding into new European and non-European markets, diversifying into the owning and operation of construction service operation vessels and service operation vessels (CSOVs and SOVs), and deploying hydrogen engines developed by CMB.TECH onboard the existing and newbuilding Windcat fleet.”

Alexander Saverys had previously said that the world’s push to decarbonise may pose an existential threat to the shipping industry. Now Esvagt, Acta Marine, Windea, and Edda Wind (which we covered here) have potential competition from a big, heavy-hitting player entering the SOV business. Following hard on the heels of the Sohmen-Pao family investment in Swire’s wind turbine installation company Cadeler (here), another major shipping dynasty chases the lure of the Green Revolution in energy.

So too does Aage Remøy, CEO at Rem Offshore. Rem has acquired a partly completed newbuilding from Green Yard Kleven (ex-Kleven Verft), according to broker’s reports. The newbuild was originally designed as a PSV of the Havyard 833WE ICE design. However, the partly finished hull will now be converted to an SOV.

Fearnleys reported that the Ice Class 1B vessel has already secured a contract in Germany in the offshore wind segment.

Six more vessels sold by Swire

The sale of the century (here and here) continues at Swire Pacific Offshore, as the cash hungry vessel owner headquartered in Singapore continues to sell ships, at what one market source described as “crazy low” prices.

Next on the block were two of the company’s 140-tonne bollard pull AHTS vessels, Pacific Wrangler and Pacific Warlock, built in Norway in 2003 and 2002, along with the two high specification accommodation work barges Pacific Installer and Pacific Intrepid, built in Malaysia in 2012 and 2013. The latter are fitted with 200-tonne lattice boom cranes, berths for 370 personnel and 1,400 square metres of clear deck space.

Allianz Marine Services of the UAE is the buyer, with the anchor handlers intended to tow the accommodation barges to the Gulf.

Additionally, brokers Fearnley Offshore reported that Swire has sold the anchor handler Pacific Vigour (2010-built, 118 tonnes bollard pull, built to the IMT  966 design) to Tang Cang Offshore of Vietnam.

To complete the six-pack, the smaller 60-tonne bollard pull anchor handler Pacific Papillon was sold to Indian owners, and has been reflagged and renamed Adsun Genesis.

Another one bites the dust. It is not very festive to ask what will be left of the company if the current fire sale continues.

Background reading

Reuters reported Peter Coleman’s retirement from Woodside here, focusing on the strategic and financial challenge which the stalled Scarborough LNG project throws up for the company.

Windea has provided a quick and easy guide to success in the wind farm SOV business for the Saverys family here.

Hieronymus Bosch

This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.