Blackstone sets up fund for struggling offshore drillers

Blackstone, one of the world’s largest investment firms, has set up a fund to finance the troubled offshore drilling industry.

According to a statement on Thursday, the new platform, named Clarion Offshore Partners, will provide strategic solutions to the offshore oil and gas drilling and services sector, with a financial commitment from private equity funds managed by Blackstone.

Blackstone says Clarion’s investment mandate is broad and flexible, enabling the partnership to pursue opportunities with a wide array of industry participants, including offshore drilling companies, shipyards, financial institutions, investors, and oil & gas operators.

Clarion is a partnership between Blackstone and former senior executives of Pride International, an ultra-deepwater drilling firm later bought by Ensco.

“The partnership will provide creative financing solutions including growth and restructuring capital to the sector,“ Blackstone said.

Struggling drillers

Offshore drillers are in an unenviable position. The drilling firms are coping with the lack of demand for their services, oversupply in the market, lost contracts and cuts in dayrates, as the oil prices are lingering around $30 a barrel, causing the oil firms to curb exploration budgets.

One of the drillers, Hercules Offshore, on Thursday said it was looking at its options including a merger or even a sale of the company.

Another one, Noble Corp. on Friday said it won an extension for a rig contract, but had to accept a dayrate of $96.500, down from the previous one of $197.000. It also said it was in talks with other clients regarding the dayrates adjustments.

Furthermore, Ocean Rig, a company specializing in ultra-deepwater rigs has lost a contract this week for the Eirik Raude semi-submersible drilling rig in the Falklands, after it had previously lost a deal with Eni for a 2011-built drillship.

Earlier in February, Pacific Drilling said three out of its seven drillships were without without a contract.

Adding to the already depressing drilling market news, credit ratings agency Fitch recently said while drillers continue to face murky market conditions, the situation is nowhere nearly close to improvement, and the dayrates will keep falling.

Clarion to the rescue?

Commenting on the Clarion Offshore Partners initiative,  Louis Raspino, former CEO of Pride, and one of the leaders of Clairon said, “This is an opportune time in the industry for a well-capitalized and experienced team to provide creative financing and operational solutions. Balance sheets are under severe pressure, existing operators are challenged to deploy assets, and related parties throughout the value chain are also facing financial pressures. We believe Clarion can be a partner of choice to the industry and we are excited about partnering with Blackstone.”

Michael Ryder, a Senior Managing Director with Blackstone Energy Partners, said, “We are very pleased to form this partnership with Clarion, which brings together our global energy investing experience and a best in class management team. Louis and the team are uniquely positioned to contribute deep strategic and operational expertise, having successfully led Pride and other organizations. We look forward to working with Clarion and other industry participants in the coming years.”

Offshore Energy Today Staff