INTERVIEW: Global OCV Fleet Worth Close to $27 Billion
- Business & Finance
VesselsValue, the online platform for valuation, AIS and market intel service for the maritime and offshore sectors, is publicly launching its Offshore Construction Vessel valuations in May this year.
Subsea World News interviewed Charlie Hockless – VV’s Head of Offshore to learn more about the new service, what was the criteria for value estimates, who’s got the strongest OCV fleet, where the market is heading, and who sails the most expensive OCVs.
Charlie began his Offshore career in 2013 at the Paris-based shipbroker Socomet Sales, where he specialised in the Offshore sector, particularly focusing on the West African OSV market.
He joined VesselsValue in 2015 to lead the Offshore project from inception, launching the first set of values in April 2016. Charlie has overseen the development of VV Offshore, working together with the London analyst team and dedicated Offshore research team.
When did you decide to introduce Offshore Construction Vessel (OCV) valuations, and why?
Since we launched offshore in May 2016 our ultimate goal was to provide daily valuations for all ship types within the sector. We started out with offshore supply vessels due to the large number of vessels and the fact that they are the most commoditized vessel type in the offshore sector. As we became more established within offshore, launching values for Mobile Offshore Drilling Units in February 2017, we started receiving requests from our owner and banking clients to expand our services to the subsea sector. OCVs represent the missing part of the offshore drilling cycle for us.
Could you tell us in brief what OCV valuations delivers to VV users?
The OCV module contains data in line with all our valuation products and provides automated daily historical values for MPSVs, DSVs, Well Intervention, Well Stimulation and Maintenance and Support Vessels. Alongside these automated values, we offer bespoke valuations for Pipe Layers, Cable Layers, Accommodation Vessels and other OCV subtypes. As part of the package, VV also provides a vessel database, commercial (deals) database and AIS/GIS mapping service.
We have restricted the automated values for specific vessels types due to the niche nature of the sector. Our current model requires a high volume of good quality sales to dive the daily values and many OCV types are highly illiquid. To combat this, VesselsValue is currently developing a SPARSE model which will be able to provide daily valuations for vessels which have a low level of liquidity.
Unique to the large OCVs module, we have also launched a Forward Commitment module where clients are able to see each vessels future and historical charter information. This will be available for each different subtype of offshore construction vessels.
How do you establish a vessel’s value? What parameters do you use?
We use a five-factor transaction based model that takes into account the age, size, type, features and earning sentiment in a given market. Each vessel is scored individually based on its features, such as the yard, gearing capacity, DP class, number of moon pools, dive saturation, deck area, accommodation etc.
Our earnings sentiment is calculated using the combined rolling average of the long and short-term price of brent crude. This gives a picture of overall market sentiment, while incorporating short term movement. Second hand sales are fed into the system, which allows the model to continually re-calibrate.
What were the challenges of this project?
Launching Offshore came with its own challenges. VV is traditionally linked with the cargo sector, as our founder has been a ship broker for over 40 years, specialising in bulkers and tankers. Therefore, we had to hire offshore experience to adapt VV’s offering to suit the offshore market.
Even once we had fine-tuned our OSV and MODU values, providing automated OCV values presented their own issues; the illiquidity of the sector, the increased specialization of the vessels, the nature of the sales.
To overcome these challenges, VesselsValue used regression techniques and full, clean data to identify trends and premiums in the market, whilst also knowing our limitations. This has resulted in us providing automated values for a selection of OCVs, developing a whole new valuation model for the others.
Does your coverage include all the regions in the OCV segment? How many vessels are we talking about, and what’s your estimated value of the complete OCV sector.
In our fleet database, deals database and mapping service you will be able to find all OCVs, amounting to over 2000 vessels. The vessel types we provide values for total $26.9 billion.
From your analysis, who has the strongest OCV fleet on the market right now?
The larger companies such as Subsea 7 and Technip are in the strongest position. They have large, younger fleets and they dominate the charter markets, winning huge contracts. This can be seen on the large lists of forward commitments attached to each of their vessels.
Due to the downturn there is now a smaller pool of owners and subsea contracting engineering firms. Many small owners have either gone into administration, gone bankrupt or been bought by larger companies. This consolidation should make for an easier recovery than in other offshore sectors.
I think we can agree the OCV sector has been hit hard in the past 3 years, have you seen improvement in value going into 2018?
Just like with all offshore, the OCV sector has suffered during the oil price crash and subsequent reduction in offshore oil exploration and production. However, this vessel type has suffered slightly less due to the nature of the bespoke industry. OCVs are also in a better position for recovery due to the age structure of the fleet, testament to the rarity of OCVs ordered on a speculative basis.
Where do you see the OCV sector in the next 5 years, and what would be the challenges the companies surrounding this industry face?
We see the OCV sector recovering well, and indeed leading the overall offshore sector. There will be a growth of opportunities for OCV vessels in renewables. decommissioning and in the traditional offshore construction sector, due to a rebound in the oil price and strengthening offshore conditions.
What are the top 10 most expensive offshore construction vessels right now?
Offshore subsea construction vessel Normand Maximus is currently valued at $189 million. Built by VARD, the Solstad Farstad vessel is on a long-term charter with Italian contractor Saipem.
Other 9 most valuable OCVs, according to VV are:
- Fortitude $99 million;
- Deep Explorer $97 million;
- Siem Helix 2 $96 million;
- Seven Kestrel $95 million;
- Siem Helix 1 $95 million;
- Island Venture $94 million;
- Viking Neptun $92 million;
- Far Sentinel $90 million;
- Far Sleipner $89 million;
Subsea World News Staff