Ultra-deepwater drillship up for sale

Deepsea Metro II, an ultra-deepwater drillship delivered in late 2011, has been put up for sale.

Chloe Marine Corporation Ltd. said on Friday it formally resolved to initiate a process to sell the ultra deepwater drillship “Deepsea Metro II”.

Pareto Offshore AS has been appointed as exclusive broker for the sale of the vessel.

Deepsea Metro II has been without a contract since May this year. The rig finalized its contract with Petrobras in Brazil mid May 2015 and has been laid-up awaiting new employment. The vessels AIS data show it has been moored in Curacao.

The ultra-deepwater drillship, Deepsea Metro II, is owned by Chloe Marine Corporation Ltd, a company owned by Deep Sea Metro Ltd., a joint venture
between Metro Exploration (60%) and Odfjell Drilling (40%). Odfjell Drilling is the manager of the vessel. The joint venture also owns the Deep Sea Metro I drillship.

Eearlier this year, presenting its first quarter results, Odfjell Drilling hinted there was a tough time coming ahead for the Deep Sea Metro Ltd. joint venture.

On May 22, 2015, the company said: “The market conditions also affect the risk of the investment in the Deep Sea Metro Ltd. Group significantly with regards to maintaining continuous operations for the two drillships, and hence operational results and cash flow generated from operations.

The uncertainty is related to re-contracting both drillships in today’s market environment. The Deep Sea Metro Group will need to secure further employment for Deepsea Metro II in combination with contribution of capital in 2015 in order to secure continuous operation and be able to comply with financial covenants.”

The Deepsea Metro I, a sister vessel of the drillship put up for sale, has a contract with Vietgazprom for approximately 20 weeks in Vietnam. The $40 million contract is expected to start in the third quarter of 2015. In addition there are two options for approximately 90 days each.

Distressed sale

Industry downcycles such as this one, caused by a drop in oil prices, and oil companies cutting spending, put pressure on debt-laden companies, opening a way for mergers and acquisitions activity.

Commenting on the Deepsea Metro II sale announcement, Sondre Dale Stormyr, an analyst with Danske Bank following Odfjell Drilling, said he expected several bidders to take part.

“The bids and a potential sale will be a widely watched data point as the first distressed sale of a modern UDW drillship in this downturn, and we expect prices to be in the lower end of a general range from USD 450-350m per rig,” Stormyr said in a message to Offshore Energy Today.

As for the potential suitors, there are several options, with the latest being Ocean Rig UDW. The driller’s CEO, George Economou last week said the company had enough cash to pursue distressed asset opportunities.

Offshore Energy Today Staff