25-05-2014, 01:01 PM
I would argue that 'high specification' is a relatively over abused word in any field that uses technological prestige as bragging rights.
The last pair of F&G JU2000E rigs (turnkey though) secured by SCM was ordered by Seadrill at USD 192mil per rig in Oct 2010. Up to last Aug2013, Seadrill has since turned to DSIC (a Chinese shipyard) for ~10 similar F&G JU2000E designs costing ~ USD 230mil per rig (tail heavy terms which are reflected in slightly higher total project cost). Benchmarking with these orders, SCM seems to have gotten a 'fair deal' but unmistakenly, they have decided to play the same game as the Chinese shipyards (a compensation for their non 'near market, near customer' strategy?)
As for default risks, there are many factors at play. A '10:90 (or 10:10:80)' or '20:80' payment terms might make little difference to the rig builder if the customer was EVENTUALLY going to default anyways. That said, if the customer was going to default, securing 20% terms is eventually much easier when going to auction the rig to prospective buyers. Besides payment terms, customer pedigree (tier 1 operator or purely speculative PE funds) and whether any contracts have been secured by the orders are both important factors that toggles the default probability. To date, SCM has done relaxed payment terms for both Transocean (a tier 1 operator) and the current Hercules North sea rig (already secured a contract with Maersk Oil and Gas).....One needs to observe very closely whether they will start to build rigs on similar relaxed terms with speculative PE funds.
I recall that SCM has had 3 cases of 'default' - 2 of them (Seadrill-PC rig, ~200+ mil and PetroMena-CJ70, ~550mil) and both of them were in the boom days with 'normal' payment terms and were subsequently auctioned to new buyers (not sure of the actual impact to profit margins). The 3rd one by Equinox Offshore-ARV3 (140mil) was more recent (last year) and it had a 5 year chartered contract with Petrobras. SCM might not have found a suitable price to sell it and Board made an unprecedented decision to operate ARV3 while continuing to look for sellers.
http://www.offshoreenergytoday.com/seadr...-in-china/ (F&G 2000E orders by Seadrill)
http://www.seatrade-global.com/news/asia...drill.html (F&G 2000E orders by Seadrill)
SCM defaults:
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (sale of CJ70)
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (sale of Pacific Class jack up)
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (ARV3 by Equinox Offshore)
The last pair of F&G JU2000E rigs (turnkey though) secured by SCM was ordered by Seadrill at USD 192mil per rig in Oct 2010. Up to last Aug2013, Seadrill has since turned to DSIC (a Chinese shipyard) for ~10 similar F&G JU2000E designs costing ~ USD 230mil per rig (tail heavy terms which are reflected in slightly higher total project cost). Benchmarking with these orders, SCM seems to have gotten a 'fair deal' but unmistakenly, they have decided to play the same game as the Chinese shipyards (a compensation for their non 'near market, near customer' strategy?)
As for default risks, there are many factors at play. A '10:90 (or 10:10:80)' or '20:80' payment terms might make little difference to the rig builder if the customer was EVENTUALLY going to default anyways. That said, if the customer was going to default, securing 20% terms is eventually much easier when going to auction the rig to prospective buyers. Besides payment terms, customer pedigree (tier 1 operator or purely speculative PE funds) and whether any contracts have been secured by the orders are both important factors that toggles the default probability. To date, SCM has done relaxed payment terms for both Transocean (a tier 1 operator) and the current Hercules North sea rig (already secured a contract with Maersk Oil and Gas).....One needs to observe very closely whether they will start to build rigs on similar relaxed terms with speculative PE funds.
I recall that SCM has had 3 cases of 'default' - 2 of them (Seadrill-PC rig, ~200+ mil and PetroMena-CJ70, ~550mil) and both of them were in the boom days with 'normal' payment terms and were subsequently auctioned to new buyers (not sure of the actual impact to profit margins). The 3rd one by Equinox Offshore-ARV3 (140mil) was more recent (last year) and it had a 5 year chartered contract with Petrobras. SCM might not have found a suitable price to sell it and Board made an unprecedented decision to operate ARV3 while continuing to look for sellers.
http://www.offshoreenergytoday.com/seadr...-in-china/ (F&G 2000E orders by Seadrill)
http://www.seatrade-global.com/news/asia...drill.html (F&G 2000E orders by Seadrill)
SCM defaults:
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (sale of CJ70)
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (sale of Pacific Class jack up)
http://www.sembcorpmarine.com.sg/index.p...eturnid=78 (ARV3 by Equinox Offshore)