On the other hand, there were 2010-built Valaris DS-3, 2011-built Valaris DS-5 and 2012-built Valaris DS-6, which Bassoe Rig Values had priced at between $40–54 million on a willing seller/willing buyer basis. At the time of the sale Bassoe Rig Values valued it at $32–41 million and it was reportedly sold for $37.5 million to Turkish Petroleum for its domestic drilling purposes. They command very different pricing.įirst take 2012-built drillship Sertao (now called Kanuni), which was sold in 2020 on a willing seller, willing buyer basis. There are two markets: one for traditional S&P transactions and one for scrap. We’d rather contribute to a more profitable supply/demand balance and the possibility of higher dayrates in the future.”īy looking at some of the deals done in 2020 we gain insight into the strategy and economics of selling a rig in today’s market. When all of a sudden, a rig owner sells a 10-year old rig for scrap, they’re saying, “hey, we don’t care if we lose millions of dollars today.
That means we have seen wild deviations in transaction values, especially when rig owners prioritize market dynamics and future cash flows over current asset values. Adding to this is a market in which equity prices have collapsed, financial support for assets is minimal with an absence of buying power from traditional parties. But what happens when this is not the case? Nowadays there are mainly unwilling (distressed) sellers and willing buyers (if any) represent opportunists looking for assets at exceptional low levels. The accepted approach to a fair market rig valuation is to consider the premise of a willing buyer and willing seller and take a balanced view of the bid/ask value range. With all the selling going on the two big questions rig sellers have are: what are these rigs worth and how should we sell them? The answers, which Bassoe Rig Values aims to come up with, aren’t always straightforward. As we reported during December in a previous article: Offshore rig values take a $30 billion hit in just 12 months, the unprecedented challenges faced by the offshore rig segment last year meant values took a hammering. Since January 2020, 58 offshore rig sales have been recorded, according to Bassoe Rig Analytics, including 10 sales for conversion to non-drilling applications, 12 sales for rigs that will remain active in the drilling fleet and a massive 36 for recycling (scrap). With more pressure to sell rigs than ever before, some drilling rig owners are prioritizing their future over current asset values.