Awilco Drilling, an offshore driller owning two semi-submersible drilling rigs, is now looking to expand its fleet with a newbuild rig.
The driller on Tuesday said it was contemplating a private placement of new shares to Norwegian and international investors, aiming to raise $65 million. The subscription price will be fixed at NOK 29 per share.
Awilco Drilling plans to use the proceeds to part finance the equity requirement for the building of a new semi-submersible drilling rig for harsh environment use. The rig will be built by KeppelFELS in Singapore at a price of approximately $425 million.
The rig will be of the CS 60 ECO MW design. According to Awilco, the newbuild will be the most environmentally friendly drilling rig offered in the harsh environment market. It is expected to be delivered in March 2021.
According to Bassoe’s David Carter Shinn, this order will be the market’s first newbuild offshore rig order in four years.
Awilco and Keppel have signed a letter of intent for the order. This also includes options to build up to three additional rigs of similar design.
“North Sea rig market outlook is improving after the worst downturn ever. Market expected to move towards a more balanced supply in 2020/2021 as aging cold-stacked rigs will require contracts at a significant premium to current rig dayrate levels to justify the reactivation costs,” Awilco said in its investor presentation on Tuesday.
More orders ahead?
In his commentary published on Tuesday, Bassoe’s David Carter Shinn said the rig was based on the same hull design as the other CS-60s which have recently been acquired – West Mira, Bollsta Dolphin, West Rigel, and Stena Midmax – and more specifically equipped to suit Norwegian Continental Shelf requirements.
Bassoe’s Rig Valuation Tool (RVT) values the four existing rigs in drilling condition at around $450–502 million.
He said: “Awilco’s purchase price is at the low end of the range as it is and they (opposed to the owners of the four rigs mentioned above) don’t have to take delivery until 2021. They also avoid stacking costs and can wait for dayrates to rise. If you believe in midwater harsh environment market, this is one of the best deals you can do.
“We’ve talked about the potential shortage of premium (new, high spec) semisubs for the Norwegian sector for a long time. And we expect to see more orders this year as the hottest segment of the rig market keeps heating up.”
Awilco Drilling owns two enhanced pacesetter semi-submersibles, the WilPhoenix and the WilHunter. The rigs were built in 1980s, but were both upgraded a few years back.
The WilPhoenix is currently under a contract with Apache. Awilco has earlier this month signed a letter of intent with an undisclosed operator for the provision of the WilPhoenix, starting in September 2018. The estimated contract duration is 450 days. The dayrate was not disclosed.
The company’s other rig, the WilHunter, has been cold stacked in Invergordon for a while now with no near-term employment prospects.
Offshore Energy Today Staff