Vantage Drilling Fleet

[Aline Braunbeck]

Offshoredrilling contractor Vantage Drilling has disclosed its operational and financial performance for the fourth quarter and full-year 2022 while revealing its expectations that the future will bring further growth in day rates and utilisation for its fleet of rigs.

The global energy crisis, which took the world by storm in 2022, put energy security as the prevailing concern for countries globally. This enabled oil and gas companies to rake in all-time high profits, while the fast-tracking of certain energy projects, primarily oil and gas ones, and a boost in the search for new hydrocarbon resources, brought more business to the offshore drilling market.

Commenting on the joint venture, Ihab Toma. Chief Executive Officer of Vantage Drilling International stated, This is a transformative event for the Company. This joint venture underscores TotalEnergies' confidence in Vantage, and our client's belief in the value of collaborating with a flexible and efficient drilling contractor. We very much look forward to strengthening our longstanding and mutually beneficial relationship with our esteemed client, TotalEnergies.

TotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to energy that is ever more affordable, more sustainable, more reliable and accessible to as many people as possible. Active in nearly 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.

Vantage Drilling International is an offshore drilling contractor, with a fleet of two ultra-deepwater drillships, and two premium jackup drilling rigs. Vantage's primary business is to contract drilling units, related equipment and work crews primarily on a dayrate basis to drill oil and natural gas wells globally for major, national and independent oil and gas companies. Vantage also markets, operates and provides management services in respect of, drilling units owned by others. www.vantagedrilling.com

Cautionary Note Vantage

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the company's filings that it may be required to make, or may otherwise voluntarily make, with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements. Vantage disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

Exmar, a company best known to the Offshore Engineer audience for its FLNG units, has decided to re-enter the offshore drilling sector with an investment in the offshore drilling company Vantage Drilling.

Vantage Drilling offers offshore oil and natural gas well drilling services, with a fleet comprising of two ultra-deep-water drill ships and two premium jack-up rigs, listed on the US OTC market under VTDRF.

"This strategic investment is driven by promising value due to continued underinvestment in the offshore drilling market. After over two decades, EXMAR re-enters the drilling sector, further expanding its role in the energy value chain," Exmar said.

Belgium-headquartered Exmar has taken an 11.5% stake in Houston-based rig owner-operator Vantage Drilling, while Saudi-American joint venture ARO Drilling has taken delivery of the first of a planned 20 drillship newbuilds

The Saverys family-controlled, gas shipowning Exmar, which holds rights to multiple rig designs and owned and operated an offshore drilling fleet in the 1990s, reported the re-investment in an offshore-focused company in its quarterly results.

In its most recent quarterly earnings, Vantage reported a "near break-even net income" and a significant year-over-year improvement as the firm reduced debt levels, increased fleet utilisation and enjoyed a market atmosphere of increasing day rates for rigs.

Floating, production, storage and offloading (FPSO) vessel Prosperity is expected to reach initial production of approximately 220,000 barrels per day over the first half of next year as new wells come online. This additional capacity will be the third major milestone towards reaching a combined production capacity of more than 1.2M barrels per day on the Stabroek Block by year-end 2027, according to ExxonMobil.

ExxonMobil Guyana anticipates six FPSOs will be in operation on the Stabroek Block by year-end 2027. Yellowtail and Uaru, the fourth and fifth projects, are in progress and will each produce approximately 250,000 barrels of oil per day. The company is working with the government of Guyana to secure regulatory approvals for a sixth project at Whiptail.

Following the closing of the rig acquisition, Paul B Loyd, Jr will be under contract with Harbour Energy in the UK with the firm period slated to last until September 2027, with an additional five one-year options.

In June 2023, Dolphin Drilling announced the acquisition of two semi-submersible rigs, Paul B Loyd, Jr and Transocean Leader. The agreement was conditional upon acceptance of the former rig by the UK regulators.

According to his carefully edited Wikipedia entry, Evangelos Marinakis "is a Greek media mogul, shipowner, lyricist, and member of the Piraeus city council. He is the founder and owner of Capital Maritime and Trading Corporation and also the owner of the football clubs Olympiacos in Greece and Nottingham Forest in England."

The two larger units are trading in the North Sea, whilst Standard Defender was dispatched to Equatorial Guinea for the winter to support the semi-sub rig Island Innovator for Trident Energy for two firm wells and five option wells.

"Standard Supply was always intended to be an asset play with an opportunistic approach towards the market," Martin Nes, Chairman of Standard Supply, commented in the press release. "We have seen a robust recovery within the PSV market since the IPO in 2022, and opting to realise our gains at this juncture aligns with our strategy. As with previous sales, we intend to return capital to our shareholders."

Following the sale, Standard will control a fleet of just four PSVs through its 51 per cent ownership interest in Northern Supply, all trading in the North Sea and all managed by Fletcher Shipping. Three of the four vessels are on short-term contracts and available for new charters in the upcoming months.

It is hard to see where Standard goes next. In September, Northern sold the PSV FS Balmoral for US$9.5 million, and in August, Standard flipped the UT755 design Standard Duke for US$11 million. Tactically, these were all profitable trades for the company, but where does the company go now?

It could buy some of the few remaining laid-up vessels, reactivate them, and try to flip them again, but that would mean re-entering the market at a time when asset values are at eight-year highs. The recent sale of the large PSV GSP Perseu (2006 built, DP2, 4,300 DWT) from Romania's GSP to Posidonia Shipping in Brazil shows there is a still a hunger for high quality tonnage internationally. The remnants of the former R. K. Offshore fleet of 120 tonners are being circulated in cold stack by brokers in Asia. Perhaps Standard will shift its focus from PSVs to anchor handlers, where, as we have seen, the market recovery has been slower?

Or perhaps Standard ELO, the parent company, which is controlled by Oystein Stray Spetalen and his business partner Martin Nes, just focus on its investment in Dolphin Drilling. The latter is firmly in recovery mode now and has proven an astute investment. Nobody lost money taking a profit even if Standard's frenetic vessels buying and selling over the downturn would have been better served by a buy-and-hold strategy with hindsight.

The only current Greek owner of note in offshore supply is MCT in Athens, which has built up a fleet of over half a dozen ships, buying anchor handlers in lay-up from troubled owners Bourbon (now Panos P and sisters), Havila and Brodospas (former Brodospas Alpha and Brodospas Beta, both 2009-built, Damen 6615 design AHTS of 120 tonnes bollard pull) to put them to work in Africa and Brazil.

There comes a time in every offshore cycle where the deep-sea shipping Greeks get excited and believe that their acumen in tankers and dry bulk will translate into bumper profits from offshore. They then learn that offshore is a long-cycle business with illiquid assets and a different contract structure to wet and dry cargo trades.

Golden Close Maritime Corporation, which was 60 per cent owned by Theodore Angelopoulos, took delivery of two sixth generation deepwater drillships, Deepsea Metro I and Deepsea Metro II, from Hyundai Heavy Industries in 2011. The first was laid up and out of work in 2015, and the second followed suit in 2017. Both ships were eventually sold for less than a third of their newbuild prices, the first going to its lenders for a reported US$175 million in 2016, which then sold it to the Turkish state oil company TPAO for US$210 million in 2017 and renamed Fatih. The second was auctioned to TPAO in 2018 for what Bassoe reported as US$262.5 million, and was renamed Yavuz.

The saga of Ocean Rig followed a more predictable pattern, as George Economou proved once again where even if the other investors in his companies are wiped out by his bad decisions, he will still profit personally.

The market bounced back in 2010, Ocean Rig listed in New York, and the company went on a US$4 billion borrowing frenzy to build eight deepwater drillships, only for the deepwater market to crash again in late 2014. By 2017 Ocean Rig had filed for Chapter 15 bankruptcy protection. The final restructuring agreement saw the shareholders wiped out, including Mr Economou, when the holders of 73 per cent of Ocean Rig's debt worth US$3.7 billion took over the restructured company.

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