heard about the big offshore rig sale
ezcredit deepwater oil rigs all the
latest bells and whistles available
cheap come and get them you know really
it's almost that bad in the offshore
drilling market oil and gas producers
have had to put pressure on their
suppliers and whenever possible these
energy companies they've delayed
projects especially the more costly
offshore ones for those that build and
operate offshore drilling rigs the
nightmare may have only just begun so
rig owners have spent hundreds of
millions of dollars to construct each
one of these sophisticated bits of
deepwater kick meanwhile the daily
rental rates for these have halved to
about 250 thousand dollars since 2014
and another 35 new rigs are due for
delivery in the next few years that will
add fifteen percent to supply without
enough work for them now any debt raised
to build these rigs looks less secure
with each passing month these
liabilities already make up eighty
percent of the enterprise value that's
market value plus net debt of the 16
listed rig companies in the US and
Norway that means essentially that the
market believes the sector is bust not
to worry though some investors are
snapping up any available distressed
debt indeed some rig providers have
already gone through debt restructuring
for example in December Vantage drilling
in the US which has three deep Watership
drillships filed for bankruptcy now
whereas the old Vantage had high costs
mostly due to its interest payments new
and restructured Vantage has the lowest
estimated break-even cost in this group
Vantage can afford to offer lower day
rates than rivals and according to its
online home page it's even keen to hire
more workers so other distressed rig
companies such as Hercules offshore and
Paragon are similarly adjusting their
costs now analysts at DNB see a trend of
tractors preferring to keep a rig
working rather than removing it from
supply the largest rig owners seadrill
of Norway and Transocean and even lowest
cost provider diamond offshore 22
billion in gross debt between all of
them can only watch nervously as the
newly restructured companies offer
customers more discounts in the coming
year come on come on