Pacific Drilling (and others) Chapter 11

Based on those numbers I seems like it will just be a slow walk in that direction.
For the Sharav, a rig that is currently listed as “Smart Stacked” that $180k x 450 days is only $81million in revenue. Unstacking and mobilization costs, unless covered in the contract, are known to be in the tens of millions, conservatively. And historically at $180k about half of that goes to manning and daily operating costs. That leaves almost zero to support the rest of the companies operation.

Which makes me wonder why an oil major would even look at contracting them. Part of the appeal and success of larger drilling contractors is the depth of field, the office support, engineering support, global supply chain, phone-call-away downtime support. A company with 5 stacked, one idle, and one rig operating at breakeven just doesn’t seem all that marketable.

I’d posit that perhaps their business model is to make it long enough to where one of the larger firms recovers enough to buy them. But with most of their rigs having only a 2MM lb hook load they’re not even the best out there to buy. So it seems like a pipe dream at this point.

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but all the larger firms are bankrupt themselves and if not yet bankrupt, already have rigs cold stacked that they cannot market to anybody anymore and we are not talking about 20+year old junk but ships less than 10 years old (many of which never drilled a well or perhaps a paltry few). there will be no buyers now or in the foreseeable future for Pacific’s ships at any price higher than their value as scrap until these larger companies put those they already have back to work. As I wrote before, these ships were worth their weight in gold when times were good and they all had plenty of high paying work, but they are barely worth their weight in cow dung today when there is nothing for them to do or can barely earn their operating costs. The market basically has collapsed for deepwater drilling and there is no foreseeable future recovery of this market. The world of crude oil flipped on its back after all these ships were built and there was absolutely zero hedge by these drilling companies for that occurring so today they pretty much all are going into the toilet.

Of course this is where I brought up alternative jobs for them to be converted to do but that conversation went right into the black hole that so many other good ones here seem to in this forum.

Deepsea mining MAY be the saving grace for at least SOME of the newer and better equipped drillships.

It will take some change in equipment above and below deck. Some of the drilling equipment can be useful, however…
Machinery, thrusters and DP system are items that is the same for both tasks.

It didn’t go into a black hole it is just that there are no good ideas out there currently being proposed. The drilling contractors, Transocean, Pacific and the rest know only one thing drilling for oil. They are not maritime companies with people experienced in ship management, marketing or conversion to other uses. Most drilling companies think that a ship is just a necessary evil that is only needed to mount a drilling rig on. They’d mount a drilling rig on a blimp if they could.
The money is running dry for these guys. Investors will finally quit listening to the sales pitch of the bond sellers. There will be a wave of liquidations and a consolidation. It may well be that there will be only a couple of offshore drilling companies left and the names will be changed. Unless, things revert to the oil companies owning their own drilling rigs thru a subsidiary. This has always been on the table but the liability scares them. Bottom line is, unless the price of oil doubles the deepwater industry is in hospice care.

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True for most US Drilling Contractors, but many others have their roots in shipping companies.
Pacific Drilling is Hq in Luxembourg and owned by Idan Ofer, an Israeli businessman living in London.
He also own Tanker Pacific Pte. Ltd., Owner/Operator of a fleet of large tankers.
The two companies even share the funnel marking:
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That Jon Fredriksern, the Owner of Seadrill, is a shipping man should be well know and the company has it’s roots in Smedvig Shipping.

Odfjell Drilling is another example. There are many more.

and they all have proposed no repurposing of drillships either.
My guess? They decided it’s time to wring what little they can out of what’s left and move on. These guys don’t need to make a living on drillships, they have other interests. Perhaps they call their attorneys up once a month and ask, “We still have any of those damn drillships?” But that’s about it. They will move on to the next new thing.

Aside from Pacific Drilling that has no other rigs and Seadrill, the others sold out of the drillship market before it crashed. (Some have got out of drilling altogether)

PS> Fred Olsen’s Dolphin Drilling has declared bankruptcy and re-financed.

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there it is in a nutshell…what is the next new thing that requires ships like these? Deepwater mining requires these types of ships and the new energy future demands the rare and valuable minerals they contain. I wanted a discussion of this but it went nowhere at all. Does no one else here believe that deepwater mining has any potential to become a massive new maritime industrial sector?

I was essentially agreeing with you up there and just trying to figure out what possible plan Pacific management could have, cause I don’t see a viable one.

I think it has yet to be proven as viable. Not to say that it won’t be, but someone needs to show the profit margins are there on the product produced versus the time it takes to produce a salable quantity.

And even if so, no, I personally don’t see it as a massive potential industry in the US anyway (EEZ, OCS, etc). I know you didn’t specify where, but as for the US I think the potential regulatory/environmental hurdles would preclude meaningful development in the next several years. Certainly not in a short enough timeframe to justify investment in drillship re-purposing right now, even if its the best time to pick one up.

Internationally, maybe a different thesis. I think China would go for it. European nations probably NIMBY. Off of Africa, I could see it following a similar path as the development of offshore O&G there.

Drillships are operating worldwide now. Offshore mining is a business that will mostly be conducted in international waters waters and under UNCLOS rules.
If the US wants to participate they need to ratify UNCLOS.

But most drillship owned by nominally US companies are not US registered and most of the companies are incorporated outside US.
So they are free to operate under their registered country banners, most of whom are UNCLOS “members”.

Well Deep Green has already made their deal with AllSeas who bought the VITORIA 10000 to do the mining but there are others out there who themselves have the deals in hand with the nations granted the quota of nodules in the Clarion Clipperton Zone (CCZ). Here is a list of those companies and their sponsoring governments

Now, I will certainly say that Pacific Drilling does not have a strong hand to play because there are all the other companies which have idle ships all looking to cut a sweet deal to be the one who gets the contract plus many of these companies are owned by governments so likely would in no way want to farm out the work to interlopers. Still there is the prospect of outright selling their ships to these companies for at least more that they would get as scrap?

The outlier option is that the US not having ratified UNCLOS could give the ability for a pure US firm to simply get their butts out there asap and start harvesting the nodules while the rest of the world howls and in that case, the ships would need to be US flagged. At least then, our government might be able to wring concessions out of the UN to get the center seat at the table when it comes to who controls this resource or it could set off a no holds barred gold rush style race by everyone else you see on that list which would drive up the value of the ships exponentially since the time to build them means getting to the gold fields too late after the value of the minerals brought up falls from over production. Like every other gold rush, those who get there first reap the lion’s share of the rewards. The latecomers end up pounding sand.

and in case anyone here is wondering what a seafloor mining support vessel looks like…here is a rendering

image

so there you go…surprise, surprise, surprise

In the renderings/map shows USA has a very small footprint in that area. But many more countries are interested .Question remains, who has the “Good ground”?

As things stand with the USA not ratifying the UNCLOS treaty we have zero footprint because the UN has apportioned the rights to the minerals to signatory Nations only. That table I provided shows what nations have right to the nodules in the CCZ which include EU nations, several Pacific Island states, Singapore, Japan, Korea and most importantly China (who I believe has the most by far and stands to be the biggest winner here by far).

I firmly believe that with the huge demand for batteries required to transition from fossil fuels to clean energy that the minerals these nodules contain are going to be as valuable as gold and that this will become a gold rush. The only question in my mind is when the demand for the minerals will become so great to burst the logjam created by all the pinheads worried that some jellies and sponges will lose their habitat. There is nothing alive 4000m down that humans are benefited by. It is virtually impossible to even visit there in person and before the discussion of this mining began, there was nobody who cared one whit about what was down there. Suddenly losing these “creatures” becomes some great loss to the planet! Jobs and saving the planet we humans live in trumps what little lives in that perpetual blackness which is the very deep ocean!

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You are way off. Public information is available on the website.

well considering they have not released a fleet status report since July nor has the news section of their website indicated anything to contradict the status report posted, tell me how I am reading this wrong?

All disclosures are in the restructuring section along with reference to court filings on Prime Clerk. Definitely going down the rabbit hole by reading court papers, but that is where the most up-to-date information lives.

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Protect your company. :wink:

Always, so long as doing so is in alignment with what’s already in the public domain.

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The reality is, PD will continue to operate under bankruptcy protection, the employees will still have jobs and get paid a decent wage. I would though suggest to any Offshore worker not just PD employees, if you are constantly worrying about your job, and probably causing yourself so much stress at work and home, start looking for something new, start taking additional classes or training in a profession you may want to try, do it while you are employed, but that type of stress is dangerous for you, your family and your crew. Offshore drilling is in the biggest reboot of its life, and things will be completely different in 5 years in that market, probably will see a much leaner fleet worldwide, but there will still be a need. The concern that most should have, is how much are the companies cutting in regards to safety on these stacked vessels.