Norwegian Investment Banks Touting Oil Rigs at Firesale Prices
By Luca Casiraghi and Mikael Holter
(Bloomberg) — Pareto Securities AS is amongst banks concentrating on debt funds and private-equity corporations to purchase oil rigs at firesale costs to carry till demand for offshore-drilling rebounds, in line with individuals acquainted with the matter.
Norwegian funding banks are sounding out curiosity in special-purpose funding autos that will purchase rigs from distressed firms, mothball them and promote them when the market picks up, mentioned the individuals, who declined to be recognized as a result of the plans are non-public.
Drillers could also be pressured to promote rigs at a reduction as they wrestle to repay debt amid a greater than 50 p.c fall in oil costs since August 2014. Almost a 3rd of rigs are and not using a contract this week after oil producers canceled or renegotiated contracts as a glut of new-builds come on-line, in line with a Pareto word on Nov. 12.
“There are now more funds interested in investing in rigs as values have fallen significantly,” mentioned Nigel Thomas, a companion at Watson Farley & Williams in London, a legislation agency that makes a speciality of the delivery and offshore industries. “The risk is that prices will bump along the bottom for quite a long time.”
Pareto Chief Executive Officer Ole Henrik Bjoerge declined to touch upon the funding autos.
“I expect some of the banks, which sit on a large amount of rig debt in distress or which may come in distress, will try to push for asset sales,” mentioned Eirik Rohmesmo, a credit score analyst at Clarksons Platou Securities AS in Oslo. “Funds alone would not be able to run a fleet and they will need an industrial operator to manage it.”
Chartering charges for essentially the most superior gear have dropped to as little as $250,000 a day from as a lot as $650,000, in line with the Pareto word.
“It’s hard to calculate the price of a rig these days, because you don’t know how long you’ll remain without cash flow,” mentioned Janne Kvernland, an analyst at Nordea Markets in Oslo. “So it’s anybody’s guess what a rig is actually worth.”
©2015 Bloomberg News
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