Cyprus-based Ocean Rig has stepped in to buy the sixth generation ultra-deepwater (UDW) drillship Cerrado, which once drilled the giant Libra prospect offshore Brazil, following its owner Brazil-based Schahin Group bankruptcy declaration last April.
Ocean Rig paid US$65 million at auction for the UDW drillship, which was built at Samsung Heavy Industries' Geoje, South Korea, yard in 2011. Upon delivery, the ship will now be renamed Ocean Rig Paros.
The sale of the Cerrado marks the first sixth generation rig to be sold, said Leslie Cook, senior research consultant, Quest Offshore Resources, to OE. In December 2015, James West at ISI Group reported that sixth generation drillships could be valued at $250 million (low end, "Bear case") to $400 million (high end, "Bull case"). However, Andrew Jackson, market research & database manager, Quest Offshore Resources, told OE that the industry should keep Schahin Group's unique situation in mind before declaring the sale the new benchmark price for sixth generation UDW rigs. For example, the firm is going through bankruptcy proceedings and the engineering division, in particular, had been swept up by a corruption probe into the Brazil's Car Wash (Lava Jato) scandal, which has entangled many major players. Last May, Petrobras cancelled five long-term leases with Schahin Group, including one with the Sertão drillship.
"I would still view West’s valuation as being more appropriate than the number skewing too much closer to the Cerrado sales price,” Jackson said. “But, it is definitely now a data point that people will consider, but more on the lowest end of the spectrum depending on how ‘distressed’ the asset sale is."
Cook notes that Shahin Group has a sister ship to the Cerrado, the Sertão, that is likely headed to the auction block as well.
The Cerrado is a S10000E design, which is the same model as Ocean Rig's UDW drillships Ocean Rig Olympia, also built in 2011, and the Ocean Rig Athena, built in 2014, both at the same yard. However, the Cerrado can operate at a maximum 10,000ft water depth and can drill to a maximum depth of 40,000ft. Its dimensions are 748ft x 137.7ft x 39.3ft.
Petrobras chose the Cerrado to drill its Petrobras' first exploration well on the giant Libra prospect, called 3-RJS-731, in early August 2014. Libra is in the pre-salt area in the Santos basin offshore Brazil. In October of that year, Petrobras confirmed the discovery of good quality oil in the northwestern portion of the structure. Petrobras has continued to make discoveries at the Libra prospect as recently as February.
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