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An Ultra-Deepwater Drillship Just Sold For 10 Cents On The Dollar

Burgess COMMENTARY

Peter Burgess

An Ultra-Deepwater Drillship Just Sold For 10 Cents On The Dollar

This morning, Ocean Rig announced that it has acquired a 2011 built ultra-deepwater drillship, the Cerrado for $65 million.

This was a distressed sale with the Cerrado drillship sold through an auction process and industry sources indicate that Ocean Rig may have been the only bidder at auction. The Cerrado was previously owned by Schahin (a Brazilian conglomerate with an O&G engineering and drilling business that filed for bankruptcy about a year ago).

enter image description herePhoto credit: Schahin

Although this is is a unique situation and not indicative of broader market values, the sale is startling as construction costs for this new generation ultra-deepwater rig have been in the $600-$700 million range. This transaction cleared at just 10% of the cost to build this sort of rig, and the lack of interest beyond Ocean Rig is telling of just how difficult conditions are for offshore drillers right now.

The drillship was built at Samsung Heavy Industries in 2011 to similar design specifications as Ocean Rig's existing 6th generation drillships built at Samsung. The drillship will be renamed the Ocean Rig Paros upon its delivery to Ocean Rig. Another subsidiary of the Company has been acting as the manager of the drillship for its previous owners.