August 4, 2021

10 thoughts on “Marco Polo to cancel rig contract with Semb Marine – The need to understand Rig ownership versus speculation!

  1. Good point: to analyse SembMarine and Keppel, need to check the background of their customers that hold the orders.

    Agree that oil is a very complex industry, really hard to analyse. And rigs/vessels is several steps harder. Impossible for layman.

    What do you think is the long term effect on Keppel and SembMarine companies if oil never goes above USD 65 again, due to the fracklog? What price would you buy these two companies?

    1. Hi BlackCat,

      Tks for dropping by. For both Kep n Semb, I m not vested and did not go into detail their figs as well as their quality of backlog orders.

      Kep is almost 50% non O&G, hence its quite difficult to just use O&G to determine her entire fate.

      Read my earlier article on Kep corp.

      Your question of what price? I do not know!
      It depends on how long is ur investment horizon. All I know is If oil price stays depressed with low capex throughout 2016 n 2017 then "the worst has yet to come!"

      For things I am unsure for now, I stay away!

      Not sure about u?

    1. If never tio burnt, how to learn.

      But the question is really how big the fire u r playing with?

      The worst is even to win this time, and next time speculate bigger, n fail n no return.

  2. Good article. But keep in mind that Sg yards made very good money during the first bull market for rigs from 2005 till the GFC building rigs for speculators. But Keppel and SCM typically build well-proven designs, especially in the jackup space. However this time the rig oversupply is particularly bad and even if oil prices recover, it's unlikely that rig demand will mop up all the new rigs. Keppel must be worried about their Can Do drillship being built by the yard on spec. One thing though – note that it's very rare for oil companies to bareboat rigs or OSVs. Its actually unheard of today. Only production platforms like FPSOs are bareboat end or even outright own d by oil cos

    1. Hi Serendib,

      Tks for dropping by first time. U must be a veteran in the industry! 🙂

      U r absolutely right abt bareboat charter by Oil co is almost unheard of, except for FPUs normally chartered over longer time. Oil co normally goes into time charter and it's almost always that the drilling & offshore construction contractors, OSV operators etc who will charter bareboat from asset owners either in finance lease (to be asset light) or operating lease forms.

      Kep and SCM are definitely one of the best yards ard in terms of value for money products n designs. Given their resilient n diversified nature, I believed they will b able to weather the storm ahead. Yes, Kep CanDo is a concern. Hope it "can do!"

      But the questions investors are more concern are really the sustainability of their bottomline n valuation.

      Anyway the world economy is volatile nowadays directly affecting oil price also. What if war?

  3. Rolf,

    I read and learned a little more 😉

    Confirmation of a conventional wisdom:

    Don't go to a spear maker and ask about farming oranges!

    1. Hi Jared,

      Thanks for the read. 🙂

      Ah… it reminds me of a story in "Richest Man in Babylon" when Arkad invested in a Brickmaker for jewel trades!

      Go back to fundamentals! It's so simple. But the problem begins when it is often so easily overlooked with distractions.

      Just look at CHC. I am sure the once well respected leaders are aware of their wrongdoings, BUT distractions fogged their visions!

    1. Hi Kevin,

      Thanks and I m glad that u learnt something new. I am sure ur investment is slow and steady and will eventually win the race just as ur blog title suggests.

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