Forum: Transocean » Forum Transocean Ltd. (RIG) geopend » Pagina: 2

Gaston Lagaffe 22 augustus 2017 13:29

Gaston Lagaffe

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Total neemt Deense Maersk Oil over voor $7,45 mrd
Het Franse olie- en gasconcern Total neemt het Deense Maersk Oil over voor $4,95 mrd. Ook neemt Total $2,5 mrd schulden over. Daarnaast neemt Total de verplichting over om in de toekomst boorplatforms en infrastructuur te ontmantelen. Dat heeft nu een waarde van bijna $3 mrd. Dat hebben beide bedrijven maandagochtend bekendgemaakt.
Moederbedrijf A.P. Moller-Maersk zette Maersk Oil vorig jaar in de etalage, omdat het bedrijf zich wil concentreren op zijn containerrederij en zijn haven- en logistieke activiteiten. De verkoop, die in het eerste kwartaal van 2018 moet zijn afgerond, levert het bedrijf een boekwinst op van $2,8 mrd, na belasting.
Volgens Total sluiten de activiteiten van Maersk in de Golf van Mexico, Algerije, Kazachstan en Angola goed aan bij de eigen activiteiten in die regio's.
Volgens Total sluiten de activiteiten van Maersk in de Golf van Mexico, Algerije, Kazachstan en Angola goed aan bij de eigen activiteiten in die regio's.Foto: Maersk
Total wordt met de overname een van de grootste spelers op de Noordzee en voegt 1 miljard vaten olie aan zijn reserves toe, waarvan 80% Noordzee-olie. De overname levert per direct een positieve bijdrage aan de winst per aandeel en de kasstroom. Volgens Total sluiten de activiteiten van Maersk in de Golf van Mexico, Algerije, Kazachstan en Angola goed aan bij de eigen activiteiten in die regio's.
Het Franse bedrijf krijgt via Maersk nu ook toegang tot het zeer gewilde Johan Sverdrup-olie- en gasveld in het Noorse deel van de Noordzee dat eind 2019 in productie moet gaan en waarin Maersk Oil ene belang heeft, schrijft zakenbank Barclays in een commentaar. Johan Sverdrup is een van de grootste olievondsten ooit in de Noordzee en moet de komende 50 jaar olie gaan produceren voor Noorwegen.
Samen met de complementaire activiteiten elders in de wereld ziet de zakenbank net als Total zelf de rationale achter de overname, waarbij Total volgens de Britse zakenbank een eerlijke prijs betaalt voor conventionele olie- en gasactiviteiten die bij lage kosten al rendabel zijn, ervan uitgaande dat de olieprijs blijft zoals hij nu is.
Herstellend vertrouwen
Bestuursvoorzitter Patrick Pouyanne zei vorige maand al dat het bedrijf klaar was om overnames te doen en de productie te laten groeien. Het laat zien dat het vertrouwen in de toekomst van de olie- en gassector terugkeert na een aantal zware jaren als gevolg van de lage olieprijs. In de afgelopen drie jaar hebben grote olie- en gasbedrijven fors in de kosten gesneden, is personeel ontslagen en zijn de prijzen voor apparatuur en dienstverlening gekelderd.
Eerder dit jaar nam Total voor $900 mln een belang in een project in Oeganda en gaf het groen licht aan een investering van $2,2 mrd in Braziliaanse olievelden. Ook elders in de sector is er weer beweging.
================================ Zo maakte Transocean, een grote dienstverlener in de olie- en gasindustrie, eerder deze maand bekend Songa Offshore over te willen nemen voor $3,4 mrd.==============================================
Onderdelen verkopen
Ondertussen hebben BP en Shell de afgelopen maanden juist voor miljarden aan bedrijfsactiviteiten verkocht. Met de opbrengst van verkopen en de aanhoudende kostenbesparingen slagen bedrijven als Shell en Total er weer in om voldoende kasstroom te genereren om de investeringen en het dividend te kunnen dekken, ook bij de huidige relatief lage olieprijs.
Toch blijven er bij sommige marktkenners zorgen over de olieprijs. Shell-topman Ben van Beurden zei eerder rekening te houden met een piek in de vraag naar olie in het volgende decennium.
Dong Energy
Total financiert de overname door 97,5 miljoen nieuwe aandelen uit te geven aan A.P. Moller-Maersk. Daardoor groeit het uitstaande aandelenkapitaal van Total met 3,75%.
A.P. Moller-Maersk probeerde volgens bronnen van Reuters in eerste instantie te fuseren met de olie- en gastak van Dong Energy, maar die onderhandelingen liepen eind vorig jaar spaak omdat de beide partijen het naar verluidt niet eens konden worden over de prijs. Dong verkocht zijn olie- en gasdivisie vervolgens voor $1,3 mrd aan Ineos.

Gaston Lagaffe 22 augustus 2017 13:41

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Maersk.com >> PRESS RELEASE (ingekort ivm maximaal aantal karakters)

Total S.A. to acquire Mærsk Olie og Gas A/S for USD 7.45bn and make Denmark a regional hub 21 August, 2017
A.P. Møller - Mærsk A/S [A.P. Moller - Maersk] has today signed an agreement to sell Mærsk Olie og Gas A/S [Maersk Oil] to Total S.A [Total] for USD 7.45bn in a combined share and debt transaction.

Tyra East.
Maersk Oil will become part of a leading global oil and gas operator with a long-term investment interest in the sector. Total will take over Maersk Oil’s entire organisation, portfolio, obligations and rights with minimal pre-conditions. Planned development schedules and investments in strategic and sanctioned projects will be upheld.

With the agreement A.P. Moller - Maersk is taking a material step forward in its strategy to ================ separate out its oil and >>>>>>oil related activities <<<<<< to create an integrated transport & logistics company ======= , and this transaction will contribute significantly to upholding its strong capital structure.

“In determining the best future ownership structure for Maersk Oil, it has been imperative for us that the capabilities and assets created in Maersk Oil continue to be developed, and that long-term investments are upheld, especially in the Danish part of the North Sea,” says Søren Skou, CEO of A.P. Moller - Maersk and continues:

“The valuation of Maersk Oil and Total’s commitment is a testament to the quality and standing of Maersk Oil. In addition, the agreement will strengthen the financial flexibility of A.P. Moller - Maersk and free up resources to focus our future growth on container shipping, ports and logistics.”

Denmark will become the regional hub for all Total’s operations in Denmark, Norway and the Netherlands, based on Maersk Oil’s capabilities and strong position in the North Sea region.

“Maersk Oil’s activities across the North Sea will become part of a leading global operator with a strong performance record and long-term growth interest in the sector. The combination of Total and Maersk Oil’s global footprint and geographical overlap will ensure the continued development of Maersk Oil’s worldwide strategic and selective assets. By selling to Total, we ensure a continued Danish stronghold in the North Sea based on Maersk Oil’s leading position within technology development and its track record as a lean, efficient and trusted partner. Importantly, Maersk Oil will remain close to its technology and innovation partners at the Danish technical institutions and in the oil and gas service industry to the benefit of all parties,” says Claus V. Hemmingsen, Vice CEO of A.P. Moller - Maersk and CEO of the Energy division.

Patrick Pouyanné, Chairman and CEO of Total, commented that:
“I welcome Maersk Oil to the Total family. Building on Maersk Oil’s high safety standards, strong technological leadership, operational excellence and strong Danish heritage, we will intensify and accelerate the push to optimise and extend the Danish oil and gas production. The addition of Maersk Oil’s strong capabilities and high quality assets to our business will create a leading international operator in the North West European offshore region, making Denmark a regional anchor point for Total’s North Sea business. With Maersk Oil’s technical and operating competencies and Total’s experience and strong financial position, we have an exceptional opportunity to boost the combined competitive position in several core upstream regions and deliver growth, value creation and career opportunities.”

A.P. Moller - Maersk has been the main operator in the Danish North Sea for half a century, establishing and maintaining Denmark’s position as self-sufficient within oil and gas. With Maersk Oil at the forefront, the Danish oil and gas industry has contributed DKK 400bn in taxes to Denmark over the past 50 years, and provides employment to 15.000 people in the sector. In addition, Maersk Oil has significant presence in the British and Norwegian sectors, with nine licenses in Norway, including an 8.44% ownership of Johan Sverdrup, one of Norway’s largest discoveries ever. In the United Kingdom, Maersk Oil operates several offshore installations, as well as leading a number of project developments; most notably the Culzean gas development, where Maersk Oil is the operator and holds a 49.9 % ownership.

“Our future position as the regional hub for Total’s operations in Denmark, Norway and the Netherlands, recognises Maersk Oil’s status in the North Sea region. In Denmark, the focus will continue to be on investing in safe, efficient growth from existing fields. The capabilities, experiences and partnerships, which made Maersk Oil a globally recognised technology leader and trusted operator, will contribute to Total’s position in the entire North Sea and worldwide. In addition, the agreement presents new opportunities for our employees, as Maersk Oil joins a global industry leader,” says Gretchen Watkins, CEO of Maersk Oil.

The separation of the energy businesses was decided as part of last year’s strategic decision to focus A.P. Moller - Maersk’s future activities on transport and logistics, as well as a result of recent years’ oil and gas industry and market developments. Maersk Oil is the first of the four energy companies of A.P. Moller - Maersk for which a future structural solution has now been identified. The solutions for Maersk Drilling, Maersk Supply Service and Maersk Tankers remain to be defined before the end of 2018.

In a comment to the transaction, Chairman of A.P. Møller Holding A/S, Ane Mærsk Mc-Kinney Uggla states:
“In my heart and mind, this is a very difficult, but right decision. Maersk Oil has for almost half a century been at the forefront of the Danish oil development, been vital to A.P. Moller - Maersk and to this very day plays a decisive role in the Danish and international oil and gas industry. This gives us pride. As owners, we seek the best foundation for the future growth of the Maersk Oil activities and the focused development of the Danish North Sea. A.P. Møller - Mærsk A/S has found a dedicated industry owner with a sincere interest in further developing and investing in the assets and capabilities created in Maersk Oil, while preserving the heritage of Denmark's leading oil company. On behalf of A.P. Moller Holding, I wish to thank all our employees in Maersk Oil for their vast achievements and relentless dedication to A.P. Moller - Maersk.”

The agreement is subject to regulatory approval from relevant authorities, including the Danish Minister of Energy, Utilities and Climate and relevant competition authorities. Closing is expected to take place during first quarter, 2018.

A.P. Møller - Mærsk A/S has today released the following information in a Stock Exchange Announcement:
Today, A.P. Møller - Mærsk A/S (APMM) has entered into an agreement to sell Mærsk Olie og Gas A/S (“Maersk Oil”) to Total S.A. for USD 7.45bn in a combined share and debt transaction.

APMM will receive an enterprise value per 30 June 2017 of USD 7.45bn paid by 97.5m shares in Total S.A. with a value of USD 4.95bn equal to approx. 3.76% of Total S.A. (post issuing shares to APMM). In addition to the shares Total S.A. is assuming a short-term debt of USD 2.5bn via debt push down from APMM into Maersk Oil. Total S.A. will pay an interest of 3% p.a. of the enterprise value from 30 June 2017 and until closing of the transaction. Total S.A. will take over all decommissioning obligations currently amounting to USD 2.9bn.

Gaston Lagaffe 22 augustus 2017 13:58

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De olieindustrie is nu duidelijk in beweging aan het komen. Diverse overnames en fusie zijn aangekondigd. Of ze allemaal doorgaan valt te betwijfelen maar de trend is duidelijk. Maersk neemt afscheid van zijn olie- en olie gerelateerde activiteiten en concentreert zich op zijn (container)vloot en havenactiviteiten waar ze tot de top van de wereld behoort. Het is mij niet geheel duidelijk of dit ook op de (aanzienlijk) supply-vloot en Maersk Drilling gaat maar het lijkt mij, op termijn,

Gaston Lagaffe 22 augustus 2017 15:41

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Transocean - Low Day Rates Are The Magic Formula For Recovery

Seeking Alpha >> Aug. 22, 2017 About: Transocean Ltd. (RIG), Includes: ESV, NADL, NE, ORIG, SDRL >> door : Fun Trading

Summary : Statoil is reportedly in the market for four additional rigs as it seeks to take advantage of lower day rates. Transocean is getting a solid hand in the North Sea and the Barents Sea. Offshore drillers could be at the bottom, and it is perhaps time to invest in this sector again for the long-term while the stock prices are showing multi-year lows.

Investment Thesis
It is not a secret, the offshore drilling industry is not doing well and drillers are struggling to survive while waiting for an elusive recovery that appears to slip further away due to a stubborn low oil price environment, which is not enough to push oil majors to invest sufficiently in offshore exploration capex.

However, the market is far from being dead and I have noticed some tendering activity the past few months, especially in the jack-up segment, and recently shifting to the floater sector as well.

Thus, trends signaling a rig market recovery have emerged this year. Rig contracting activity and utilization are on the rise, asset values are increasing, crude oil benchmark prices held relatively stable, albeit not enough but sufficient to trigger new activity.

The conclusion is that offshore drillers could be at the bottom, and it is perhaps time to invest in this sector again for the long-term while the stock prices are showing multi-year lows.

What does the industry have to say about the market environment? The industry is positive and signs suggest that it is something solid that is happening.

David Carter Shinn from Bassoe.no said: In March, Ensco PLC executives told investors that they have seen a 200% increase in rig years, tendered for jack ups year-over-year. Future deepwater markets likely will become more focused toward the operators' growing need for plug and abandonment work and large new projects.
Furthermore, Noble (NE) CEO David W. Williams indicated in the 2Q17 conference call,

Now I'll turn our attention to the business. I'm pleased to tell you that we've seen a step-up in contracting activity over the recent weeks. After a rather quiet period, the contract awards that began to appear, primarily in the jackups sector in early 2017, have recently spread to the floating side of the business, and Noble is benefited.
Ensco (ESV) CEO Carl Trowell said in the company 2Q17 conference call,

While recent volatility and commodity prices could present challenges at the onset of customers' 2018 budget season, we continue to see signs of improvement in customer activity. New contract awards and inquiries for future work have increased year to year, albeit of a very low base. More projects have reached a final investment decision, sanction this year than we did in all of 2016, providing a pipeline future offshore work in the years ahead.
And finally, Ms Terry Bono from Transocean (RIG) said in the 2Q17 conference call,

We also see multiple bidding opportunities globally where we have identified almost 60 floater programs that could begin within the next 18 months. We are participating in multiple bids and seeing more opportunities in other parts of the Latin America, including Trinidad, Colombia, Guyana and Suriname as a number of operators have programs that should begin in the next 12 to 18 months. In addition to the FID approval for ExxonMobil's Liza development, offshore Guyana, Tullow recently signed a 10-year lease for the Orinduik Block in the Guyana-Suriname Basin. We are also excited about deepwater opportunities in Mexico, including the recent large discovery of the Zama field by the Talos JV.
August 18 news about Statoil in "fresh rig hunt" - The Arctic Barent Sea's potential

On August 18, 2017, Steve Marshal wrote in Upstream the following: Statoil is reportedly in the market for three additional rigs as it seeks to take advantage of lower day rates, including two units for drilling work in the Barents Sea off Norway.

The state-controlled operator has initiated a tender for two frame agreements for a pair of rigs capable of working in both deep and shallow waters in the Arctic region, Norwegian news site Petro.no reported, citing a Statoil spokesman.

The work will entail exploration wells, as well as drilling near existing fields and for upcoming projects, though the workscope and licences to be drilled have not yet been finalized, according to the spokesman.

Statoil will be looking to drill production wells under its proposed development of the Johan Castberg field in the region on which a final investment decision is due later this year.

The spokesman said projected start-up for the two frame agreements is between 1 October 2018 and 1 March 2019, and between 1 April 2018 and 1 March 2019.

In addition, Statoil is hunting for a rig for drilling of 22 wells under its Snorre Expansion project in the North Sea field, with estimated start-up in the third quarter of 2019 and a duration of between three and four years.

The latter contract is contingent on a final investment decision and submission of a field development plan on the project that is due in December this year, with an award likely to be made around the same time...
1 - The Kayak discovery using the Semisubmersible Songa Enabler.

Statoil announced on July 3, 2017 that Statoil and partners ENI and Petoro have made an oil discovery in the Kayak well in the Johan Castberg license.
Totalling between 25 and 50 million barrels of recoverable oil equivalents, the discovery may provide valuable additional volumes for the Johan Castberg development. The discovery also opens other exploration opportunities in the same area.
2 - Snorre Expansion project.
In addition, Statoil is hunting for a rig for drilling of 22 wells under its Snorre Expansion project in the North Sea field, with estimated start-up in the third quarter of 2019 and a duration of between three and four years.
Note: The award is expected around December 2017 and is contingent on a final investment decision and submission of a field development plan on the project about the same time.

Gaston Lagaffe 22 augustus 2017 15:42

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Vervolg :

Transocean is getting a solid hand in the North Sea and the Barents Sea
1 - Transocean is acquiring Songa Offshore.
On August 15, 2015, Transocean announced that it is acquiring Songa Offshore for a total transaction value of $3.4 Billion. Transocean expects to close the transactions contemplated by the Offer during the fourth quarter of 2017. To read my article, please click here.

The combined company will operate a fleet of 51 mobile offshore drilling units with a backlog of USD $14.3 billion consisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters. Additionally, Transocean has four ultra-deepwater drillships under construction, including two contracted with Shell for ten years each. Consistent with Transocean’s strategy of recycling older, less capable rigs, Transocean anticipates re-ranking the combined fleet, which may result in additional rigs being recycled.
Songa Fleet composition: Comparative table (Based on InfieldRigs data):

Offshore drilling Company Total rigs Semi Submersible Operational Semi Submersible Ready Stacked Semi Submersible Cold stacked
Songa Offshore

(Not including the JV Songa Opus with 6 rigs)

7 4 0 3
There is likely to be fierce competition for the three contracts, given that 15 floating rigs are already dispatched off Norway with four more units due to come off contract later this year.

A few competitors stay, though, North Atlantic Drilling (NADL), Seadrill (SDRL) through Northern Drilling (John Fredriksenand the Semisubmersible West Mira) or China Oilfield Services Ltd. (COSL), Stena Drilling

However, only a handful of these rigs will be compatible with harsh-environment requirements for drilling in the Barents, including Ocean Rig’s Leiv Eiriksson and Transocean Spitsbergen, said Steve Marshal.

Songa Offshore is showing $4.1 billion in backlog with Statoil already with four Semi-submersibles on contract for the next seven years.

2 - Transocean may be the buyer for the semisubmersibles Ocean Eirik Raude and the Ocean Leif Eiriksson for a total of $60 million.
In March 2017, Ocean Rig UDW (ORIG) indicated in its lender update, that the two semisubmersibles will be sold for a total of $60 million. The semisubmersible Eirik Raude for $10 million in August 1, 2017, and the semisubmersible Leiv Eiriksson for $50 million in January 1, 2018.

The company indicated in the fleet status "Rig assumed to be sold on August 1, 2017 for $10 million" and "Rig assumed to be sold on January 1, 2018 for $50 million". See lender update page 5.

3 - Transocean may acquire the Semi-submersible West Rigel from North Atlantic Drilling (NADL). Transocean was interested by the $455 million West Rigel and could acquire the rig at a distressed price, unless NADL can manage to contract the rig?

Conclusion : Oil majors and National oil companies [NOC] are back on a "rig hunt". I have commented about opportunities in harsh environments (North Sea and possibly Canada), as well as regions such as Brazil, Guyana, Mexico, West Africa, the US Gulf of Mexico, and the Middle East.

A few more long-term contracts, here and there, and the market will finally recognize that the offshore drilling industry is trading at the rock bottom now. The five companies still considered as safe in this sector are now trading about 50% lower since January 2017. I see this situation as an opportunity, especially for Transocean.

Disclosure: I am/we are long RIG, ESV.

Additional disclosure: I own also NE and RDC for the long term and trade the Industry as well.

Gaston Lagaffe 22 augustus 2017 15:56

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quote:
Gaston Lagaffe schreef op 22 augustus 2017 13:58:
De olieindustrie is nu duidelijk in beweging aan het komen. Diverse overnames en fusie zijn aangekondigd. Of ze allemaal doorgaan valt te betwijfelen maar de trend is duidelijk. Maersk neemt afscheid van zijn olie- en olie gerelateerde activiteiten en concentreert zich op zijn (container)vloot en havenactiviteiten waar ze tot de top van de wereld behoort. Het is mij niet geheel duidelijk of dit ook op de (aanzienlijk) supply-vloot en Maersk Drilling gaat maar het lijkt mij, op termijn,

onvermijdbaar. Maersk Drilling is een (goede) middelgrootte driller met een vloot van 4 boorschepen (Ultra Deep), 4 Semi-Subs en ca 15 Jack-Ups. Onder deze Jack-Ups bevinden zich enkele Harsh Environment / 350 voets Jack-Ups. Al met al redelijk modern materiaal waar zeker interesse voor zal bestaan. Of Transocean t.z.t. geinteresseerd zal zijn valt niet te voorspellen. Met Songa Offshore hebben ze in ieder geval een andere Scandinavische driller aan gekocht. Kwaliteit zoekt kwaliteit.

Gaston Lagaffe 22 augustus 2017 16:12

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Nog een oud (maar interessant) ingekort bericht van de start van dit forum door IEX Analist Paul Weeteling. Opvallend Weeteling heeft zijn long positie aangepast : Transocean erin / Seadrill eruit.

Drilling sector nabij bodem door Paul Weeteling op 13 jun 2017 Categorie: Beurs vandaag Onderwerpen: olie, olie & offshore, olieprijs, oliesector, schalieolie

Drilling sector nabij bodem
Dienstverlenende bedrijven in de olie- en gasindustrie hebben de afgelopen jaren rake klappen gekregen. De drilling sector is echter een verhaal apart. Om in bokstermen te blijven: daar is bijna sprake van een Knock Out. Enkele spelers hebben al faillissement aangevraagd en voor anderen zal dit niet lang meer duren.
Bedrijven die boren naar olie (of gas): olieboorders, worden ook wel drillers genoemd. Wanneer er een oliebron op land of onder de zeebodem in kaart is gebracht, krijgen dit soort bedrijven opdracht een verbinding te boren tussen de bron en de oppervlakte of zeebodem.
Vervolgens wordt er een zogenaamde “wellhead” gebouwd. Dit is een afgedichte put waarop een pijp kan worden aangesloten zodat grote olieproducerende bedrijven: oil majors, de ruwe olie naar de oppervlakte kunnen halen. In dit artikel worden alleen bedrijven besproken die naar olie boren op zee.
Bedrijven als Transocean (RIG), Ensco (ESV), Diamond Offshore (DO), Noble Corporation (NE) en Seadrill (SDRL) zijn 90% of meer van hun beurswaarde verloren sinds de hosannadagen vlak voor de kredietcrisis. Seadrill is een geval apart in dit rijtje. Het bedrijf heeft haar hand fors overspeeld qua financiering; momenteel is de beurswaarde nog slechts een schamele 1% van de hoogste koers ooit. Rowan Companies (RDC) is de witte raaf en heeft meer dan een kwart van haar beurswaarde weten te behouden.
Vorige week deed Ensco een bod van omgerekend 10,72 dollar op sectorgenoot Atwood Oceanics (ATW), waarover later meer. Betekenen deze schrikbarende inéénstortingen nu het einde van de sector of is de eerste grote overname in de sector juist een signaal dat de bodem nabij is? Het antwoord op deze vraag is vooral afhankelijk van uw visie op olie en in mindere mate gas als toekomstige energiebron.
Discussie rond olieprijs
Een groot deel van de discussie rond de olieprijs gaat over of deze vervuilende energiebron is ingehaald door de tijd en of dat we snel overgaan op alternatieve energiebronnen. Verder is de opkomst van nieuwe wintechnieken, voor met name schalieolie uit de VS, een issue dat regelmatige de revue passeert.
De productie van schalieolie in de VS bedraagt ongeveer 5% van het dagelijks verbruik, maar een dergelijke verschuiving in het aanbod zorgt voor een grotere beweging in de prijs.
Dan is er nog de afhankelijkheid van olie als inkomstenbron van sommige landen. Met name Venezuela, Rusland en een aantal landen in het Midden-Oosten zijn in grote mate afhankelijk van de export van ruwe olie. Deze landen kunnen niet zomaar even stoppen met het produceren van olie ondanks dat de olieprijs hard onderuit gaat. Dit ondermijnt de kracht van de OPEC.
Zonder de OPEC zou de prijs van olie echter nog veel lager liggen dan de huidige marktprijs. Het functioneren van dit kartel is daarom wel van essentieel belang voor de drillers. In een bearmarket ligt de focus natuurlijk op bovengenoemde zaken, maar juist dan is het van belang de andere kant van de medaille niet te vergeten.
Andere kant medaille
Een groeiende vraag uit China en (vooral) India wordt vaak genegeerd net als het extreem lage investeringsniveau van de oil majors. Op termijn zal er weer moeten worden geinvesteerd om in de toekomstige vraag te kunnen voorzien.
Daarnaast komt minder dan de helft van de vraag naar olie van transportmiddelen die op korte termijn over kunnen gaan op alternatieve energiebronnen. Auto’s en, in beperkte mate, vrachtwagens kunnen theoretisch overschakelen op accu’s of waterstof, bij vliegtuigen en schepen is dit niet zo eenvoudig.
Verder worden er nog steeds volop nieuwe verbrandingsmotoren geproduceerd. Deze zijn weliswaar zuiniger dan oudere verbrandingsmotoren, maar zullen de komende decennia de nodige olie blijven verstoken. Olie wordt daarnaast ook gebruikt als basis voor talloze chemische producten en kunststoffen.

Olie, waterstof of elektrisch
Dan is er nog het argument van de technologische vooruitgang van alternatieve aandrijflijnen op basis van bijvoorbeeld waterstof. Tesla CEO Elon Musk ziet echter geen toekomst voor een aandrijflijn op basis van waterstof. Hij zegt er het volgende over: “I just think that they’re extremely silly … It’s just very difficult to make hydrogen and store it and use it in a car,” Musk said at the time. “If you, say, took a solar panel and use that … to just charge a battery pack directly, compared to split water, take hydrogen, dump oxygen, compress hydrogen … It is about half the efficiency.”
Hij doelt hiermee op het feit dat elektriciteit nodig is om waterstof te produceren en vervolgens vloeibaar gemaakt moet worden. Deze elektriciteit direct in een accu stoppen zou veel efficiënter zijn. Nu is hij met Tesla natuurlijk een andere weg ingeslagen waardoor het niet in zijn straatje ligt om waterstof de hemel in te prijzen.
Anderzijds heeft hij waarschijnlijk ook wel overwogen om zijn bedrijf richting waterstof te sturen, mits dit een betere energiebron zou zijn dan elektriciteit uit accu’s. Er zijn ook wel degelijk issues met betrekking tot veiligheid, efficiency en infrastructuur voor waterstof.
Waterstof nog niet afgeschreven
Waterstof is echter nog niet afgeschreven. Er zijn namelijk ook voordelen zoals de schone verbranding van waterstof door middel van de brandstofcel (de uitstoot is schoon water zonder milieuonvriendelijke accu’s), geen noodzaak om zware accupakketten mee te torsen en snel tanken. Last but not least kun je waterstof in theorie zolang opslaan als nodig is, hoewel hier wel speciale tanks voor nodig zijn.
Vooral Japanse automakers zijn actief bezig met het ontwikkelen van aandrijflijnen op basis van waterstof. Het bekendste voorbeeld is wellicht de Toyota Mirai die volledig op waterstof rijdt. Net als met andere technologieën heeft alles wat komt kijken bij het rijden op waterstof ook een bepaalde optimalisatieperiode.
Het zou dan ook best kunnen dat de issues met waterstof uiteindelijk worden opgelost en de brandstofcel de plek van de verbrandingsmotor inneemt. De elektrische aandrijflijn is dan slechts een overgangsvorm.
Amazon heeft recent een belang genomen in Plug Power (PLUG) dat brandstofcellen maakt. In eerste instantie om heftrucks in grote magazijnen te voorzien van een dergelijke aandrijflijn, maar wie weet wat hier verder uitrolt.
Al met al zijn er een hoop technologische ontwikkelingen binnen de transportsector, maar dat zet voorlopig nog geen zoden aan de dijk om olie overbodig te maken. Elektriciteit en waterstof spelen momenteel nog een marginale rol in de engergievoorziening binnen de transportsector.
Wereldwijd een nieuwe infrastructuur uitrollen is niet zo gepiept en er zijn nog een hoop uitdagingen met de nieuwe techniek. Dat olie op lange termijn een steeds kleinere rol zal gaan spelen is wel zeker, al was het maar omdat het ooit een keer op raakt.
Outlook IEA en oil majors
Volgens het internationaal energie agentschap (IEA) en de oil majors is de rol van olie voorlopig nog niet uitgespeeld. Het IEA zou onafhankelijk moeten zijn in het opstellen van haar scenario's waardoor we de “wij van wc-eend-gedachte" bij oil majors voor zijn. Zelfs in het meest negatieve scenario van de IEA blijft olie een aanzienlijk deel van de wereldwijde energiebehoefte dekken.

Gaston Lagaffe 22 augustus 2017 16:12

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Met 450 in bovenstaande grafiek wordt bedoeld 450 parts per million; het meest milieuvriendelijk scenario waarin de aarde niet meer dan 2 graden opwarmt op lange termijn en de hoeveelheid CO2 beperkt blijft tot die waarde. Onderstaande schattingen zijn niet de meest recente, het IEA komt pas in november met een nieuwe schatting. De meest recente schattingen van de oil majors wijken hier echter niet veel van af.
Nu zou je denken dat wanneer de vraag naar olie afneemt in dit 450 scenario, de prijs ook afneemt, maar niets is minder waar. Zelfs in het meest milieuvriendelijke scenario verwacht de IEA dat de olieprijs op de lange termijn oploopt.

Het 450 scenario is overigens niet het meest waarschijnlijke scenario volgens de IEA. Het agentschap gaat ervanuit dat de wereld niet in staat is om deze target te halen (new scenario grafiek). Deze target komt grofweg overeen met de afspraken volgens het klimaatakkoord van Parijs. De VS is hier recent alweer uitgestapt, terwijl het akkoord nota bene in New York is ondertekend door de 174 deelnemende landen.
Shell-bestuursvoorzitter Ben van Beurden zei eind vorig jaar in het FD: “Ik denk dat we als samenleving uiteindelijk niet zullen ontkomen aan Arctische olie. Ongeveer 25% van alle olie en gas die nog gevonden moet worden, zal naar verwachting in het Noordpoolgebied gevonden moeten worden.”

Norway doubles Arctic oil estimates
Studies of the northern part of the Barents Sea shows twice the resource potential per square kilometer as the southern Barents Sea.

Arctische olie is niet bepaald de meest makkelijk winbare olie vanwege de ruige condities. Mocht dit scenario uitkomen, dan is hier nog genoeg te doen voor bovenstaande bedrijven. Dit soort projecten hebben vaak ook hogere marges dan makkelijker winbare olie.
Het lijkt er dan ook meer op dat we wereldwijd overgaan naar een meer diverse energiemix. Olie zal hierin voorlopig een belangrijke rol blijven vervullen.Overname van Atwood
Terugkomend op het aan het begin vermelde bod van Ensco op Atwood: dat is volledig in aandelen en daarmee geen ultieme krachttoer, maar wel een teken dat het bedrijf meer exposure voor de toekomst welkom acht. De koers van het aandeel Ensco is immers ook fors gedaald waardoor er een behoorlijk verwatering optreedt. Ensco laat haar cash ongemoeid om zo solvabel mogelijk te blijven in de huidige markt.
Atwood aandeelhouders ontvangen 1,6 aandelen van het nieuwe bedrijf voor elk aandeel Atwood. Dat komt neer op een prijs van 10,72 dollar. Inmiddels is de waarde van het bod tegen de huidige koers van Ensco al gedaald tot 9,28 dollar.
De geboden premie van grofweg 33% ten opzichte van de koers vóór de bekendmaking is gunstig voor aandeelhouders. Ze krijgen in feite 33% meer aandelen Ensco dan wanneer ze de stukken in de markt hadden gekocht voor de aangekondigde overname.
Als redenen voor de overname worden synergievoordelen genoemd, evenals een sterkere gezamenlijk liquiditeit. Zou de markt niet aantrekken, dan moet het nieuwe bedrijf het minimaal tot 2020 uit kunnen zingen op basis van de huidige liquiditeit. Past het bedrijf goed op de centen dan is 2024 ook haalbaar maar een tussentijdse kapitaalronde is dan niet uit te sluiten. Daarnaast hoeven de bedrijven elkaar niet langer te beconcurreren.
Keerpunt nabij
Voor beleggers die, na lang wachten, overwegen in te stappen zou dit een signaal kunnen zijn dat de bodem nabij is. Ensco heeft heel lang gewacht op het juiste moment. De situatie lijkt op dit moment dusdanig uitzichtloos dat het management van Atwood akkoord gaat met een overnameprijs ver onder de boekwaarde. Dit kan echter ook juist het keerpunt zijn in de sector en een goed getimede zet van Ensco.
Er is momenteel een enorme overcapaciteit aan boorplatformen en schepen wereldwijd. Projecten met een hoge marges lopen af en prijzen staan onder druk. De echte pijn is daarom nog niet volledig zichtbaar in de cijfers. Het sentiment is zeer negatief en olie lijkt ingehaald door de tijd.
Dit nodigt natuurlijk niet meteen uit tot het innemen van een positie. Kijken we echter naar waarderingen van gezonde spelers, liquiditeit en vooruitzichten van het IEA dan kan er nog weleens goed zaken te doen zijn in de sector in de loop van dit jaar.
Toekomst van drilling sector
Het lijkt er een beetje op dat de markt vooral één kant op kijkt als het gaat om bedrijven actief in de olieindustrie: naar beneden. De drilling sector is daar met name de dupe van aangezien diepzeeolie op dit moment onderaan de spreekwoordelijke voedselketen bungelt.
Een echt “uitkotsmoment” hebben we nog niet gezien, hoewel je ondertussen wel kunt spreken van een algehele “uitkotsing”. Na het uitkomen van de laatste Amerikaanse olievoorraden ging de olieprijs ook weer flink onderuit.

Het feit dat Amerika uit het klimaatakkoord van Parijs is gestapt verandert daar niet veel aan. U zou dit kunnen zien als een signaal dat het land niet genegen is om snel over te gaan op alternatieve energiebronnen. Het is echter waarschijnlijker dat de technologische ontwikkeling bepaalt hoe snel de transitie naar efficiëntere energiebronnen plaatsvindt, in plaats van een politiek akkoord.
Dat de wereld voorlopig nog niet zonder olie kan is wel duidelijk. Het zwarte goedje blijft voorlopig nog een belangrijke rol spelen in de wereldwijde energiemix. Hoe snel de verschuiving naar alternatieve energiebronnen plaats zal vinden, is echter moeilijk te zeggen. Volgens schattingen van de grote olie- of beter gezegd energiebedrijven en het IEA kan dit nog lang duren.
In de tussentijd is er nog een aanzienlijke hoeveelheid nodig om de wereldeconomie te blijven “smeren”. Of deze olie echter persé uit de zeebodem moet komen, of dat er nog genoeg olie op het land kan worden gewonnen om in de toekomstige vraag te voorzien, is een tweede. Op basis van de huidige schattingen is het waarschijnlijk dat een deel hiervan uit nieuwe olievelden op zee moet komen. Daarmee is er voor de drilling sector voorlopig nog geen sprake van een knock out.
Niet duur
Investeren in bovengenoemde bedrijven is dan ook meer een langetermijn play. Voorwaarde is dat u gelooft dat de winbare olievoorraden op land samen met lopende projecten onvoldoende zijn om in de toekomstige vraag te voorzien. De prijs van olie zal dan in de loop van de tijd oplopen en daarmee de vraag naar offshore drilling.
De recente overname van Atwood zou een signaal kunnen zijn dat het kantelpunt nabij is. Dat de overname met aandelen wordt gefinancierd maakt het een wat minder sterk signaal dan wanneer dit met cash was gedaan. Ensco heeft lang gewacht met deze overname. Dat het nu alsnog doorzet is dan ook opvallend.
Bovenaan genoemde aandelen zijn tegen de huidige waarderingen niet duur te noemen. Er is al flink wat ellende overheen gekomen en er is nog meer ellende ingeprijsd. Mocht de olieprijs ooit weer op 70-80 dollar per vat staan, dan bent u te laat.
Anderzijds kunt u ook nog een tijdje tegen een bloedend aandeel aan zitten kijken. Op dit moment is het dan ook aan te raden om wat kapitaal vrij te maken zodat u niet achter de feiten aanloopt wanneer het herstel inzet. Dat moment hoeft niet lang meer op zich te laten wachten. Vervolgens kan gespreid instappen en het verdelen van de inleg over de grootste spelers uitkomst bieden om het risico binnen de perken te houden.
Disclaimer Weeteling: Long positie Ensco (ESV), Noble Corporation (NE) en Seadrill (SDRL) >>> Seadrill (SDRL) positie omgezet naar Transocean (RIG)

Gaston Lagaffe 23 augustus 2017 13:06

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Bij gebrek aan "breaking news" wat "oud" nieuws waarbij nog maar eens het belang van het opdrachtenboek (backlog) aan de orde gebracht wordt. Het bericht is van voor de Songa deal waarbij de schrijver in een andere posting wel Songa als een van de overname kandidaten noemt.Transocean - Evidence Suggests That Offshore Recovery Has Now Begun, But Stock Lags Behind

Seeking Alpha >> Aug. 13, 2017 >>About: Transocean Ltd. (RIG) door
Fun Trading

Summary

The Deepwater Nautilus has been taken on a four-month deal, which will start on November 1 and end on February 28, 2018.

Based on an estimated $150k-$200K/d and 4-month contract, the total backlog should be around $25-30 million with mobilization fee.

I see this low stock price as an opportunity and I recommend a cautious accumulation for the long term.

Transocean (RIG). Deepwater Nautilus: Ultra-deepwater, 5th generation semi-submersible offshore drilling rig (She was completed in 2000 and significantly upgraded in 2007). The rig was designed by Reading and Bates Falcon and constructed by Hyundai in South Korea.

Note: The Deepwater Nautilus can accommodate 166 people, can work in water depths of up to 8,000 feet and drill up to 30,000 feet. The rig's AIS shows it as currently moored in Brunei Bay, on the northwestern coast of Borneo island.

Investment Thesis:

Transocean (RIG) is the uncontested leader in the deep water sector (floaters) with an impressive backlog estimated at $10 billion (see graph below as of August 13, 2017, - Backlog estimated by Fun Trading).

The company's fleet is now reduced to 50 rigs with ~26 rigs operating (including the two under-construction drillships contracted to Shell (NYSE:RDS.A) (NYSE:RDS.B) for 10 years).

The company management has done an excellent job to rejuvenate its rig fleet and cut its long-term debt to about $6+ billion at the end of 2017. This consolidation phase will allow Transocean to use the weakness of this market to eventually acquire distressed assets and keep its solid leading position in the floater category.

Despite a difficult environment, the growing sentiment in the offshore drilling sector is that the market has stopped degrading, prompting oil producers to look ahead for new opportunities in order to increase their fast declining oil & gas reserves, at a very attractive cost per barrel never achieved before.

There is always a silver lining in every dark cloud... And it is the jackup segment rebounding recently. The contracting activity in the jackup segment has shown clearly a nascent recovery shaping up during the first half of 2017. As an example, Vantage Drilling Inc., a private company from Vantage Drilling (OTCPK:VTGDF), has been awarded a contract for its Topaz driller Jack-up in Indonesia, according to OffshoreEnergyToday and the list is now long.

It is slowly expanding to the floater class and I was glad to report several welcomed contracts, such as the Seadrill Drillship West Saturn in Brazil or the Ensco three drillship contracts in West Africa. On August 10, 2017, according to OffshoreEnergyToday again:

Offshore driller Odfjell Drilling has signed a contract with Aker BP for the 2010-built Deepsea Stavanger semi-submersible drilling rig.

The driller informed on Thursday that the contract with Aker BP is for a period of approximately nine months, starting in February 2018 and completing around October 2018.

The contract for the 6th generation semi-submersible is for exploration and development drilling at various locations in the Norwegian Sea and the Barents Sea. The contract value is estimated up to $68 million, Odfejll Drilling said.
Yet, the offshore drilling sector is trending down, at record lows, and even the "survivors" such as RIG and Ensco (ESV) are selling off. The question is to know if it is a trading opportunity or just a sign that the industry is slowly dying? I choose to believe that it is an opportunity and the market is always slow to react positively.

Thus, I recommend a cautious accumulation for the long term.

August 11, 2017, news:

According to OffshoreEnergyToday, we learn the following:

According to VesselsValue, an undisclosed charterer has hired Transocean's 2000-built semi-sub Deepwater Nautilus on August 8.

The drilling rig has been taken on a four-month deal, which will start on November 1 and end on February 28, 2017.

The semi-sub previously worked Shell in Malaysia on a contract that ran from May 2016, till August 2017, at a day rate of $456,000.

The contract was an extension of a previous contract with Shell, which ran since August 2012, till May 2016, on a maximum day rate of $531,000, which was subsequently downgraded to $456,000
The day rate for this new rig is undisclosed as well as the charterer. However, based on the Odfjell drilling contract indicated above, the day rate should run between $150k/d and $200k/d, in my opinion, with some mobilization fee.

Thus, based on an estimated $200K/d and 4-month contract, the total backlog should be around $30 million including mob fee.

Conclusion:

The offshore drilling industry is rapidly changing by necessity. The oil prices have forced the Industry to adapt to a new business environment with lower day rates often close to break-even level or even lower in some cases.

However, the offshore drilling market is well-known as a cyclical one, ups and downs will always affect the industry and it is not really a new issue. Just a matter of time and patience, believe me, I have been long enough in this insane market to tell you that it is a fact. Thus, we have only two choices available.

On the one hand, we do nothing and we complain and cry about the loss on paper due to a bad investment timing. On the other hand, we recognize the character inherently cyclical of the offshore drilling industry and use the same timing as an opportunity.

Important note: Do not forget to follow me on Transocean and other drillers. Thank you for your support.

Disclosure: I am/we are long RIG.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Gaston Lagaffe 23 augustus 2017 13:15

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En nog een oud bericht waarbij een "duidelijk" overzicht van de booreenheden van Transocean en Songa opgenomen is.

Transocean To Acquire Songa Offshore For A Total Transaction Value Of $3.4 Billion

Seeking Aplha >>> Aug. 15, 2017 About: Transocean Ltd. (RIG) door Fun Trading

Summary

Transocean To Acquire Songa Offshore For A Total Transaction Value Of $3.4 Billion.

Transocean expects to close the transactions contemplated by the Offer during the fourth quarter of 2017.

The key factor here is that the North Sea seems in recovery mode and Transocean is positioning itself to become the uncontested leader in the floater.

A - Investment Thesis

Transocean (RIG) is the uncontested leader in the deep water sector (floaters) with an impressive backlog estimated at about $10~ billion (see graph below as of August 13, 2017 -- Backlog estimated by Fun Trading).

Note: If the acquisition of Songa is completed in 4Q'17. The total backlog will be $14.3 billion.

As you all know, the company is no longer involved in the Jack-up category.

I think it is the right time for Transocean to shop around and acquire new valuable assets. The company owns a leaner rig fleet and enjoys a stronger balance sheet with considerably less future CapEx, after transferring five under-construction jack-ups to Borr drilling.

This potential merger could be done at largely discounted value, allowing Transocean to accelerate a high-level rig attrition strategy to cut down on its obsolete older floater class -- which represents about 21 rigs (out of a total of 50 rigs, please see table below) -- either held for sale or cold stacked.

Transocean fleet situation and debt analysis.

As you all know, the company is no longer involved with the Jack-up class.

On June 1, 2017, BORR Drilling completes transaction with Transocean for the acquisition of 15 High-Specification Jack-ups (10 Jack-ups in Transocean fleet and five new-builds under construction at Keppel Fels Ltd.) for $1.35 billion in total consideration.

This divestment allows Transocean to take care of the long-term debt by reducing it to a more acceptable level.

On June 13, 2017, Transocean announced cash tender offers for $1.5 billion aggregate principal amount of notes due 2017, 2018, 2020 and 2021. The company announced early results of the tender cash-offer on June 26, 2017.

Transocean has about ~$3.8 billion in cash and cash equivalent now (including the May offering and the cash paid by Borr Drilling).

At the end of the first quarter 2017, the total debt was about $7.5 billion after Transocean's last two offerings totaling $1.88 billion, on July 8, 2016 and December 8, 2016.

This deal has the potential to cut the total debt to $6 billion, while leaving over $2.2+ billion in cash and cash equivalent.

July fleet status table (InfieldRigs) - Total floaters: 50

Category Operational Ready stacked Cold stacked Under Inspection On standby Under Construction
Drillships 11 1 11 1 1 3
Semi Submersibles 9 1 10 1 1 0
Total 20 2 21 2 2 3
A quick conclusion is that Transocean could use a few semi-submersibles and drillships to revamp its aging fleet. A fleet composed exclusively of modern semi-submersibles and drillships, between 5 to 15 rigs, seems the right answer.

For the ones who want to look in the Transocean recent FSR, please my recent article. Click here.

News Today: Acquisition of Songa Offshore SE.

Transocean released today the following:

Transocean Ltd. Has reached an agreement with Songa Offshore SE whereby it will, subject to certain conditions, make a Voluntary Exchange Offer to acquire 100 percent of the issued and outstanding shares of Songa Offshore, including shares issued before expiry of the offer period as a result of the exercise of warrants, convertible loans and other subscription rights.

The consideration in the Offer will be based upon NOK 47.50 per share of Songa Offshore, representing a 37.0% premium to Songa Offshore’s five-day average closing price of NOK 34.68 per share. The consideration implies an equity value of Songa Offshore on a fully diluted basis of approximately NOK 9.1 billion (USD $1.2 billion), and an enterprise value of approximately NOK 26.4 billion (USD $3.4 billion).
As I previously indicated Songa offshore was the perfect candidate.

Note: 1 NOK= 0.125423 $US

Transocean said:

The combined company will operate a fleet of 51 mobile offshore drilling units with a backlog of USD $14.3 billion consisting of 30 ultra-deepwater floaters, 11 harsh environment floaters, three deepwater floaters and seven midwater floaters. Additionally, Transocean has four ultra-deepwater drillships under construction, including two contracted with Shell for ten years each. Consistent with Transocean’s strategy of recycling older, less capable rigs, Transocean anticipates re-ranking the combined fleet, which may result in additional rigs being recycled.
Fleet composition: Comparative table (Based on InfieldRigs data):

Offshore drilling Company Total rigs Semi Submersible Operational Semi Submersible Ready Stacked Semi Submersible Cold stacked
Songa Offshore

(Not including the JV Songa Opus with 6 rigs)

7 4 0 3
Note: On April 24, 2014, Songa Offshore SE entered into an agreement with Opus Offshore Group for the sale of the Songa Mercur and Songa Venus and establishment of a strategic joint venture drilling management company.

The current international operations of Songa Offshore, primarily related to the Rigs in S.E. Asia, will be transferred to the Songa-Opus JV. In addition to the Songa Mercur and Songa Venus, the Songa-Opus JV will operate additional assets, including Opus Offshore’s Tiger series of drillships currently under construction or on order with scheduled delivery between 2014 and 2017 (delayed since then).

Gaston Lagaffe 23 augustus 2017 13:15

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Analysis

Transocean will pay for the deal as follows:

Additionally, assuming the cash for equity component described below is fully exercised by the remaining shareholders the transaction will have the estimated values described below.

• Total transaction value of approximately USD $3.4 billion, including premium, comprises:

USD $1.7 billion net assumed Songa Offshore debt
USD $660 million estimated Transocean Inc. Convertible bond
USD $540 million estimated Transocean Ltd. Equity
USD $480 million estimated Transocean cash.
As part of the transaction, Songa Offshore’s legacy fleet loan, and a portion of its unsecured bonds, including the associated swaps are expected to be retired with cash. Songa Offshore’s remaining unsecured bonds and Perestroika’s shareholder loan will be satisfied with convertible bonds issued by Transocean Inc., as described below. The Songa Offshore Cat-D secured credit facilities will be assumed by Transocean, or refinanced as determined at a future date.

Additional Transaction Elements

• Terms of the Offer to Songa Offshore shareholders:

Songa Offshore shareholders will receive consideration comprised of 50% Transocean Ltd. Newly issued shares and 50% in convertible bonds exchangeable into new shares in Transocean Ltd.
The exchange ratio is equal to 0.7145 times, based on the Transocean Reference Price of USD $8.39 per share and a USD/NOK exchange ratio of 7.9239 as per close August 14, 2017.
Cash Option - Each Songa Offshore shareholder may elect to tender up to 2,631 Songa Offshore shares under the Offer for cash of NOK 47.50 per share, i.e. Up to a total of NOK 125,000 in cash per Songa Offshore shareholder.
• Terms of Transocean Inc.’s convertible bond:

Senior unsecured
Issued at par
Matures five years from issue
Coupon of 0.5% per annum paid semi-annually
Exchangeable into shares in Transocean Ltd.
The Reference Price is USD $8.39 per share
The Exchange Price will be set at a 22.5% premium to the underlying Reference Price
Non-callable for the life of the instrument
Songa Offshore SE fits the need of Transocean, for three important reasons.

The company operates in the North Sea sector only, and has a firm backlog of ~4.1 billion with Statoil exclusively. It is a solid market for harsh-environment floaters and Transocean is quite weak in this sector with few aging rigs.
Four semi-submersibles are contracted until 2022 to 2024 at a day rate of $444/d to $490k/ (with the 5-year SPS scheduled in 2020-2021) and owns also three semi-submersibles (Songa Trim, Songa Dee, Songa Delta) either ready stacked (2) or cold stacked (1). The cost for the three rigs stacked was $7 million in 1Q'17. Total non-current liabilities was about $2.18 billion in 1Q'17, and no more direct under-construction rig (Beside the JV Songa/Opus).
On July 21, 2017, The UK tribunal ruled in favor of Songa against DSME who asserted aggregate claims of USD 329 million, along with a request for repayment of liquidated damages in a total amount of USD 43.8 million, totalling to USD 372.8 million.
The present business structure is a little complicated, with the JV Songa-Opus who owns the Tiger series, which represents three drillships under-construction and one drillship ready stacked.

Conclusion

The transaction is not an easy one, and requires a long time to analyze in details. However, using the RIG stock as a currency is a plus for the company with a reference price of $8.39 per share.

As always, we will find some positive and negative and I expect a good communication to follow my article. By the way, Transocean will conduct a teleconference call to discuss this transaction at 9:00 a.m. EDT, 3:00 p.m. CEST, on Tuesday, August 15, 2017.

I believe this acquisition is a good move for Transocean, because it increases the company backlog by 40% with a strong semisubmersible fleet and a good partnership with Statoil in the North Sea.

The key factor here is that the North Sea seems in recovery mode and Transocean is positioning itself to become the uncontested leader in the floater segment.

Important note: Do not forget to follow me on Transocean and the offshore drilling segment. Thank you for your support.

Disclosure: I am/we are long RIG.

Gaston Lagaffe 24 augustus 2017 15:54

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vervolg

In the table above, you can see that, using the old Reference Price for Transocean, the company's backlog / price was 3.11. This means that for every dollar an investor is charged to buy Transocean's stock, they are receiving $3.11 in backlog. This is better than the 2.41 metric for Songa, but I would hesitate to call the disparity here terrible. Under the backlog / EV approach, Songa is actually more attractive with a metric of 1.21 compared to Transocean's 0.95.

Takeaway

Based on the data provided, I must say that the transaction here is interesting to say the least. I believe that the market isn't too fond about the idea of Transocean paying what it did for the firm and it is true that, from an equity perspective, the deal is more expensive than Transocean itself is when you compare it to backlog. This probably explains why shares of the company dropped as much as they have. However, I do not see the deal as being an impediment to the company's survival and, should the market turn around in a favorable light again, there could be decent upside.

Gaston Lagaffe 24 augustus 2017 15:54

Gaston Lagaffe

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Transocean's Big Move: Deal Not Too Terribly Priced

Seeking Alpha >> Aug. 23, 2017 About: Transocean Ltd. (RIG) door Daniel Jones

Summary

In this article, I decided to look at the picture facing Transocean after it announced a large acquisition of Songa Offshore SE.

Shares of the company tanked over the ensuing days (though are recovering now), but is the deal really bad enough to justify a drop like this?

While the dilution and added debt is painful, some data suggests the deal may not be too terribly priced compared to how Transocean itself has been priced recently.

It seems that, right now, the market isn't terribly happy with Transocean (RIG). Last week, the management team at the firm announced their intentions to acquire Songa Offshore SE in a transaction exceeding $1 billion. As of the time of this writing, shares of the company have plummeted to the tune of 12.3%, falling from the Reference Price set for the deal of $8.39 per share down to $7.36. In what follows, I will look over the deal, point out the good parts and bad parts of it, and give my thoughts on what the transaction could mean for investors moving forward.

A look at the transaction

As opposed to a simple stock or cash type of transaction, the management team at Transocean negotiated a four-pronged approach to their purchase of Songa. According to their press release on the matter, the firm will take on $1.7 billion in existing debt (net of cash) that's currently on Songa's books (this is standard), but it will also reward investors in three ways. First, the firm will give current shareholders cash totaling $480 million. Second, they will provide equity worth $540 million. Last but not least, shareholders will get convertible notes worth $660 million that have a five-year maturity and a 0.5% annual interest rate, payable semi-annually.

Seeing as how the press release on the transaction covers these details further, I will only look briefly at these particular implications. The debt assumption and cash payment are fairly straightforward, but the other two are a bit more nuanced. Let's begin with the convertible notes. Assuming these do not mature in five years, the notes can be converted by shareholders into stock at a price of $10.28 per share. This represents a premium of 22.5% over the Reference Price. In all, this should result in an extra 64.20 million shares of dilution for Transocean's investors if all are eventually converted.

The equity issuance, based on the $8.39 Reference Price, would mean that investors in Songa would receive, in aggregate, a further 64.36 million shares (rounding could result in a different calculation). However, given the fact that shares of Transocean have dropped considerably, the number of shares that should be issued would be closer to 73.37 million. What this disparity means is that, as opposed to the 24.7% dilution that Transocean's investors should deal with in a worst-case scenario, dilution looks to be a bit larger at 26%. Existing Transocean investors should be left with the remaining 74% of the business.

Is the deal worth it?

Truthfully, it's difficult to know exactly how good or bad this deal is for Transocean. One positive thing is that management believes there will be annual synergies of $40 million (on a pre-tax basis). $25 million of this should come from general and administrative costs declining, while the remaining should be operational in nature. Generally speaking, I am skeptical of companies claiming synergies from transactions, because it usually results in disappointment, but given the composition of those synergies, combined with how small they are relative to the combined business, I am inclined to say that it wouldn't be terrible for investors to anticipate some sort of improvement of the magnitude described by management.

*Taken from Transocean

Another benefit, perhaps more meaningful, relates to backlog. Right now, Transocean has around $10.2 billion in backlog, but this number has been hit quarter after quarter as rig operators in this space are slammed by a slow recovery in offshore drilling. Songa's backlog of $4.1 billion will increase total backlog to $14.3 billion and, according to management, should help it to generate positive cash flow, in aggregate, through 2019, of between $0.8 billion and $1.2 billion. After stripping out capex of $0.7 billion and debt maturities of around $1.7 billion, this means that, from its pro forma cash of $2.2 billion, the consolidated entity should have remaining liquidity, excluding credit facility capacity, of between $0.6 billion and $1 billion. That's still pretty nice but we need to consider that Transocean itself will still have debt due in the years to come. In 2020, debt maturities total $296 million while, in 2021, they will be $334 million. Total debt maturing in the 2020 to 2022 period for the combined company is estimated at $3.1 billion.

*Taken from Transocean

What this does is give us an idea of how long the company can survive without a turnaround in the market. I have done similar analyses in the past that have concluded a similar time frame (around 2020 to 2021 or so, though management's assumption of positive cash flow extends the real "trouble" for a bit) before something bad might happen. Fundamentally, so long as management can realize those synergies and if the market recovers, the transaction appears to be reasonable.

I rarely read the work of other authors because I don't like the idea of their thoughts influencing my own. That said, I was intrigued by the input of said individuals regarding the acquisition. One author, whose work you can read here, concluded that the cost of Songa that Transocean is paying, on an EV/EBITDA (Enterprise Value divided by Earnings Before Interest, Taxes, Depreciation & Amortization) basis, using last year's figures, is a very pricey 14x. In general, 14x EBITDA is quite expensive but I don't know if it's the optimal measure for the attractiveness of the deal.

My own philosophical views regarding both EV and EBITDA aside, we need to be cognizant of the fact that this is still a downturn in this space and, as a result, EBITDA is bound to be low compared to a scenario where the market is healthy. In essence, EBITDA today is likely not reflective of the long-term potential cash flow generation of Transocean, Songa, or other firms. Perhaps a better metric, given the tough times companies are facing, would be the equity value of Songa compared to the backlog of the acquisition (my preferred method between this and the next valuation I propose), as well as the EV of the firms compared to their respective backlog.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Gaston Lagaffe 24 augustus 2017 16:05

Gaston Lagaffe

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Zoals uit de verschillende artikelen blijkt wordt er verschillend tegen de overname van Songa Offshore aangekeken. Waar is men het over eens :
1 - het is een defensieve overname waarbij Transocean met name op het orderboek (backlog) van Statoil uit was.
2 - de overnameprijs wordt aan de hoge kant / te hoog gevonden.
3 - het afschrijven op oude booreilanden/schepen zal nog moeten plaatsvinden
4 - tot eind 2019 lijkt Transocean voldoende cash te hebben, hierna wordt het van belang of de $ 3,5 miljard Revolving Credit (gedeeltelijk) verlengd wordt.
5 - de consolidatiefase in de drilling industrie is aangebroken

Gaston Lagaffe 30 augustus 2017 10:11

Gaston Lagaffe

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Hieronder de Conference Call naar aanleiding van de overname van Songa Offshore. Het is een zeer lang en interessant artikel welke over meerdere postings verdeeld moest worden.

Transocean's (RIG) CEO Jeremy Thigpen on Agreement to Acquire Songa Offshore Conference Call (Transcript)

Aug. 15, 2017 3:00 PM ET| About: Transocean Ltd. (RIG)
Transocean Ltd. (NYSE:RIG)

Transocean Ltd Announces Agreement to Acquire Songa Offshore

Executives

Bradley Alexander - Vice President of Investor Relations

Jeremy Thigpen - President and CEO

Mark Mey - Executive Vice President and CFO

Analysts

Gregory Lewis - Credit Suisse

James West - Evercore ISI

Blake Hancock - Howard Weil

David Anderson - Barclays

Ian MacPherson - Simmons

Jud Bailey - Wells Fargo

Sean Meakim - JP Morgan

Haithum Nokta - Clarksons Platou Securities

J.B. Lowe - Bank of America Merrill Lynch

Colin Davies - Bernstein

Operator

Good day, everyone, and welcome to the Transocean call to discussion the acquisition of Songa Offshore. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Bradley Alexander, Vice President of Investor Relations. Please go ahead, sir.

Bradley Alexander

Thank you, Dana, and welcome, everyone, to the Transocean conference call to discuss our agreement to acquire Songa Offshore. With me today are Jeremy Thigpen, our President and CEO; and Mark Mey, our Executive Vice President and CFO.

We issued a press release earlier today which is available Transocean's website. Please also refer to Transocean's transaction presentation that is also available on our website. We will refer to the slides included in this presentation during our call.

Over the course of this call, participants may make certain forward-looking statements regarding matters related to our business and companies that are not historical facts. Such statements are based upon the current expectations and certain assumptions of management and are, therefore, subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for more information regarding our forward-looking statements, including the risks and uncertainties that could impact future results. Also, please note that the company undertakes no duty to update or revise forward-looking statements.

Now I will turn the call over to Jeremy.

Jeremy Thigpen

Thanks, Brad, and welcome, everyone. I'll make a few opening remarks and discuss the strategy the transaction, including the benefits to Transocean of Songa Offshore. Mark will then address the anticipated financial implications of the transaction. And we will then take your questions.

As we've discussed, in the current environment, we view rig capability and the impact to near-term liquidity as equally important. Therefore, existing backlog, visibility of future contracts, cash on hand and the timing of maturities are all critical factors that we consider gauging any prospect. We believe today's announced transaction with Songa Offshore is consistent with this strategy and meets all of these criteria. This transaction is also consistent with our strategic goal of remaining the industry's undisputed leader in the ultra-deepwater and harsh environment markets, where our high-specification assets, unmatched operational experience and trusted relationships provides us with the clear competitive advantage.

Turning now to the transaction presentation. I would like to direct you to Slide 4, where we cover some of the many benefits of this transaction. They include strengthening our position in the harsh environment market, adding substantial backlog and recognizing significant cost synergies, to name a few.

Turning to Slide 5 Songa's fleet includes 4 of the highest-specification harsh environment semisubmersibles ever constructed: the Songa Equinox, Songa Encourage, Songa Endurance and the Songa Enabler. These 4 assets combined have a current backlog of $4.1 billion. Additionally, they have a stellar operating history with Statoil, one of the world's most experienced and respected harsh environment operators.

Just like Transocean, Songa is thoroughly committed to the safety of its employees, customers and the environment as well as the delivery of reliable and efficient operations. This culture, we believe, will allow for a very smooth transition over the coming months as we marry these 2 companies and fleets together.

Turning to our Slide 6 in our package. When we combine Songa's fleet, which includes 4 high-specification high environment semisubmersibles, with our existing fleet of 45 floaters plus the ultra-deepwater drillships under construction, the result is 55 floating assets, 40% larger than our nearest competitor. Importantly, this pro forma combined fleet would include 11 harsh environment semisubmersibles, 10 of which are currently contracted. And as stated on past conference calls, we remain encouraged, if not excited, by the growing customer demand for harsh environment assets in Norway, the UK and off the east coast of Canada.

If you now turn to Slide 7. Over the past 4 years, we have been actively renewing our fleet with a focus on ultra deep water and harsh environment. With the recent sale of our jackup fleet the retirement of a number of deep water, the retirement of a number of deepwater and mid-water assets and the addition of Songa, approximately 82% of our rigs will fall into these two categories, where we believe we can differentiate ourselves in the eyes of our customers.

Needless to say, the boards of both of our companies fully support this transaction. And with the expected support of our respective shareholders and the required regulatory approvals, we anticipate the closure of this transaction during the fourth quarter of 2017. Transocean will be scheduling an extraordinary general meeting to enable our shareholders to authorize the issuance of shares as a primary form of consideration for this transaction.

The offshore drilling market is undoubtedly facing one of its most challenging times in history. And with the precise timing of the recovery still unknown, we view the addition of $4.1 billion of backlog as critically important With this increased visibility to future revenue, EBITDA and cash flow, a high-graded fleet an even stronger presence in Norway and our continued focus on operational and financial excellence, we expect to emerge from this downturn extremely well positioned when the market ultimately recovers. In closing, there's absolutely no doubt that this transaction makes us stronger today and going forward.

I'll now turn the call over to Mark to discuss the transaction details. Mark?

Mark Mey

Thanks, Jeremy, and good morning, good afternoon to everybody. Not only does the strength the addition of Songa to Transocean's fleet continue to enhance our asset profile but it also provides us existing contract backlog.

Gaston Lagaffe 30 augustus 2017 10:11

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If you turn to Slide 8, our combined pro forma backlog is $14.3 billion, an increase of 40% on our already industry-leading amount. And as importantly, over 90% of this backlog is with investment-grade companies. This substantial backlog creates multiple years of cash flow and earnings visibility, de risking our cash flow profile during these uncertain times in the offshore drilling industry.

The combined entity will generate at least $2 billion of revenue annually from backlog through 2019 and over $1 billion from backlog through 2023. Turning to Slide 9. Let's review some of the terms of transaction. Transocean is providing an estimated $3.4 billion consideration for Songa as of August 14 stock closing stock prices. This includes the assumption of approximately $2.2 billion of debt and the acquisition of Songa's equity at a value of approximately $1.2 billion.

Looking at the consideration portion of the table and, again, using closing share prices of August 14, this comprise the assumption of Songa debt, net of their cash, of approximately $1.7 billion; issuing approximately $540 million of Transocean equity, issuing approximately $660 million of convertible bonds; and providing cash of approximately $480 million. This values Songa's fleet at approximately $1.29 billion, exclusive of the NPV of their current backlog. Assuming their three legacy rigs are valued at $50 million, the $1.29 billion fleet value translates into a steal value of $312 million per Cat-D rig.

Slide 10 describes the voluntary offer terms where shareholders receive a combination of 50% newly issued Transocean shares and 50% convertible bonds issued by Transocean Inc., exchangeable into new shares of Transocean Ltd. with a capped cash option component of approximately $15,700 per shareholder.

Slide 11 details the terms of the convertible band. It is a five year term, non-call with 0.5% interest rate that is payable semi-annually in cash. At maturity, the bond has conversion premium capped at 22.5%.

On slide 12, we expect to generate significant G&A and O&M synergies associated with this transaction. We anticipate annual G&A savings of at least $25 million beginning in 2018. Operationally, we are estimating cost savings of at least $15 million annually. This is consistent with the type and level of cost savings we are generating at Transocean and expect to drive across these new assets. That includes maintenance agreements that we have with some of our key OEM suppliers focused on acquisition-based maintenance methodology, operating efficiencies associated with streamlined crews, implementation of data-driven operational performance and savings generated through a combined operational footprint we have in Norway.

On Slide 13, we updated our liquidity waterfall through 2019 pro forma for this transaction, which assumes a net cash outlay associated with the Songa transaction as discussed previously. As both Transocean and Songa have substantial profitable backlog, our operating cash flow ranges between $800 million and $1.2 billion. Our estimated liquidity at the end of 2019, therefore, ranges between $600 million and $1 billion, absent any additional financing and an extension or amendment of our revolving credit facility.

We fully anticipate securing a revolving credit facility that meets our requirements and are highly confident that markets are receptive to traditional secured financings when they become necessary.

Slide 14 depicts strong net debt-to-EBITDA ratio expected pro forma for the combined company in 2018.

Moving on, slide 15 reflects our new debt maturity profile. It should be noted that the convertible bond we are issuing in conjunction with the Songa transaction is not included in this view as we currently expect to satisfy its payment at maturity with equity. And including the conversion of the convertible bond, we intend to issue 128.2 million new shares, increasing our share count to 524.7 million shares.

And finally to conclude, this transaction clearly enhances our contract backlog and hence our cash flow visibility. It also strengthens our competitive position in the harsh environment market and provides greater access to one of our strategic customers.

We are very pleased to invite Songa into the Transocean fold.

That concludes my prepared comments, and now we welcome your questions. I'll hand the call overt to Dana.

Gaston Lagaffe 30 augustus 2017 10:13

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Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. And we’ll take our first question today from Gregory Lewis with Credit Suisse.

Gregory Lewis

Yes, thank you and good morning. Jeremy, could you talk a little bit about the timeline of this deal, sort of when it first came across Transocean's desk? And just a little bit of color behind the timeline of this transaction.

Jeremy Thigpen

Yes. With all of these, Greg, they all can take on a life of their own. So initially, we started exploring this possibility multiple months ago. And then just as you go through the process and it's a bit of a dance, if you will, get to know each other, get comfortable with each other and then get comfortable with the merits of the transaction. But from afar looking at it, asset quality was important to us, and we said that all along specifically in the ultra-deepwater and harsh environment markets, so that kind of narrows your focus. And then the impact to near-term liquidity has always been something that we want to focus on as well. And so, you can kind of narrow down into which potential targets have the right assets, but also come with either really clean balance sheet and/or the backlog to offset some debt that they may be carrying on the balance sheet. So we've been looking at this for quite some time.

Gregory Lewis

Okay, great. I mean just looking, the backlog looks great. Maybe the price was a little bit higher than maybe we would have liked to see. Do you sort of have, I mean, as we look at this deal, do you think it was more of an offensive move by Transocean or maybe a little bit more of a defensive move just given the size of that backlog?

Jeremy Thigpen

Yes. I think its a combination of both. And in my prepared remarks I said good for today and good for going forward. I mean, this is, adding firm backlog in a market where the recovery is still a bit unknown, I think, is a smart play, and you could probably qualify that as a bit defensive. But here we're getting four brand-new high-specification assets with long-term contracts with a strategic customer in a strategic market. And by the way, that strategic customer, Statoil, has a past history of actually recontracting rigs that it helped design and ordered. So we actually feel pretty good that following these contracts, we'll have follow-on work.

Gaston Lagaffe 30 augustus 2017 10:13

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Operator

And we'll take our next question from James West with Evercore ISI.

James West

Congrats on this transaction.

Jeremy Thigpen

Thanks, James.

James West

So in running our math earlier this morning, we, including the kind of cash flows from the backlog, et cetera, and assigning really little value to the three rigs that are on contract, we came up with a value on a per-rig basis for the new assets of somewhere around $320 million to $350 million, There's some assumptions there. I guess, one, is that a fair statement? And then, two, if we look at recent transactions in the market, they've been in that range, so its kind of hit me that you're bend of bottom picking out, I think, the harsh environment floater market.

Jeremy Thigpen

Yes. James, I think, that's right. If you ascribe zero values to the three uncontracted older semis, I think the range you come to is probably about right. For us, there aren't many comps out there, but if you start to look at some of the comps, the West Mira, I think it was, went for a purchase price of $360 million. But I’ll remind you that wasn't an arms-length transaction, first of all, and clearly, the rig still requires a lot of capital, spares, more commissioning, mobilization to actually get it on location. And by the way, it doesn't have a contract, so you got stacking costs for an indefinite period as well. So that's really the only marker that's out there for us. The other distressed assets that are sitting in shipyards that are harsh environment are, I mean, they have list price for $500 million, and the shipyards aren't coming off of them. So we actually feel pretty good about the valuation, especially given the backlog, really nice day rates for a prolonged period of time. So yes, I think we view this like you're viewing it

James West

Okay, got you. And then on the harsh environment market, in general, I think Terry had mentioned a quarter or two ago when we talked on your earnings call that, that market was getting very, very tight I know you and I have talked about that, but there's very little capacity out there. I mean, when is the next harsh environment floater even available for contract at this point that's not in a shipyard, that, as you say, need spares and mobilization, et cetera? I mean, it seems like at least, we're in a tough market for drilling rigs, as we all know, but the harsh environment side of the market seems to be doing exceptionally well.

Jeremy Thigpen

Yes. No, you're spot on. And I don't have the count in front of me right now, and I should, I apologize for that. But we're seeing it in customer behavior. I mean, we're seeing it in our conversations with our customers, We're seeing it in some of the dayrates that we’ve seen published here recently for harsh environment. So it's getting lighter, and our customers are recognizing it's getting tighter as well. So again, this is an area of focus for us in terms of this type of asset market, and we're excited about this transaction.

Operator

We'll take our next question from Blake Hancock with Howard Weil.

Blake Hancock

Thanks, good morning, guys, and congrats. I guess, first, look, Jeremy, it's a pretty uncertain market still, and you kind of touched on the evolution, I guess, of the deal. But we've got some negative reactions around another proposed transaction. Maybe why do you believe this is kind of the time to make this move? Is it more because it's harsh environment and tightening? Or can you just talk about maybe why now?

Jeremy Thigpen

Yes, Good and fair question. Without going into detail on the other transaction, I think it's been pretty public that any opposition is not around consolidation. I think everyone realizes that consolidation is important for the health of this market. And so it's really around --it really come to the things we talked about before as being strategic for us, asset quality and the impact to near-term liquidity. We're getting 4 quality, brand-new assets, and we're getting a lot of backlog to go with it. And I think that's probably the big difference between this transaction and maybe the other proposed transaction that you're referencing.

Blake Hancock

That's fair, absolutely. And I mean, I guess, if you kind of look at the operational efficiencies between the 2 entities, it looks like they're running maybe, call it, 92% to 95% from a revenue efficiency standpoint. You guys obviously caught 97%, 98% your last couple of quarters. I didn't see that mentioned in the release. Is that something you think you can tighten up as well here as we move through the next couple of years?

Jeremy Thigpen

Absolutely, that's certainly our intention. I mean these are 4 new rigs, and you typically expect some bumps along the way as you're bringing the rigs on to contract. And you've seen here recently, with their earnings efficiency here in the last quarter, much stronger than in previous quarters. But we think we can maintain that very high level and make it consistent. So I think there is some upside potential there.

Blake Hancock

That's great. Thank you, guys.

Jeremy Thigpen

Thanks.

Gaston Lagaffe 30 augustus 2017 10:14

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Operator

And we'll take our next question from David Anderson with Barclays.

David Anderson

Hey, Jeremy, so if we look at the Atwood deal that's out there, kind of the big difference when we compare and contrast, obviously the contracted backlog here. Just wondering, as you're looking forward, it does feel a little bit defensive and that you're looking for --you've kind of concentrated on the 4 rigs and this future backlog. But going forward, does this mean that you'll only be looking at assets if they have backlog on there? Would you be willing to buy ultra-deepwater rigs without a contract? And does this deal kind of free you up to do that because you emphasized the deleveraging, you emphasized liquidity here?

Jeremy Thigpen

Absolutely. No, I think this --for us, sequence of this transaction was really important to us. We wanted to make sure that the first one that we did actually strengthened our financial position, improved our credit metrics. And so that's why Songa was so important to us. Again, just great company, great assets, great management team and an excellent backlog with a strategic customer, you put all that together and that's a nice foundation upon which to build. But it certainly doesn't preclude us from now going out and actually acquiring a distressed asset or a company with limited backlog. But we want to be thoughtful. I mean, we've worked really hard as a team to improve our financial position, and so we don't want to do anything that could cause any pain in that area,

David Anderson

So in some respect, we should view this as somewhat of a stepping stone. This is kind of continuing to build out your assets, but you have ideas to do a lot more from here. Fair?

Jeremy Thigpen

Absolutely, but maintaining the financial flexibility.

David Anderson

Second question, Jeremy, what's your view on kind of where replacement costs are now in ultra-deepwater assets? Obviously, we haven't seen a new order in years. Presumably, these costs have come down across the board, I mean, what's your best guess for kind of where let's say, a $600 million newbuild back in I don't know, back in 2014, where is that today? What do you think?

Jeremy Thigpen

Well, I'm not sure that anybody has actually kicked the tires to build a new rig at this point in time. But if you kick the tires around some of the distressed assets that are on the shipyard today, I'd say the ultra-deepwater drill ships are still starting with a four handle in most cases. And as I said previously on the call, these harsh environment semis that were probably constructed in the $900 million to $1 billion range, the shipyards, they're starting with five handle still, so I mean that kind of gives you a marker, I think.

Operator

And we'll take our next question from Ian MacPherson with Simmons.

Ian MacPherson

Jeremy, I think with a deal of this nature that's really underpinned by the backlog, my question would be, what is your opportunity to vet that backlog? We obviously know who Statoil is. But just with regard to the sanctity of contract renegotiations or recurs, what level of diligence are you able to conduct in a deal like this to kind of completely derisk what you think you're buying in terms of the contracted cash flows?

Jeremy Thigpen

Yes. Ian, you hit it. Those contracts are extremely valuable. And rest assured we've done quite a bit of due diligence to ensure the sanctity of those contracts, so no concern there. The other thing I would add is that our relationship with Statoil is really solid. And our performance with them historically has been exceptional as evidenced by the fact that the Transocean Spitsbergen, they named it -- well, it drilled the well of the year -- the perfect well, I think they called it, and it just recently secured a new contract with them as well. So I -- we definitely vetted the contracts and feel very comfortable there. And that plus the relationship that we have, I think, no concern.

Ian MacPherson

Good. And then as a follow-up for you, Mark, we obviously can reference Songa's financials for what they've been able to achieve, but as the fleet is on boarded on to your organization, I wonder if you could help me a little bit with regard to what you think your optimized EBITDA per rig year is with these contracts based on how your cost synergies flow into the P&L. And also, if you could give any kind of indication on the cash tax implication or the cash tax per year -- per rig year assumption for this, that would be helpful as well.

Mark Mey

Yes. That's getting a little bit into the details, could we take it offline to discuss that one on one?

Ian MacPherson

Happy to. Okay, I'll do that. And then -- but then lastly, how do we feel about the reactivation optionality of the cold-stacked rigs? Is that pretty far off the grid at this point or not necessarily?

Jeremy Thigpen

It's too early to tell at this point, and we have not conducted the full due diligence on the assets themselves yet obviously, we looked at them from afar, technical specification, and of course, we know them. But we really need to get on those rigs and kind of kick the tires a bit and see what we have before we make that kind of decision,

Ian MacPherson

Fair enough, okay thank you.

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Operator

We'll take our next question from Jud Bailey with Wells Fargo.

Jud Bailey

Thanks, good morning. Question, Jeremy, could you talk maybe a little bit about the Cat-D rigs? These are [audio gap] Statoil has really liked the rig as it's extremely efficient and is well accepted in Norway. Could you maybe talk about some of the characteristics that Statoil likes in these rigs? And from your conversations with Statoil, what is their appetite to have more of these types of rigs in Norway on a longer term basis?

Jeremy Thigpen

Candidly, Jud, we haven't talked specifically to Statoil about this transaction and what they like most about the floaters. So I couldn't comment at this particular point in time on the Cat-D rigs. And I don't -- I mean, as we said earlier, I don't know that in the immediate term that there's a real appetite to construct new rigs by any of the drilling contractors or any of the operators, including Statoil. But those are conversations we plan to get into right away with Songa and with Statoil. I'm actually flying over to Stavanger later today to welcome the troops and then to visit with Statoil about next steps.

Judson Bailey

Okay. Alright. And a question for Mark. When I lock at -- could you talk a little bit about, I guess you're going to be inheriting some of Songa's debt, is that debt that you could potentially refinance or make it advantageous to refinance? Could you maybe just talk about the game plan on the various tranches of debt that Songa has and how you think about that?

Mark Mey

Absolutely, Jud. So as we said in our press release, most of these smaller bonds, we're going to refinance either with convertible paper or with cash. As it relates to the Cat-D facilities, there's two of those, one for the Cat-D 1 and 2, one for the 3 and 4. Those are backed by 6.5 years of backlog on average. So clearly, an opportunity for us to either extend the financing with existing banks or for us to go out and refinance that in a structure that could range anywhere from a credit facility to a term loan to one of the facilities that we used for the Shell rigs quite recently. As you know, those contracts are highly profitable so that should not be a challenge for us.

The debt maturity profile we showed in the presentation; that will obviously be enhanced with the refinancing of that debt. And like I said, we'll look at doing those over the next couple of months as the transaction proceeds.

Judson Bailey

Okay, great. And if I could slip in one more, I think all of these rigs have options at the end of the fixed contracts. Can you -- what are the nature of those options? I assume it's the operator's choice or mutually agreed rates. Could you comment on those at all?

Mark Mey

Yes. So those options, they are at predetermined rates. It’s about 57.7 billion of options. Obviously, it will be the operator's option, and we have several years yet before they make a decision as to whether they want to take up those options.

But if you look at the history of Statoil, when they're involved in constructing rigs with drilling contractors, they typically kept those rigs on average 10 years. So we feel highly confident that Statoil will look forward to working with the Cat-D rigs for a while yet.

Operator

We’ll take our next question from Sean Meakim with JP Morgan.

Sean Meakim

Nice. Good morning. So maybe can we just dive a little bit more into the synergies? Just some of the moving parts there, just corporate costs and onshore services, just looking to get a little more detail of the opportunities there and potentially what upside there could be as you get deeper into it?

Mark Mey

So Sean, we've assumed that we can get $25 million on the SG&A front. Their current G&A is running at about $38 million per year, so you can do the math on that. Then we've assumed about a 6% on the O&M cost as a synergy. Obviously, as we get deeper into this and we sort of apply our OEM care agreements to this and we expand the care agreements beyond the current OEMs, we could see an opportunity to improve the synergies, especially on the O&M front beyond the $15 million. And for this, for now, we wanted to be conservative and provide an estimate out here which we feel comfortable we can achieve, but over time, as we do get little closer, that aspect can grow.

Sean Meakim

Got it, okay. That's very helpful. And then I guess, just given this shift in your position in harsh environment rigs, as we think about other opportunities going forward, how would you rank other classes of rig type where, one, you see the opportunity going forward? And two, where perhaps do you think that there could be assets that you may find attractive in a secondary market?

Jeremy Thigpen

I think, Sean, go ahead, Mark.

Mark Mey

No, I'm going to say, as Jeremy said earlier, the opportunities out there For stranded assets are quite, you have numerous harsh environment assets at shipyards currently that have been marketed for sales for coming on two years now. But the pricing on harsh environment assets start at $500 million and go up from there. Not to mention that you still have the additional cost in completing the construction and purchasing spares and equipment and in mobilizing the asset. So the holding cost plus the additional cost to get the rig operational do not, are not supported currently by day rates. So when we look at that and then we look at the opportunity in buying four slate-of-the-art Cat-D rigs with average 6.5 years of backlog, it was clear, very clear to us that this was the opportunity right now. As the market develops, as we start seeing longer-term contracts at higher day rates, then we’ll be more active in looking at some of these stranded assets. But for now, this appears to us as being the most value-creating transaction we could do for Transocean shareholders.