![COLUMN | The Twelve Days of Christmas 2023: Days 7,8 and 9: Standard Supply and Capital Maritime, Costamare and Vestland; eight billion tonnes of coal; nine missing Vroon vessels [Offshore Accounts]](http://media.assettype.com/bairdmaritime%2Fimport%2Fwp-content%2Fuploads%2F231218-Offshore-Accounts.jpg?w=480&auto=format%2Ccompress&fit=max)
Not long until Christmas now! On the first day of Christmas my true love gave to me… a partridge in a pear tree, according to the ancient English carol, but at Baird Maritime, we have already reached the second half of our Twelve Days of Christmas from an energy perspective.
So, who replaces the seven swans-a-swimming, eight maids-a-milking, and nine ladies dancing in Part Three of our offshore sing-along?
We reported last month how Standard Supply had sold its three large platform supply vessels (PSVs) Standard Defender, Standard Supplier and Standard Viking to Capital Maritime's Evangelos Marinakis for a total price of just over US$72 million. On December 12, Standard Supply announced it had completed the sale of Standard Viking and Standard Defender, with the sale of Standard Supplier now scheduled to be completed in mid- January 2024.
We conclude by observing that "following the sale, Standard will control a fleet of just four PSVs through its 51 per cent ownership interest in Northern Supply, all trading in the North Sea and all managed by Fletcher Shipping."
That didn't last long. It soon transpired that Standard had actually also sold these four vessels for a total price of US$34 million, with the deal scheduled to close before year-end. These are all medium-sized units of Kongsberg UT755 LN design of 3,300 DWT, and again, the buyer of FS Abergeldie, FS Braemar, FS Crathes and FS Kristiansand, was also Mr Marinakis, who has set up Capital Offshore to own his new fleet of seven PSVs.
We would observe that the US$34 million is a pretty average price and makes a mockery of the assertion recently published in Tradewinds that "asset prices [for PSVs] have been rising at US$1 million per week, but sales candidates are scarce."
Checks notes and observes that Standard actually sold the similar but younger specification PSV Standard Duke for US$11 million in July.
Seven cheerleaders-a-cheering, clearly, and no fact-checkers-a-checking.
Standard Supply also needs to check its own facts. In its November trading update, the company said that it had achieved time charter equivalent earnings of approximately US$16,400 per day, "with a utilisation rate of 100 per cent," warning "but note that this excludes the Standard Supplier, which remained off-hire during the month due to repair of one of the azimuth thrusters."
So, that would actually be 67 per cent utilisation rate, then. If I discount all the dissatisfied readers, I too can achieve 100 per cent reader satisfaction rate with this article. This is not a strategy I recommend you to try in your year-end appraisal: "I nailed all the targets, except for those that I missed, which I have excluded."
In December 2021, we concluded that "Standard is clearly now becoming a pureplay 'casino stock.'" We understand that Standard Supply will dividend out the cash from the sale of its PSV fleet and close, leaving its parent company S.D. Standard ETC to focus on its shareholding in Dolphin Drilling.
Dolphin has had a rocky few weeks, with the decision in November to terminate its contract for the semi-submersible rig Blackford Dolphin (built in 1974) with Peak Petroleum Industries Nigeria. Dolphin cited consistent breach of terms by the Nigerian customer, which had been paying a charter rate of US$325,000 per day, including the mobilisation fee. So, the company is playing with much higher stakes in its casino venue of drilling than it ever was for its fungible and modern PSV fleet.
Meanwhile, the North Sea has been much more vibrant for PSVs in 2023 right through to the end of the year, even though December is typically a dead month of low rates and activity, heralding the start of storm-wracked weather and lower fixing levels for winter. Indeed, this February, we were reporting how Vroon Offshore Services was fixing its PX121 VOS Patriot on the spot market for a pound sterling equivalent of just US$4,810.
Now, brokerage SSY has reported that Golden Energy's Ulstein PX121 design PSV Energy Passion (former VOS Passion built 2016, and sister to the cut price VOS Patriot) scored a charter with TotalEnergies UK at £14,500 (US$18,385) last Friday, whilst Perenco chartered Atlantica Carrier (2006-built, former FS Arendal) for £12,000 (US$15,215), and on the Norwegian side, Equinor fixed the 4,900DWT Rem Arctic (built 2015) for NOK140,000 (US$13,334).
These higher rates – supported by an exodus of North Sea vessels and rigs to international destinations including Mauritania, Mexico, Namibia, Equatorial Guinea, and Egypt – have encouraged more speculators to take a punt on PSVs. Increasingly, the North Sea market has been ceded by the long-established players like Solstad and Tidewater to purely speculative players like Atlantica and Songa.
Now, with the sale of Standard Supply by the first-wave speculators, they have been replaced by the second wave. Capital is not alone in Greece in rushing into offshore, hopefully not driven by the ludicrous reports of asset prices rising by a million dollars a week.
Seabrokers has reported in its Seabreeze newsletter that the Costamare Group and its controlling Konstantakopoulos family will shortly take ownership of three large PSVs: two from Norways's Vestland Offshore, being the 2011-built, 5,400DWT Solvik Supplier and 2011-built, 4,900DWT Vestland Artemis, which are both working in the North Sea, and also the 2012-built Evita II. This PSV is owned Ugland Offshore but is technically managed by Vestland, and is operating in Mexico with Allseas's mighty pipelay construction vessel Solitaire.
The sale leaves Ugland with only one PSV, Juanita (built in 2014 and 5,400 DWT), which is flying the Norwegian flag and is working out of Mongstad base on contract to Equinor, fixed until the summer of 2026, plus additional options.
A quick refresher: Costamare is listed in New York with a market capitalisation of over US$1.1 billion and over US$2 billion of long-term debt as of September 30th. It operates a fleet of 68 containerships, with a total capacity of approximately 513,000 TEUs, and 43 dry bulk vessels with a total capacity of approximately 2.6 million DWT (excluding two vessels that it has agreed to sell), plus chartered in bulkers, according to its website.
During the third quarter of this year, the company generated net income of about US$53 million, but its cash flow from operations approximately halved year on year to around US$70 million for the quarter. So far it has not taken significant write-downs on its container fleet, but with rates dropping, that can perhaps be possible in 2024.
As Howard Marx of Oaktree is supposed to have said of investing, "Rule No. One: Most things will prove to be cyclical. Rule No. Two: Some of the greatest opportunities for gain and loss come when other people forget Rule No. One." Oaktree is the half-owner of Norwegian PSV operator Golden Energy Offshore, so Mr Marx has put his money where his mouth is on this cycle.
Therefore, maybe we should see the sudden interest of the Greeks in offshore as driven as much by the cyclical weakness of container shipping and bulker markets as by over-hyped accounts of an offshore El Dorado. Wait… there really is an El Dorado Offshore.
There are several fail-proof tests to answer to identify pretentious individuals. One is to see who attended the COP Climate conference in Dubai. This concluded with much fuzzy wording about an eventual "just" phase-out of fossil fuels, maybe, headed by the CEO of an oil company (Adnoc of Abu Dhabi) which is planning to invest US$150 billion over the next seven years in its oil and gas operations. As The Onion reported, "This is the most powerful non-binding thing I've ever seen."
Perhaps this is not so contradictory, however. The same week that COP closed with tens of thousands of delegates flying away from the Emirates smugly confident that their hard work would ensure that the global temperature could somehow be capped rising at only one and a half degrees centigrade over pre-industrial levels, the International Energy Agency (IEA) released its annual coal forecast.
Regular readers of this column will recall that burning coal to generate electricity produces twice as much carbon dioxide as burning natural gas. The IMF found that coal is a major contributor to local pollution and climate change, accounting for 44 per cent of global CO2 emissions.
Guess what? For all the excitement at COP, and all the promises, global coal demand reached record levels and an all-time high this year. The IEA expects global demand for coal to rise by 1.4 per cent this year, surpassing 8.5 billion tonnes for the first time. Below is an excerpt from the report:
"Global increase masks stark differences among regions. Consumption is on course to decline sharply in most advanced economies in 2023, including record drops in the European Union and United States of around 20 per cent each. Demand in emerging and developing economies, meanwhile, remains very strong, increasing by eight per cent in India and by five per cent in China in 2023, due to rising demand for electricity and weak hydropower output."
Coal is the largest source of CO2 emissions from human activity, and global consumption is forecast to remain well over eight billion tonnes through 2026, according to the IEA market report.
It will perhaps surprise our Australian readers that China, India, and Indonesia are the three largest coal producers globally, and all three are expected to break coal production output records in 2023. These three countries now account for more than 70 per cent of the world's coal production. The IEA found that Chinese imports are on track to reach 450 million tonnes this year, which is more than 100 million tonnes above the previous global record set by the country in 2013, while Indonesia's coal exports in 2023 will be close to 500 million tonnes, also a global record. The pride that the Indian government takes in boasting of its 14 per cent higher coal production this year on its website is depressing,
Until this this trio change their highly polluting habits in real life, the prospects of achieve CO2 reductions remain stark. Remember that for every unit of energy produced by coal, emissions would be halved if gas was used.
Gas still has a future as the best short-term alternative to coal for developing countries, even as investment in renewables increases. Eight and a half billion tonnes of coal consumption is a tonne for every single person on the planet this year. And next year. And the year after. And the year after that.
This Christmas, just reject coal, which is what COP28 should just have done emphatically, rather than blathering about a "just transition," but didn't. And if you are working in offshore, remember that gas is the best hope to halve emissions from power plants by 2035. The death of coal will be good for the planet, but bad for mid-size bulk carrier owners.
Nine was the hardest number for me this week. Peschaud apparently ordered nine crewboats at their own shipyard in South Africa, but I couldn't find any detail. I couldn't find a way to shoe-horn Jifmar buying Acta Marine's workboat and multicat fleet into a Partridge in a Pear Tree article with the number nine. Jifmar acquired 26 workboats, the crews, the Netherlands-based organisation, and all existing contracts as part of the deal, leaving Acta with three walk-to-work vessels in operation and four more such vessels under construction. None of these figures are conducive to a "nine ladies dancing" replacement.
What to do? If in doubt, turn to Vroon…
When the sale of Vroon Offshore Services was announced in January by the banks that owned the troubled Dutch shipowner, it was touted that forty offshore support vessels (OSVs) would be sold. The final sale documents launched in the spring apparently featured thirty-nine, and then when Britoil announced that it has secured the company, it purchased only thirty ships.
Where had the balance gone?
What happened to the other nine is a reminder of how much easier it is to report on publicly listed companies. We know that five went to Golden Energy, which kept the four PX121s and promptly flipped the fifth, the small subsea vessel formerly known as VOS Sugar, which they bought for just US$9.4 million, but sold for US$15.9 million a few weeks later.
That ship is now appearing on the AIS in the English Channel as Panama-flagged Horizon Zenith, suggesting that the former VOS Sugar may perhaps now be owned by Canada's Horizon Maritime, which previously bought a subsea vessel from Tidewater (now Horizon Enabler) and a massive 2016-built anchor handler from Bourbon with 307 tonnes bollard pull (now Horizon Arctic).
It turned out that other two small subsea vessels had gone to a European buyer. In November, the Dutch diving company N-Sea Group announced that it had entered into an agreement with Rederij Groen to long-term charter the vessel 4-WINDS, "a modern offshore support vessel built in 2012," which turned out to be the former VOS Sweet, another DP2 small subsea vessel from the Vroon fleet built in 2012 with 60 metres LOA.
Meanwhile, Rederij Groen posted footage of its new ship Aquarius G arriving in Scheveningen port, looking like it had half the letter "V" still painted on its red/orange hull… This Aquarius G is not to be confused with the seismic support vessel the company acquired in 2013 with the same name, because this Aquarius G is indeed the former VOS Star, the third small VOS subsea vessel of 68 metres LOA, built in 2016 in China and sister to Horizon Zenith.
Seven down, two to go.
Then, finally, earlier this month Dutch walk-to-work company CBED announced that it had acquired Wind Creation and Wind Evolution – being the former VOS Start and VOS Stone, with delivery scheduled before the end of March next year. These were the two most expensive vessels in the Vroon offshore fleet with an estimated price tag of US$35 million apiece.
The two 2017-built, customised walk-to-work vessels each have room to accommodate 60 clients and feature motion compensated gangways and Kongsberg DP2 systems, as well as 50 tonnes capacity active heave compensated cranes for subsea work, and five-tonne 3D motion compensated cranes for wind turbine spares transfers.
CBED currently operates just one walk-to-work vessel, Wind Innovation, the converted former 1999-built seismic survey vessel Veritas Viking, which was upgraded in 2016 with 80 single cabins to provide the option of a total 105 clients comfortably living on board along with up to 32 crew.
CBED is owned by the privately held Danish bunkering company Monjasa, which is fully owned by its co-founder, Dubai resident Anders Østergaard. Monjasa's current fleet comprises "some 30 tankers and barges" dedicated to the supply of marine fuels worldwide.
So, another new entrant is growing fast in offshore, this time a bunker trader taking a punt on the walk-to-work market for offshore wind.
We've got the Greeks, we have a bunker trader, Oaktree is in. Who's next to try their luck in the great offshore lottery?
Background reading
The first three days appeared on December 4 (here) covering the latest on the Scottish ferry fiasco, two Windcat Offshore newbuilding orders, and three Azerbaijani journalists detained. Last week, we looked at six money laundering countries, five shipping magnates pontificating on future fuels, and four drilling assets for sale (by Seadrill).
Read here for the fourth and final part of 2023's Twelve Days of Christmas.
Our 2020 Twelve Days of Christmas (here and here) featured some the bleak midwinter of the industry downturn, covering Cairn Energy (as was), Esvagt, Vantage Drilling, Shearwater, Swire Pacific Offshore and Seacor, followed by the oil price, floating wind, ammonia fuel cells, Myanmar, Bourbon and Standard Drilling (the predecessor to SD Standard ETC).
Our 2021 Twelve Days of Christmas (here, here, and here) featured Cairn Energy becoming Capricorn Energy, Vantage Drilling, North Star and Vard, Shearwater and Shell, Windcat Workboats, Swire Pacific Offshore, ammonia fuel cells, the oil price, Myanmar, Floating Wind, Bourbon's revival and Standard Drilling.
Our 2022 Twelve Days of Christmas (here, here, here, and here) featured twelve floaters a-drilling, as Seadrill bought Aquadrill, eleven percent of DOF's shareholders a-revolting, ten wind turbine installation vessels a-building, nine million tonnes of LNG a year maybe a-sailing from Indonesia, eight billion cubic feet of gas a day possibly-a-flowing there, and seven Indonesian presidents completely a-sleeping (on the job), six gratuitously unnecessary lift-boat accidents, five stranded deepwater rigs, four subsea vessel deals, three LNG projects moving forward in Asia and East Africa, two hydrogen-powered windfarm support vessels for the Saverys family, and one arrest warrant in a pear tree for "unlucky" Angolan heiress Isabel dos Santos.
The University of Reading in England has devoted a history article for each of the twelve days of Christmas here. Who knew that the Empress Josephine, wife of Napoleon, had a menagerie of foreign animals including emus, kangaroos, and an orangutan that ate carrots at the table with her guests? This number also included two black swans, brought over from an expedition to map the coast of Australia from 1800 to 1803, writes Professor Kate Williams.
Finally, perhaps this Russian video on how to protect yourself from attack by a window could be helpful to you this festive season?
