![COLUMN | Quick Updates: Atlantica buys DOF’s supply vessel flip; Maersk sells anchor handlers; battery power drive gains momentum in UK and Norway; Ocean Infinity wins grant; more cable layers ordered [Offshore Accounts]](http://media.assettype.com/bairdmaritime%2Fimport%2Fwp-content%2Fuploads%2F231009-Offshore-Accounts.jpg?w=480&auto=format%2Ccompress&fit=max)
Last week we looked at Britoil's acquisition of 30 offshore supply vessels (OSVs) from Vroon for a price we estimated to be in the region of US$239 million, and the acquisition of the Vroon Offshore Services management teams in Singapore and Italy.
We noted how the Dutch Bank ING had foolishly cut a side deal with Golden Energy Offshore of Norway to sell four PX121 design platform supply vessels (PSVs) and a small subsea vessel for US$94 million, outside the sale process to Britoil, only for the Norwegian buyer to then flip VOS Sugar last month for a 60 per cent profit on the US$9.4 million it paid for the ship in August.
We commented on how ING's bargain basement sale price and botched process showed how banks are intellectually and strategically ill-equipped to run shipping companies.
A few days later, we received a further example of this.
DOF announced at the end of September that it had agreed to acquire the PSVs Skandi Barra, Skandi Caledonia and Skandi Captain from its lenders for a total price of NOK270 million (US$24.7 million). These were older DP2 vessels, with Skandi Barra being built in 2005 to the MT 6000 MK II design with over 4,300 DWT, Skandia Caledonia built in 2003 to the original MT 6000 design with 4,135 DWT, and the smaller Skandi Captain, also built in 2003, but to the MT 6009 design with 3,333 DWT. Even better, DOF didn't even have to pay in full in cash to the lenders; it simply paid half in cash and wrote back the other half as a loan on market terms, repayable in January 2026.
Literally, less than a week later, DOF announced that it had now agreed to sell Skandi Barra and Skandi Caledonia to a company controlled by Atlantica Shipping for NOK275 million (US$25.2 million), subject to the approval of the charterers. The two vessels will be delivered to their new owners this month and next, but DOF will continue as technical and commercial manager for the vessels.
It is a great deal for DOF, as Skandi Caledonia requires a special survey later this year, which will likely cost US$2 million.
Industry sources reported that Skandi Caledonia has been forward fixed to Total Austral for drilling support to the jackup Noble Regina Allen in Argentina in the first quarter of next year in Fénix field, the world's southernmost gas project, offshore Tierra del Fuego. The PSV's contract is believed to have a firm duration of 150 days as well as 60 days of options, with DOF saying that there was an estimated margin of above US$25,000 per day excluding mobilisation and demobilisation.
The company already has a long-term contract in the troubled Latin American nation for the subsea vessel Skandi Patagonia.
After the deal, DOF will own just nine PSVs, the youngest of which were built in 2012. Mons Aase, the CEO of DOF, flagged that more of the PSV fleet would likely be sold in future as well.
"The sale of the two older PSVs is in line with our long-term strategy to focus on the integrated subsea services and the short to medium focus on optimizing the combination of earnings and vessel values from our PSV fleet," Aase remarked.
Even before the sale, the North Sea was increasingly irrelevant to DOF, accounting for just 12 per cent of its income in the first quarter of this year, the most recent period for which figures were broken out, compared to 48 per cent for Brazil. The DOF PSV fleet as a whole generated less than five per cent of DOF's overall group revenue last year, and just over one per cent of earnings before tax.
So, DOF effectively got Skandi Captain for free in the deal, in class and in charter, working in the Baltic, probably US$7 million of value from the lenders. We keep hearing that bankers are the smartest guys and deserve their large remuneration, but I sometimes wonder. The sooner the former lenders leave the share registers of the offshore industry, so much the better for everyone.
DOF's shareholder register is stuffed with banks, and after its recent rise in share price, we continue to believe that the company might be an acquisition target for Subsea 7, or some form of merger with Siem Offshore.
To put the PSV sale into context, on June 30, after its relisting on the Norwegian stock exchange, DOF had total assets of NOK25.8 billion (US$2.4 billion), and so these three PSVs represent less than one per cent of its assets. For DOF, most of the value lies in the larger, more sophisticated subsea support and light construction vessels.
However, these PSVs are extremely significant for Atlantica, which is now emerging as one of the larger but much less known PSV operators in the North Sea, alongside SD Standard ETC, the owners of Standard Supply, as well as Vestland Offshore, and other Norwegian speculators.
The DOF deal marks the latest in a string of offshore acquisitions by Atlantica, which will own nine PSVs after it acquires Skandi Caledonia and Skandi Barra. The deal marks a decisive strategic pivot for Atlantica, which disposed of the last of its five MR tankers a few months back, when the Atlantica Brave, a 2008-built vessel with 50,000 DWT, was delivered to her new owners.
Atlantica was established in Oslo in January 1997 and the company says on its website that it is owned by its management, local investors, Egon Oldendorff, and A. M. Nomikos.
"We take an opportunistic approach to ship investment," the company claims. "Since inception, we have been involved in approximately 80 vessels. This includes both secondhand tonnage and newbuildings."
Atlantica's foray into the MR tanker segment was perfectly timed and was backed by some of the biggest names in shipping. This suggests that Atlantica's doubling down into PSVs means that the company is confident of sustained offshore day rates, at least until it flips the assets and sells them, which is exactly what it hopes to do.
The MR investments shows the timing of an Atlantica deal. The company bought its first MR tanker in late 2018, then it bought two more in 2019 and a further two in 2021. Oslo-based brokers and financiers Fearnleys were partners on four of the vessels, supporting with the raising of equity and corporate management.
In recent months, Atlantica took delivery of FS Arendal, a 2006-built VS 470 MKII design PSV, and Standard Duke, a 2012-built UT755 XL design ship. Those vessels were renamed Atlantica Carrier and Atlantica Duke.
In 2022, the company also bought PSVs Normand Corona and Normand Aurora from Solstad Offshore. Normand Aurora was renamed Atlantica Supplier and reactivated from lay-up by Atlantica. That same year, the company purchased the UT755 design PSV Energy Scout from Golden Energy Offshore, renamed as Atlantica Server, and the UT755 design Portosalvo, renamed Atlantica Trader. These last three vessels were all built in 2005, approaching the twenty-year age bar for operations that many international oil companies impose.
Atlantica is focused on the older and less attractive end of the market, reflecting a shift in the North Sea. Much of the UK sector of the North Sea is now dominated by independent, often private equity-owned energy companies, as the super-majors like Shell and BP have gradually exited the market in the face of dwindling reserves and windfall taxes. These new players – exemplified by Ithaca Energy, Harbour Energy, and EnQuest, and everyone's favourite asset squeezer, Perenco – are not as concerned by chartering only the most reliable and modern vessels. Instead, they are focused on cost.
Whereas most major operators in Brazil and West Africa now shy away from older vessels and the smaller UT755 designs, these cost-focused producers are not bothered. That said, Posidonia Shipping in Brazil just took delivery of the UT755 OOC Tiger from Opielok Offshore Carriers and have mobilised it to Brazil.
This means that the North Sea market is now more bifurcated than ever, with Equinor in Norway setting new standards of technical excellence, low emissions and innovation, whilst Aberdeen is increasingly clogged with older PSVs that are unlikely to ever trade outside the UK North Sea. These vessels work for second tier clients. Tidewater's board are not going to be bothered that Atlantica is growing; the two company's fleets simply do not overlap.
Aside from the offshore vessels, Atlantica also owns a 2,700TEU container vessel built in 2004, a chemical tanker named Nordic Lynx built in 2003, and three dry bulk carriers. With an asset base like that, we can see the attraction of even eighteen-year old PSVs from lay-up, after the company so successfully cashed in on the MR tanker boom.
Whilst DOF has been selling PSVs to Atlantica, Maersk Supply Service has also been disposing of its older offshore supply vessels (OSVs) from cold stack in Denmark, as we expected. Maersk announced the sale of two of its oldest anchor handlers earlier this month. Maersk Dispatcher is now part of the Star Matrix fleet, with the 18-year-old vessel renamed Aquaman II, in line with the superhero names the company adopts. Star Matrix is owned and run by the father-and-son duo of Sanjeev Jain and Siddhant Jain.
The company is an Indian demolition-dealing company, which discovered the benefits of cheap, old anchor handlers to tow ships to the beaches of South Asia for recycling in the industry downturn, as part of what we dubbed the "Sale of the Century". It entered offshore using aged Bourbon anchor handlers to tow other Bourbon vessels from Africa to India for scrapping.
Star Matrix soon picked up second hand tonnage from other distressed sellers like Swire Pacific Offshore, whose 140-tonne bollard pull Pacific Wyvern became the original Aquaman which now works in Nigeria in Egina Field, as well as vessels from Bumi Armada (Stark is ex-Armada Tuah 85), POSH (Hulk II is the former Salvanguard) and Emas Offshore (Vision is ex-Lewek Ebony). Star Matrix is now the owner of nine anchor handlers, as per the company fleet list. So far, the timing of the Jain family has been perfect.
Scrap dealers rescuing offshore vessels from Blowtorch Beach to trade at rates far above current feeder container vessels or Handysize bulker rates is a sign of how the offshore industry has swung from abject misery to euphoria in the space of just two years.
The sister vessel to Maersk Dispatcher, Maersk Detector, was acquired by Danish owner JD-Contractor. JD-Contractor is well-known to Maersk, having previously bought other Maersk anchor handlers, namely, the (former Maersk) Boulder, a 210-tonnes bollard pull AHTS built in 1998, and (former Maersk) Assister, which boasts 252 tonnes bollard pull and was built in 2000, in a fleet that includes vessels stretching back to 1979 (rebuilt in 2013).
Rather like the grossly unfair joke that every Aussie who migrates to Kiwiland raises the average IQ of both countries, Maersk selling to JD Contractors and Star Matrix makes the average age of all three companies lower.
Safe to say that none of these acquisitions is going to see Maersk undercut or in competition with its former tonnage, at least for now.
One of the most prescient pieces we have written, even if we say so ourselves, was our "Battle of the Batteries" article in 2020. This piece highlighted the rise of battery hybrid technology and how Seacor had stolen a lead over Tidewater in adopting this emission-saving, energy-efficient technology.
Tidewater fought back with its acquisition of 37 PSVs from Solstad earlier this year for US$577 million. Tidewater said that the Solstad PSV acquisition would create the world's largest hybrid fleet, which includes 14 battery hybrid vessels and two with LNG fuel capability.
No sooner had Tidewater caught up than both the British government and Norwegian state oil company Equinor announced investments to create completely battery powered OSVs. Last week, Baird Maritime covered the launch of the Plug-In Electric Zero-Emission Offshore-Ship (PIEZO) project, which entailed the concept of a PSV that will use batteries as the primary energy source and that will be capable of offshore charging. The partners, including ship designer and shipbuilder Vard, hope to have an 82-metre-long PSV in operation in less than three years.
PIEZO is not the only battery-powered offshore newbuild vessel project with state backing. Bibby Marine has received over US$24 million in funding from the British government for over 50 per cent of the investment costs to build the world's first zero-emission electric service operation vessel (eSOV) for wind farm support. Of course, the technology developed will be equally applicable in oil and gas and offshore wind vessels.
The funding will come from the UK Government's Zero Emission Vessel Infrastructure (ZEVI) fund and will cover the design and construction of the vessel, with the project partners then covering all costs of demonstrating the ship in an operational environment after delivery in March 2028. The vessel will be designed in the UK with the aim of delivering both emission and cost savings, the ZEVI application stated.
Liverpool-based Bibby said in its press release that the proposed 90-metre-long, DP2 eSOV will be fitted with a powerful battery system specified at 20 MWh and dual-fuel methanol engines for backup along with associated shore-charging facilities. Bibby Marine CEO Nigel Quinn did not outline the detailed timeline for the delivery of what will be the first new vessel for the company in five years. However, the project is backed by Shell, Kongsberg, and DNV. These are serious players with large resources.
Serial British government grant claimant Ocean Infinity also won a US$5.4 million ZEVI grant in conjunction with partner Cummins to design and build a methanol conversion kit for one of its Armada 78 series lean-crewed survey vessels.
This is really strange, as the company designed the ships as "ammonia ready" but now has its hand out for state funding, again, to run them on methanol. Our review of these "lean crewed" and "ammonia ready" vessels from December 2022 is here.
What is shocking is that Ocean Infinity already received state funding from the UK government to develop its own ammonia-powered propulsion system in the Clean Maritime Demonstration Competition two years ago. Its newbuilding Armada 78 series vessels even each have an "ammonia space" in the event that such technology becomes available. What is going on?
With just one of the eight vessels in the Armada 78 fleet seemingly out working at the moment over a year after it was delivered from the yard, and now another grant from the long-suffering British taxpayers, one has to question – again – how commercial this company really is.
Since 2021, we have been banging on over and over that the offshore cable laying sector, for both electrical cables and data cables, is sizzling and will continue to sizzle over the coming years. As we know, sizzling sectors in shipping always attract new investment.
In March, Denmark's NCT Offshore ordered a new 95 metres LOA cable-lay vessel from Vard for delivery at the end of next year, and in August, Baird Maritime reported that French subsea company Orange Marine had taken delivery of Sophie Germain, a new cable-layer built by Colombo Dockyard of Sri Lanka. Last year, Italian cable manufacturer Prysmian also announced a newbuilding electrical cable layer, Monna Lisa, to be built at a cost of around US$240 million including the cable equipment for hooking up offshore wind farms to the grid and laying subsea interconnection cables. Norwegian owner Cecon Contracting has also contracted Sefine Shipyard in Turkey for the construction of a methanol dual-fuel cable-lay vessel, as we reported.
So, it was no surprise to learn that two major players have now announced massive newbuild orders in the cable laying sector.
Coming just before the award of a contract to build a new prison near Antwerp's Butterfly Palace, on September 30, the Jan De Nul Group ordered Fleeming Jenkin, an extra-large cable-laying vessel, at the China Merchants Heavy Industry Haimen shipyard in Jiangsu province in China. The company said that the ship offers "an unrivalled cable-carrying capacity of 28,000 tonnes" and will be delivered in 2026. No cost for the unit was announced.
Jan de Nul already operates three cable layers: Isaac Newton, which was built in 2015 and has a turntable capacity of 10,700 tonnes; Connector, built in 2011 with a base turntable capacity of 6,000 tonnes; and Willem de Vlamingh, which was also built in 2011 and has a turntable capacity of 5,400 tonnes.
The 215-metre-long vessel will be equipped with two 11,000-tonne turntables above deck, a 7,500-tonne turntable below deck, and two fibre-optic tanks, along with three 50-tonne tensioners, a cable laying chute, and a cable laying wheel. The vessel is capable of laying up to five cables simultaneously.
Let's hope the plans for the accommodation for the 440 inmates in the jail do not get mixed up with the lay-out drawings for the 120 single passenger cabins on the 36,000kW power Fleeming Jenkin.
This news from Belgium put the announcement from cable manufacturer Nexans that it was adding a third cable laying vessel to its fleet into the shade. Equipped with three turntables, offering a 13,500-tonne loading capacity, and hosting a large range of subsea tooling including jetting and ploughing tools, the new vessel will be capable of laying up to four cables simultaneously. The as-yet unnamed vessel will be delivered in 2026.
Nexans was recently awarded a US$1.8 billion contract with TenneT, and a US$1.5 billion contract for the EuroAsia Interconnector project. The new ship will build upon much of the technology that is currently deployed on Nexans' flagship vessel, Nexans Aurora, which was delivered in 2021.
These big-ticket vessels show that where there are opportunities, shipping investors and vessel owners will step up to exploit them with innovative and highly capital-intensive newbuildings.
The next industry cycle is only just beginning. The best is yet to come.
Background reading
Last month, DOF held its capital market day and the presentation is here. Slide 55 shows the current shareholder register, which is dominated by banks, banks and more banks, with former largest shareholder Helge Møgster left with just two per cent.
In our piece lamenting the state of Argentina, we had already noted DOF's strong presence in that market.
See the full Atlantica Shipping fleet list and download the Jan de Nul cablelay fleet vessel specifications.
More information on ZEVI can be viewed here.
We covered Ocean Infinity's hunger for government subsidies last year in our Waiting for Godot piece.
Find our more about the history and capabilities of the Big Four offshore wind and dredging contractors from the Low Countries in our piece on Holland and Belgium's Glory.
