Which Asset Classes to Invest In and When to Do It. OSVs vs MODUs: Forecasts for utilization, day rate development & asset values

Transcription

1 Which Asset Classes to Invest In and When to Do It OSVs vs MODUs: Forecasts for utilization, day rate development & asset values James Frew- Maritime Strategies International (MSI) Marine Money Offshore Oslo, 1 st June 2017

2 Agenda Which asset classes to invest in and when to do it? 1. The extent of oversupply 2. The impact of the newbuilding market 3. Market drivers 4. Outlook and investment returns Maritime Strategies International 2

3 Which Asset Classes to Invest In and When to Do It The extent of oversupply Maritime Strategies International

4 Demand side collapse Jackups Floaters # working rigs West Africa S & C America Middle East Med. & Caspian Asia Pacific US GoM NW Europe Mexico GoM India # working rigs West Africa US GoM NW Europe Med. & Caspian Latin America India & E. Africa Australasia Asia Pacific Maritime Strategies International 4

5 Which sector is most oversupplied 120% 100% Utilisation, 2012 = 100% Jackup* AHTS Floater* PSV 80% 60% 40% If we include all cold-stacked assets, the floaters are in big trouble 20% 0% *Including cold-stacked assets of all ages Maritime Strategies International 5

6 Rig fleet disaggregated 100% 90% Percentage of stacked units Ready Stacked, 20 Yrs + Ready Stacked, <20 Yrs Cold Stacked, <20 Yrs Cold Stacked, 20 Yrs + 80% 70% 60% At least a quarter of stacked rigs are unlikely to ever be reactivated the key question is what happens to the rest of them 50% 40% 30% 20% 10% 0% Floater Maritime Strategies International 6 Jack-up

7 Development of rig deliveries # Deliveries Only 2 rigs have been delivered in 2017 to date and the vast majority of 2017 deliveries will slip, but the orderbook is still imposing Jackup Floater* Maritime Strategies International 7

8 OSV orderbook examined # Units Pre Keel Laid Launched Not yet started Maritime Strategies International 8

9 Which Asset Classes to Invest In and When to Do It The impact of the newbuilding market Maritime Strategies International

10 Newbuilding prices are correlated 300 NB Price, 2000= PSV AHTS High Spec. Jack-up UDW Floater VLCC Offshore newbuilding prices are correlated with each other (>94%), but less wellcorrelated with merchant shipping Maritime Strategies International 10

11 And are key determinants of asset value YoY Ch 120% 100% 80% Dayrates are volatile and often move out of synch with asset prices 60% 40% 20% 0% -20% -40% NB Price 5 Yr Old Price Dayrate -60% Maritime Strategies International 11

12 Framing the window for asset prices 140% %age Net Replacement Value 120% 100% 80% 60% 40% Net replacement value is the secondhand price divided by the newbuilding price (with both expressed net of the scrap price) 20% 0% UDW Floater Dayrate Maritime Strategies International 12

13 Which Asset Classes to Invest In and When to Do It Market Drivers Maritime Strategies International

14 Utilisation and dayrates 400 3rd Gen Floater Dayrate ($ k/day) Clear correlation between dayrates and utilisation, with two (explainable) exceptions % 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Rig Utilisation Maritime Strategies International 14

15 It is different to anything this millennium Rig Utilisation 100% 90% 80% 70% 60% 50% Jack-up Utilisation Floater Utilisation 40% Maritime Strategies International 15

16 but does look quite like the 1980s 100% Rig Utilisation 95% 90% 85% 80% 75% 70% Jack-up Utilisation 65% Floater Utilisation 60% Maritime Strategies International 16

17 Back to the 1980s for the rig market 100% 90% Jack-up Utilisation Rate Jackups will require at least to 2018/9 to make significant further headway 80% 70% 60% % 40% 1981/ / / / / / / / / /2021 Maritime Strategies International 17

18 Floaters in a worse state? 100% Global Floater Utilisation Rate 90% 80% 70% 60% 50% 40% 30% 20% On the face of it, the floater market today is far worse than the 1980s % 0% Year 0 (1985/ 2015) Year 1 (1986/ 2016) Year 2 (1987/ 2017) Year 3 (1988/ 2018) Year 4 (1989/ 2019) Year 5 (1990/ 2020) Maritime Strategies International 18

19 Cold-layups key for floaters 100% Global Floater Utilisation Rate 90% 80% 70% 60% 50% 40% 30% 20% 10% For floaters, assuming rigs in cold layup do not re-enter the market makes the position considerably more optimistic s excluding cold stacked rigs 0% Year 0 (1985/ 2015) Year 1 (1986/ 2016) Year 2 (1987/ 2017) Year 3 (1988/ 2018) Year 4 (1989/ 2019) Year 5 (1990/ 2020) Maritime Strategies International 19

20 ...but OSVs have a more recent comparator 30 $ k/day What makes the current downturn so scary is what is on the orderbook k BHP AHTS Dayrate AHTS Utilisation Index (RH Axis) Maritime Strategies International 20

21 Which Asset Classes to Invest In and When to Do It Outlook and Investment Returns Maritime Strategies International

22 MSI - FMV MSI Forecast Marine evaluator (FMV) is the first web-based tool to provide forecast and historical price data covering virtually all of the deepsea shipping fleet. Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and operating costs for specific vessels. MSI FMV draws on MSI s proven, proprietary models and a consistent cross-sectional view across all principal shipping sectors. It puts asset values in the context of the near term market to enable reliable benchmarking with outputs based on annual averages. Coverage: Crude Oil Tanker Chemical Tanker Multi Purpose Product Oil Tanker LPG Carrier Containership Dry Bulk Carrier LNG Carrier PCC/PCTC AHTS /fmv PSV Maritime Strategies International 22

23 IRRs compared 30% IRR 25% 20% Hold until 2019 Hold until % 10% 5% 0% -5% Jackup Floater AHTS PSV Maritime Strategies International 23

24 MSI Background For over 30 years, MSI has developed integrated relationships with a diverse client base of financial institutions, ship owners, shipyards, brokers, investors, insurers and equipment and service providers. MSI s expertise covers a broad range of shipping sectors, providing clients with a combination of sector reports, forecasting models, vessel valuations and bespoke consultancy services. MSI is staffed by economists and scientists offering a structured quantitative perspective to shipping analysis combined with a wide range of industry experience. MSI balances analytical power with service flexibility, offering a comprehensive support structure and a sound foundation on which to build investment strategies and monitor/assess exposure to market risks. Maritime Strategies International 24

25 Disclaimer While this document has been prepared, and is presented, in good faith, Maritime Strategies International assumes no responsibility for errors of fact, opinion or market changes, and cannot be held responsible for any losses incurred or action arising as a result of information contained in this document. The copyright and other intellectual property rights in data, information or advice contained in this document are and will at all times remain the property of Maritime Strategies International. Maritime Strategies International 25

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