RE: Stena drillship15 Sep 2020 05:10
DMStewart: Thanks. Your post prior to mine was very informative. A few additional points from me to add to this Stena IceMax unfolding story………….
Yesterday early morning, I posted the following............….’I believe a funding update will be issued ‘soon’ for the Persev-1 exploration well. I am also of the opinion Stena could do very well with a JV by partnering in this funding. A $10m investment on paper will not cost Stena $10m in real cash while its drill-ships lay idle. Furthermore, if the spud is a success, its potential return on investment will be huge in its own right by owning 10% at the asset level of the oil field as this can never be diluted. Stena could also earn tens of millions in revenue within 12 months after the initial spud, from the drilling of the first appraisal wells. And a few years down the line, even more revenue delivering the oil in its tankers. It could be like a marriage made in heaven (with a relatively small dowry)…………………’
Additional analysis:
A breakdown of Stena Drilling’s daily gross profit margin per ship per day is not in the public domain, however while its ships lay idle, they are:
1. NOT earning revenue.
2. Paying port costs (whether Gibraltar or Las Palmas) for ship ‘parking’ and provisions, etc.
3. Paying salaries for the crew. Even when idle, the salary bill is high. IceMax is registered under a UK flag which likely means strict health and safety laws to protect the ship, the crew, the environment and any port she docks in. This cannot be done by one man and a clever ship’s dog.
4. Paying maintenance costs.
5. According to the nerdy website http://www.shipspotting.com/gallery/photo.php?lid=2613643 IceMax cost more than $1 billion to build. The monthly financing costs spread over several years must be massive. The typical plane used by Ryanair is a Boeing 737-800 which costs c$100m new.
Key points: a $10m Stena JV is petty cash in the overall picture, especially as it will cost them $10m lost revenue (assuming they had another customer) and NOT $10m cash/lost profit. Furthermore, it will potentially contribute to the fixed costs above. And it will also open the doors for massive revenue opportunities supplying BPC for years to come.
Even if Stena elects not to do a JV, WHY wouldn’t Stena Finance who do billion dollar deals, directly or indirectly help BPC fund the spud and maybe appraisal well(s)? If a small start-up airline with great potential wanted to buy a Boeing jet with an option for 10 more, would Boeing go out of its way to help, or take the attitude, ‘listen mate, go and get your finance organised then come back to us. Stop wasting our time.’
I have added one word to 2020vision’s post from yesterday,………..’It’s going to be a sea of blue [TRADES!] all the way to the Bahamas.’ IMHO. DYOR.
Starchild
xxx
Sign In
Follow the stocks
