The way this is going, HERO may not be around to sniff that Maersk deal. They might want to start thinking about contracting those Super A's sometime soon.....they need to generate some revenue ASAP.
A decent deal not great. On the call they stated the deal was good in their minds due to the cash flow, low risk (rigs already contracted), and option of additional rigs if they can find contracts for them. They won't take the other rigs on w/out contracts. It does beat buying a new rig for 200+m and then not being able to contract it. Also, they avoid mob fee for getting these things from China, would have been 15m apiece, also, they are already fitted to work in the North Sea, probably an additional 8m in upgrades to each rig minimum if they had to retrofit.
270m term loan 100m in bonds, the holders, if not agreeable to rolling the debt over to Paragon will be paid off by Paragon's available credit line. Paragon bought the stock in addition to this for close to 200m, so 570m total outlay. Don't forget, Prospector does have assets besides the actual rigs and the their contracts....they have 30+ million in cash. They indicated comparable rigs fitted to work in the North Sea can approach 250m a piece. They get 2 rigs plus substantial contracts on each for 570m. Prospector wasn't going to give the things away for free, it was a good deal, not great and will add to income in 1Q 2015 and every quarter thereafter.
If HERO could get a backlog in place that somebody would want, then maybe. PGN bought 2 rigs under long term contracts. HERO has 2 new rigs w/out contracts and one that isn't even built yet.
I am of the opinion the impairment whether pre-planned prior to spin off or not will allow PGN to make a profit even if dayrates and utilisation drop significantly. They have good contracts in place, going forward they can stack rigs, sell them for scrap w/out taking the impairment hit at that time. HERO made money on their GOM assets last Q excluding their impairment at a 68% utilisation. It is not expensive to suck oil out of shallow water, margins are significant even at oil $70 in quite a few places PGN has rigs.
HERO will have to have at least an 80% usage of rigs, including the Super A's in order to generate any meaningful income. If that doesn't happen, they'll trudge along as they are now. Also, the true book value is probably closer to about $2.50 if all the rigs on the books were valued accurately.
Go to ewell online query and search by date on the approved permits
NASDAQ will only reflect the true and correct amount of institutional holders once they all updated their 3rd quarter holdings. It is counting both 6/30 and 9/30 reports. Wait until after all 9/30 updates are made, then you'll get an accurate number.
I hate to admit it, but unless they get the Resilience back to work this will go down further. When they shelled out the money and shares to buy the Super A's I don't think they anticipated such a difficult time getting them on long term contracts.
Good comment schmo, LTC reminds me of work comp....the cost of this line of business got away from GNW, NOT SURE HOW WITH ALL the data readily available, but like work comp med costs can quickly escalate and last for years. I think she'll rebound a bit, but LTC is ironically going to lean on US mi for a while.
The presentation today was a little different for a change, but they are still hanging their hat on the Maersk deal. Their song and dance is getting a little old. I think Paragon is a safer bet in the washed up rig category. If hero could sign a contract on the super a's, I may re-consider.
I bought at 7.89 several days ago, no more dry powder to gamble on this any further. I like the upside, but I am surprised how poorly they handled this debacle.
They should generate substantial amounts of cash at least for the next 2 quarters, should be some money to do some other things you desire.
Agree, HERO will have a tough 4th Q from an earnings standpoint. If they don't get the Super A's under contract soon, the equity will continue to deteriorate and they won't make a dime. CFO isn't blind.
It is a fine rate for a bareboat. Good estimate for a crew to man the thing would be about 30-35k per day. Add that on to the bareboat rate and you get close to 100k, which is the going rate for these rigs outside the middle east. Plus two of these were stacked and are now are locked up for 3 years. It is great news.
Let's see how Mr. Market likes this report. $10 whacked off supposed book value. Seadrill trades at book with just under a 20% dividend yield. If they are treated like the rest of the drillers, I'd look for a share price in the $3 to $3.5 range. Funny thing is I think they overdid the write-off, buy hey they've already been shorted into oblivion why not? Get it out of the way now, does anyone really care? They are a no name in offshore drilling. I would love to get some PGN in the 3-4 range, they won't trade anywhere near the new book after this.