Until it sank in Venezuelan waters, the Aban Pearl semisubmersible drilling rig was Aban Offshore’s highest earning asset with a daily operating rate of $348,000 on a contract lasting through 2014.
Indian news sources report that Aban Offshore has a $486.5 million contract with Pdvsa, with an Ebitda of over $72.98 million and cash flow of over $60.3 million annually from the contract.
Morgan Stanley estimates the contract’s net present value at about $254.89 million, assuming a 12% discount.
Immediately after the Aban Pearl went down, the price of Aban Offshore’s stock fell by 18.29% on the Bombay Stock Exchange, erasing over $171.9 million of the Indian company’s market value, to $767.7 million, approximately, as of 14 May.
The decline in Aban Offshore’s market value offsets a large part of the potential losses that it expects to incur as a result of Aban Pearl’s sinking.
However, Aban Offshore isn’t out of the shoals. As of March 2009 the company had a consolidated debt of about $3.59 billion, of which over $973 million is due over the next two years.
Aban officials say that the company’s solvency is not in doubt. But Morgan Stanley calculates that the sinking of the Aban Pearl means that the company faces a funding shortfall of over $504.8 million in fiscal 2011-2012 and 2012-2013. Meanwhile, in March 2010 Aban Offshore missed a payment of $43.25 million of short-term debt.
The consensus view among India-based analysts is that Aban Pearl’s loss will have a negative impact on Aban Offshore’s cash flow of about 20%, or over $62.1 million annually, through 2013.
Possible upsides: 1) The Aban Pearl was insured for about $230 million, which can be used to pay down some of its debt earlier than the company may have been planning, and 2) if Aban Offshore can deploy another drilling platform to Venezuela quickly, its cash flow outlook would improve.
Energy Minister Rafael Ramirez said that Aban Offshore had two rigs available in India, and at least one would arrive in Venezuela and resume drilling operations in the Dragon 6 offshore gas field in no more than two months.
However, given Ramirez’s lack of credibility when it comes to all numbers, two months could easily extend to six months, or even longer. But Aban Offshore and Pdvsa also are under great pressure to get a replacement rig up and running quickly.
Meanwhile, unanswered questions remain:
Why did Aban Pearl sink?
Ramirez insists that Aban pearl was certified as seaworthy and safe by international inspection companies. But en route to Venezuela in August 2009 the ABan Pearl almost sank in Trinidadian waters for the same reason that it went down last week in Venezuela: Water flooded the flotation system and the rig started to tilt, prompting its captain to send an emergency distress signal seeking help to evacuate the crew. However, the crew managed to correct the problem and the rig continued on its way to Venezuela.
Some of the rig’s Venezuelan workers have given depositions at the FUTPV oil workers federation attesting that parts of the rig were heavily rusted, including the area where seawater poured into the flotation system; that emergency fire hoses were not accessible because they were tied down with wire; that the rig’s crew did not have all the tools and equipment that they needed to operate and maintain the rig efficiently; and that the rig’s Indian captain and some foreign crew members had recurring problems with the Venezuelan workers.
Who owns Petromarine Energy Services Ltd of Singapore?
Ramirez has said to local news media that Aban Pearl was being “operated jointly” by Pdvsa and Petromarine.
Petromarine’s web page says that it has “alliances” with Aban Offshore, Astivenca, and Continent Technologies.
Astivenca – Astilleros de Venezuela CA – is a Venezuelan shipyard in Zulia. The alliance with Aban Offshore is exclusively for the lost Aban Pearl rig. We haven’t found Continent Technologies yet.
But the web page of Petromarine Energy Services Ltd has an odd “feel.” It reminds this blogger of an empty, gift-wrapped shoebox – the sense that one gets studying Petromarine’s web site is that it is similar (i.e. very superficial) to the web sites of the many interlocking Bolibourgeois banks that were seized at the end of 2009 by the Chavez regime.
Sources also tell Caracas Gringo that former Pdvsa vice president Luis Vierma, who now resides in a grand mansion in Lecheria, Anzoategui state, is involved directly with Petromarine Energy Services.
Caracas Gringo smells a skunk in the woodwork.