Could a move on an equity piece in the first Jones Act-compliant wind turbine installation vessel (WTIV) to be built in the US now be in the plans of Eneti after its $600m acquisition of Seajacks International?
While he concedes it is all speculation, Clarksons Platou head of research Turner Holm said Seajacks' existing relationship with Dominion Energy — owner of the $450m WTIV Charybdis, now under construction in Texas — could put Eneti in pole position to assume a stake in the process.
Holm raised the option in an interview with TradeWinds on Thursday after he took part in Eneti's special conference call dedicated to helping analysts understand its purchase of the UK-based firm.
Eneti executives kept their cards close to the chest when Holm and other analysts asked them about next moves, saying discussions with the acquired firm's management and staff were just beginning following the takeover.
But given Eneti's stated interest in moving into the US Jones Act market — suddenly a growth area under US president Joe Biden — and Seajacks' role with Dominion in managing the newbuilding project, Holm could not ignore the connection.
"The Dominion thing is really interesting," Holm told TradeWinds. "Seajacks is managing that process for Dominion. It's speculation, but it's fair to say that for a public utility to own a vessel — especially one that costs nearly $500m — is a step that was taken out of necessity rather than preference.
Skin in the game
"It could make sense for Eneti-Seajacks to have some skin in the game courtesy of that relationship. I could see how they'd want to do that. And while they would be limited by Jones Act rules to a 25% stake, on a levered basis that could come to $50m — that's a big get."
Charybdis, slated to deliver in 2023 from Keppel AmFELS shipyard in Texas, has contracted to work for US utility Eversource and Danish green energy player Orsted to build two wind farms in the Atlantic Ocean.
The charter also allows the vessel to work on Dominion's 2.6-GW Coastal Virginia Offshore Wind project in the waters off Virginia Beach.
Eneti officials have touted Seajacks' experience in the US market as one of the elements that attracted them to the Japanese-owned firm without offering any specifics.
Indeed Eneti management was quiet about next moves on the call but highly praising the experience brought by Seajacks, which it said had installed 470 wind turbine generators and 450 foundation structures worldwide in the last decade.
Eneti shares were up nearly 6% to $16.64 in Thursday afternoon trading on the New York Stock Exchange.
Eneti's big scoop came nearly a year after the company, formerly known as Scorpio Bulkers, announced it would leave the dry trade and focus on the WTIV market.
"It's like Eneti's first birthday and Christmas all rolled up into one," Eneti president Robert Bugbee said on the conference call.
Holm is inclined to agree, saying Eneti in one swoop has ascended into an elite four of WTIV owners that includes Bonheur of Norway, Cadeler of Denmark and Jan De Nul of Belgium.
"This exceeds my expectations — both for the stock and for the company in the long term, this was the right move," Holm said.
"For the stock, there was a great deal of uncertainty about the strategic path forward. Now that uncertainty is removed. This allows institutional investors who like the story to get involved. It also eliminates any uncertainty around the handling of the newbuilding for a company with no experience in the sector.
"For the company, this does put them in the major leagues," Holm added.
