Solstad Offshore has secured two fresh contracts from the offshore market in Brazil worth a total of $100m in a move it says reflects a “strong offshore market in Brazil”.
Its construction support vessel (CSV) Normand Pioneer (built 1999) has been awarded an extension of its charter contract with the Brazilian oil company PRIO for a period of 18 months to August 2025.
The vessel will support PRIO’s E&P activities in Brazilian waters for another 18 months to August 2025, the shipowner said.
Pareto Securities said in a note to investors that it estimates the annualised Ebitda under the contract to be about $14m per annum.
“This unit is soon [to be] 25 years old and will undergo classing in 2024 costing approximately $4m on our estimates, leaving $16-17m of cash flow from the contract,” Pareto Securities said.
“The implied value of the unit is $13m on our numbers, which appears far too low given the firm cash flow and lifetime until 2029, albeit with uncertainty after current charters given the vessel’s age.”
Separately, Solstad and Equinor Brazil have agreed to convert the PSV Normand Carioca (built 2012) into a well-stimulation vessel (WSV) and extend the present contract until December 2027.
The client will cover the cost of conversion of the Brazilian-built PSV, meaning no funding will be needed from Solstad.
“The Normand Carioca, which has been under contract with Equinor Brazil since 2017, will commence its new scope of work in the third quarter of 2023 and will support the drilling activities at the Bacalhau field,” Solstad said.
“We estimate the Ebitda to be around $5m under the contract corresponding to EV/Ebitda 5.5x versus implied value on the unit,” said Pareto Securities.
“This is a higher multiple than the remaining fleet on our mark-to-market estimates, but we note that this is a four-year contract.”
Pareto Securities added that the fixtures were supportive of estimates in its view, with a “positive read-through” to other names with subsea vessel/Brazil exposure such as DOF Group and Siem Offshore.
