WilHunter, one of two Awilco Drilling's 1980s built semi-submersible drilling rigs, is set to be recycled. Awilco Drilling shared the news in its quarterly presentation on Tuesday.
The WilHunter rig, built in 1983 by Daewoo and upgraded in 1999 and 2011, has been cold stacked in Invergordon, Scotland, since 2016, without employment prospects. According to available info, the mid-water drilling rig last worked for Hess, in 2015.
“Decision has been made to recycle WilHunter. Recycling options are being pursued,” Awilco Drilling said. VesselsValue estimates the scrap value of the WilHunter is around $11.43 million.
According to statements made at the quarterly earnings call, the cold-stacked rig costs Awilco around $1,300 a day. Asked about what the net recovery from the recycling could be, Roddy Smith, MD, UK & Chief Commercial Officer said: "Scrap volumes have increased recently. So I think we could reasonably guide on a recovery in the sort of $1 million to $1.5 million range."
Recycling the WilHunter will leave the company with only one rig in its fleet, the WilPhoenix semi-sub built in 1982 and upgraded in 2011.
Awilco had planned to upgrade its fleet with a couple of 7-gen semi-subs, ordered from Keppel in 2018 and 2019, and targeted for the Norwegian market. The orders have since been canceled, and Keppel and Awilco are currently involved in arbitration cases over the order cancellations.
In the third quarter, the WilPhoenix was in operations for Ithaca at the Fotla location, offshore the UK.
At the end of September, WilPhoenix had a total remaining contract backlog of approximately $1 million. The rig has since completed the contract with Ithaca and is currently warm stacked in Invergordon and being marketed for future work, Awilco Drilling said.
As of September 30, 2021, Awilco Drilling had $12.1 million in cash and cash equivalents. It said that additional funding is expected to be required to support the ongoing arbitration process with Keppel, SPS for the WilPhoenix, and other working capital requirements.
Despite its only active rig being out of work, the Aberdeen-based firm painted a positive outlook for the floater market.
"The high volume of tendering activity in the UK rig market during 2021 is now resulting in contract awards for work commencing in 2022. The outlook towards 2023 and 2024 in the North-West European floater market continues to improve with higher levels of utilization and improving day rates expected," Awilco said.
The company said in its presentation that it was awaiting awards on outstanding tenders, exploring alternatives for financing, and actively managing the arbitration processes towards Keppel FELS to receive a refund for paid installments.
Awilco Drilling is seeking to recover $97.7 million in paid installments from Keppel for the now terminated contracts for Nordic Winter and Nordic Spring drilling rigs. However, it doesn't expect the final arbitration outcome for either of the two rigs to complete before the fourth quarter of 2022.
On the other hand, Keppel FELS has submitted claims related to the case, seeking $693.8 million from Awilco for contract terminations. Awilco says Keppel's claims "are strongly denied."
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