Mermaid cancels two more newbuild orders

January 3, 2017

Mermaid Maritime is at the chopping block again with China Merchants Industry, as the Thai company axes an additional two newbuild contracts with the shipbuilder.

Illustration of the MTR-3 rig. Images from China Merchants.

The MTR-3 and MTR-4 tender assist drilling rigs were ordered on 9 January 2014 at a combined total of US$298 million. In May 2016, both companies to delay the delivery of the rigs on 31 December 2016.

Mermaid had already pre-paid $44 million for both rigs, and held a balance of $254 million.

“In light of the challenging global oil and gas market situation that has, among other things, created a contraction in demand for drilling rigs, depressed asset values and charter rates, and making securing new contracts more challenging, the owners [Mermaid Maritime] shall not be taking delivery of the rigs from the builder [China Merchants Industry] by the delivery date. The owners had also not received any genuine interest from third party buyers for the rigs to date,” Mermaid Maritime said in a statement.

According to Mermaid, all pre-paid installments and associated costs were already recorded as asset-impairments in Mermaid’s 2015 financial statements, and no further payments are due to China Merchants Industry.

The MTR-3 and MTR-4, which are listed as "under construction" on China Merchants Industry's website, have been built as performance class tender assist drilling rigs, equipped with a modern drilling package supplied by leading drilling equipment specialist National Oilwell Varco (NOV). Compared to other tender rigs, Mermaid said in May that the rigs would feature larger deck space, bigger cranes, faster rig moves, larger and more living quarter capacity, larger tank storage and offline activity systems. The rigs are able to operate in water depths of up to 243m with conventional mooring and 914m with pre-laid mooring,  and each have a drilling depth rating of 7620m and accommodations for 200 personnel.

According to the termination deal, should China Merchants Industry find a buy for one or both of the rigs, the Chinese shipbuilder has given Mermaid a right of first refusal to buy the rig(s) at the same price, terms and conditions that China Merchants has offered to the other buyer.

Illustration of the Mermaid Ausana.

Less than a month ago on 6 December, Mermaid canceled a contract with the Chinese shipbuilder for the Mermaid Ausana DP2 dive support and construction vessel, which was also ordered on 9 January 2014.

A pre-paid installment of $20.4 million was already paid under the construction contact, with a remaining balance of about $124.8 million that would have been due to China Merchants upon delivery of the vessel.

The Mermaid Ausana, also listed as under construction, is a DP2 multipurpose subsea dive support and construction vessel equipped with an 18-man twin bell saturation system and two self-powered hyperbaric lifeboats. The vessel has been equipped with diesel electric frequency controlled propulsion, highly efficient azimuth thrusters, dynamic positioning systems, offshore cranes and a large platform deck for construction duties.

Read more:

Mermaid axes subsea newbuild

Mermaid wins 7 subsea gigs, delays newbuilds

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