Investors gobble up ADNOC L&S shares in IPO, with the Abu Dhabi-based owner using the fresh capital injection to order 14 support vessels, as demand limits available equipment in the Gulf region
Among the hottest regions in offshore oil and gas development at the moment is the Middle East, where mega-projects are lapping up available OSVS, drilling rigs and associated services, with some equipment ‘sold out.’ This had led to oil majors reportedly relaxing the age restrictions on chartering vessels that exceed 15 years old, to increase the available pool of assets required to meet their needs.
And near-term prospects for offshore oil and gas in Saudi Arabia, Qatar and the UAE look bright, with capex forecast to climb from US$33Bn in 2023 to US$41Bn in 2025, according to energy analyst Rystad Energy.
This up cycle has energised investors, who swarmed on ADNOC Logistics & Services’ 1 June IPO. Investors gobbled up the 1.41Bn share offering, representing a 19% stake in the Abu Dhabi-based integrated maritime logistics provider. ADNOC Logistics & Services (ADNOC L&S) raised US$769M in the offering, which translates to a US$4.05Bn valuation for the company. But investors’ appetites for shares were barely satiated; oversubscription orders totalled a whopping US$125Bn.
Fearnleys said the ADNOC L&S IPO was a “testament to the strong market conditions,” noting “the oversubscription was 163 times the available shares for sale.”
Added the shipbroker: “The share price surged more than 50% during the first day of trading. With fresh capital and a healthy valuation, the Middle Eastern major also ordered 14 newbuilds at Grandweld yard in Dubai, illustrating the increased vessel needs and tight market balance in the region.”
ADNOC L&S chief executive Abdulkareem Al Masabi confirmed the news of the newbuildings in a social media post, saying ADNOC L&S is building 14 marine support vessels at UAE-based shipyards Albwardy Damen Sharjah, Abu Dhabi Ship Building (ADSB) and Grandweld. “Shipbuilding is an historical craft that our region has mastered, and it is an enduring part of our maritime heritage,” he said.
ADNOC L&S is already one of the largest OSV owners in the world, following its acquisition last year of Zakher Marine International’s fleet of 24 jack-up barges and 38 OSVs.
“As the Middle East has served as a sponge for tonnage in the Eastern Hemisphere over the recent years, the strengthening of the southeast Asian market has led to a shortage of relevant tonnage for Middle Eastern charterers,” said Fearnleys. “With the region counting tenders for more than 40 vessels between the NOCs in Qatar, Saudi Arabia and UAE, we now see movements in the newbuilding market for the first time in years.”
And strong demand in the Middle East for OSVs — where average vessel utilisation is at 85% and rising — is not only kickstarting newbuilding but underpinning continued S&P activity.
Middle East S&P activity
One owner that has been snapping up key acquisitions over the last few years is Singapore-listed Astro Offshore. With offices in Dubai and Singapore, Astro Offshore plans to take delivery of a dynamic positioning class 2-capable, 60 m multipurpose support vessel (MPSV) newbuild in Q4 2023.
Under construction at Fujian Mawei Shipbuilding in China, the newbuild, Astro Athena, has a beam of 15.2 m, depth of 6.2 m and draught of 4.8 m. Built to ABS class, the diesel-electric MPSV has an FFV-1 notation, with accommodation for 60, a clear deck space of 420 m2 and deck strength of 7 t/m2.
Astro Offshore announced the addition of Astro Athena on social media, indicating the MPSV would be handed over at the end of November or beginning of December, noting “[it] is available as of now for its first job.”
“The ADNOC L&S IPO was a testament to the strong market conditions”
Among recent additions to Astro Offshore’s fleet are the 2012-built AHTS Astro Spica (ex Teras Genesis) which it snapped up from Singapore-based Ezion Holdings for US$2.25M in 2020, the 5,150-bhp, nine-year-old Astro Solaris (ex AOS Triumph), acquired from Atlantic Navigation Holdings, and the 2022-built Astro Aquila (ex OSV Latona), a DP-2 class anchor-handling tug supply (AHTS) vessel acquired from Singapore-based Pacific Ocean Engineering. With an overall length of 65 m, beam of 16.2 m and draught of 5 m, Astro Aquila has a 40-tonne active heave-compensation crane, FiFi1 notation and accommodation for 80, expandable up to 140, according to Astro Offshore. “It is a true multi-role vessel capable of working in construction, IMR, accommodation, hook-up and subsea projects amongst many others,” said the owner.
Final outfitting, including crane installation on Astro Aquila, was to be performed in Hamriyah Port, the UAE.
In another acquisition, Astro Offshore is awaiting delivery of the 2016-built AHT Chrysolite (ex Blue Ocean II) from Pacific Ocean Engineering, according to UK-based ship valuations provider VesselsValue.
Newbuild acquired for US$9M
In May, the board of Atlantic Navigation Holdings reported the Singapore-listed owner had agreed to acquire an OSV newbuild for slightly less than US$9M with “an unrelated third-party shipyard.” Atlantic Navigation said the DP 2-class OSV has a length of 79 m, deadweight of 3,300 tonnes, a knuckle-boom crane with a main hook safe working load of four tonnes at a 19-m radius, and accommodation for 54.
Being built to ABS class, the vessel will have a FiFi notation 1, with delivery targeted for the end-March 2024. Atlantic Navigation said the OSV’s specifications “may be modified during the construction, subject to the expected demand, market conditions and the availability of contracts to suit, including with respect to the enhanced accommodation size and the crane operational capacity” which would require additional capex.
Earlier, Atlantic Navigation completed the US$5.5M purchase of the 2019-built, 54 m, shallow-draught MUV Team Clio, and the six-year-old, 3,300-dwt, 75 m platform supply vessel Vega Egypt 1.
With company revenues improving over 29% and an average vessel utilisation nearing 94% for Q1 2023, Atlantic Navigation executive director and chief executive Bill Wong was confident of the market’s strength. “While there are headwinds to the current elevated interest rate environment, the offshore sector dynamics continue to remain favourable to vessel owners and operators,” he said.
In June, Atlantic Navigation incorporated a Qatari-based vessel operation and management company, Energy Marine Services and Trading (EMST). Oasis Marine, an indirect wholly owned subsidiary of Atlantic Navigation, will own a 49% stake in EMST, with the remaining 51% controlled by “an unrelated third-party entity based in Qatar.”
“We now see movements in the newbuilding market for the first time in years”
In July, family-controlled Van Stee Offshore reported its Zwerver V, ordered last year, was nearing launch at Albwardy Damen Sharjah. First of a new class designed for shallow draught operations, the Multibuster 8020 has an overall length of 80 m, beam of 20 m, and minimum draught of 3 m, with a clear deck space of 800 m2 and accommodation for 60.
Jack-ups acquired
Westwood Global Energy’s RigLogix reported contracted jack-up rigs in the Middle East had reached 164 units and 401 globally as of 17 July. Global committed utilisation and total utilisation were 93% and 82%, respectively.
Globally, a total of 31 new contracts were awarded and two contract options exercised, amounting to 21,200 days (58.1 rig years) of backlog added. The Persian Gulf accounted for 87% of total awarded days, with ADNOC Offshore awarding 20, two-year contracts for drilling activities commencing in July.
Dubai-based ADNOC Drilling has signed a deal to acquire two high-specification Gusto MSC CJ46-design jack-ups for US$220M, in a move that complements parent company ADNOC’s expansion and production growth strategy.
The two rigs will be delivered into Abu Dhabi waters and become operational Q4 2023 with revenue contribution to begin in 2024, by which time ADNOC Drilling aims to have 142 owned rigs service-ready, in line with its fast-tracked fleet expansion programme.
Supplementary infrastructure is being planned, as well, for ongoing service to ADNOC’s enlarged fleet, according to an announcement from another UAE company. In June, Abu Dhabi-based AD Ports Group inked a 25-year agreement with Singapore-based Crystal Offshore, a logistics provider to the marine and offshore industry, to build an offshore rig and vessel repair base in the emirate’s Khalifa Port.
A total footprint of 20,000 m2 and an associated quay wall in Khalifa Port are being earmarked for Crystal Offshore to build its base, which will include office facilities and fabrication workshops to provide advanced repairs and refits to jack-up rigs, FPSOs and semi-submersibles.
ADNOC Offshore awarded a US$975M enginerring, procurement and construction (EPC) contract to ADNOC L&S for the construction of an artificial island in the Lower Zakum offshore field. The first major award won by ADNOC L&S following its IPO, the award scope includes dredging, land reclamation and marine construction of an artificial island “G” for the Lower Zakum offshore field. Some 75% of the contract value will flow in country, in keeping with maximising domestic economic benefits outlined in Abu Dhabi’s Economic Vision 2030.
The award is part of Lower Zakum’s Long-Term Development Plan, which aims to increase oil and gas production to meet domestic and global energy demand. Phase 1 of the plan would sustain the field’s oil production rate of 450,000 barrels of oil per day (bopd) from 2025 to 2027, increasing to 500,000 bopd by 2028.
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