Malaysian Firm Sells Jack-Up Rig for $223 Million

Malaysian vessel owner Coastal Contracts Bhd has announced the sale of a jack-up drilling rig today via its subsidiary Thaumas Marine Pte Ltd, for approximately RM807million (USD $223 million).  The rig was sold to a “reputable oil company” according to Coastal.

Mr Ng Chin Heng, the Executive Chairman of Coastal, commented on the sale:

“Amid low oil prices, the offshore drilling industry is facing rough times as most of the oil majors have reduced their drilling budgets and are looking to cut costs, leading to less exploratory endeavors and to a drop in demand for offshore drilling rigs. The decision to sell our first jack-up drilling rig was in order to reduce the Company’s exposure to a potential downturn in the drilling market.”

Coastal has another jack-up drilling rig currently under construction that they are working to secure a charter contract for it upon delivery in Q4 2015.

According to a presentation yesterday at the Sea Asia event by Vivek Seth, CEO of Halul Offshore, he notes there are approximately 100 jack-up rigs currently out of work in Asia.

Considering that at the end of December 2013 the price for a new jack-up rig was in the range $211 million, selling a jack-up for $223 million in today’s market is particularly interesting.