That's right. Selling their up-side to a future possible change to exploration investment and adding further competition to current pricing!! I for one think that's a stupid management decision?A clear sign of panic. Read through their past Yearly's and you see that BLY debt was built by spending on Capex. Yes, there's little doubt that some of these rigs may be older (even possibly in need of a rebuild), but to what cost surely varies, as BLY in the first place needs to borrow money to do anything!! Any possible buyer, would be lining up to get this gear.
3 weeks ago Grays Online sold a (2011) WEI 50 Slant rig, from the defunct WDS drilling division for ~$250,000. New replacement cost would be ~$2m. A water bore driller bought it and has it working in WA. If BLY spent on average ~$1.8m per rig (pre-2012)and is STILL paying it off the debt, and a small operator comes along and buys it at ~10 to 15% (seems to be current market value) of that, and running with less over head costs than BLY,.........well its happy times for them!!
The industry needs BLY (being a price setter), but without steering decision like this.
Just a thought, and why this isn't being advertised as a "fleet rationalisation" process, is either they're worried on how much they may get from these rig sales (compared to what they paid for them) or they've set the price that high that they may not sell (?).......just a chain of thought.
Another drilling contractor auction at Grays Online, catalogue available from the 26th. Good research if any one is interested.
BLY Price at posting:
9.8¢ Sentiment: None Disclosure: Not Held
