The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit.
In today’s gig economy, where jobs have been replaced by ‘portfolios of projects,’ most people find themselves doing more things less well for two-thirds of the money.
Uber drivers around Oksenøyveien should drop in to Ocean Yield and give the Rokke’s a friendly high-five and welcome them to the gig economy. No more does the Lewek Constellation have to slave under the instructions from Tower 15, they are free to set their own destiny, do with the vessel (soon to be renamed I’m sure) what they wish. Pick and choose jobs merely by switching on an app (metaphorically I guess). The drop in the charter rate from USD 105k per day to USD 40k per day must have felt a little painful, but hey, joining the hipster crowd was always going to be expensive… It’s good to see the blue blood of Norwegian business joining the post-Fordism dream… I may even open a check shirt and beard trimming service around the corner…
It will be interesting to see what value OY mark this asset down to in their next accounts and quite how painful keeping the vessel in full time charter mode will be. I am not sure the Connector has aged well. A beautiful ship, but a jack-of all-trades-master-of-none in the current market and it is not a vessel well designed for the gig economy.
There has never been a spot market in the offshore for vessels of the this sophistication. All the current contractors who could utilise the system have too much capacity (for years) and anyone who doesn’t have an asset like this isn’t going to make the bid list for deepwater flexlay work. While the Connector has been off doing oil and gas work a host of renewable lay vessels have come into the European interconnector market (think Maersk Connector that can be grounded for beachhead work) and so much flexlay capability in oil and gas has been added in a fixed and modular buildout boom that this looks like a tricky asset to see a natural home for.
The charter rate is a 62% reduction to the previous rate and comes with only a three month backlog. Comparable vessels are struggling to get more than USD 20-30k a day in regular work for a time charter and long-term jobs go for much less, some of this reflects the fact much engineering work will have been done based on the vessel.. Running costs must be in the vicinity of USD 15k per day if OY crew it up and have it ready for time charter work. A rational basis would suggest therefore that a reduction of 80% to book value maybe appropriate. I suspect they will be less agressive than that… although a long spell without utilisation will do wonders for the power of rational thought.
With a broad portfolio of assets OY have no need to pretend the vessel value and future is something it is not and may just take the hit to save them having to explain its position every quarter as they announce results (which would detract from some of their excellent investments). Willing buyer/ willing seller will be very interesting here.