Standard Drilling announces sale of its 33.3% ownershp in VLCC Gustavia S
S.D. Standard Drilling Plc (Standard Drilling, OSE: SDSD NO) says it has sold its 33.3% ownership in the VLCC Gustavia S, following the updated company strategy. The proceeds from the VLCC and any future divestments of the offshore fleet will be directed towards more liquid investments within Standard Drilling's core sectors.
"The transaction follows Standard Drilling's renewed focus on more diversified and liquid investments within the shipping and energy segments. We are gradually building up our investment portfolio, expanding the team of investment professionals and implementing the strategy with controlled risk. The sale of our VLCC holdings is an important part of this transition, " says Martin Nes, Chairman of the Board of Standard Drilling.
Standard Drilling has entered into an agreement to sell its 33.3% ownership in the 2020 built VLCC Gustavia S. The transaction values the vessel at USD 93 million, where Standard Drilling will receive net proceeds of USD 14.1 million for the company's equity stake in the vessel and book a loss of USD 0.8 million in the third quarter of 2021.
"Over the last few years, the combination of low commodity prices, ESG concerns and uncertainty around long-term demand has triggered an abrupt stop to investments in the fossil sector. In fact, today many of these companies have an implied cost of equity in excess of 25%, making any new investments prohibited by the capital markets. These dynamics, coupled with the long decarbonization path we now embark on, sets the stage for a commodity super-cycle that could last 3-5 years in our view. It is these opportunities with outsized return potentials that Standard Drilling seeks to take part in, " Nes concludes.
The investment portfolio has increased to USD 46 million per end of October 2021, including investment gains year to date of USD 14 million. The largest holding is Weatherford International, but the portfolio also includes investments within E&P, drilling and shipping sectors.