Øystein Stray Spetalen’s S.D. Standard Drilling (SDSD) has sold its 33.3% ownership in the VLCC Gustavia S it acquired in January 2020.
The transaction values the vessel at $93m, with Standard Drilling receiving net proceeds of $14.1m for its equity stake in the vessel and incurring a loss of $0.8m in the third quarter of 2021. The proceeds from the VLCC and any future divestments of the offshore fleet should 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,” stated Martin Nes, chairman of the board of Standard Drilling.
Standard Drilling’s investment portfolio has increased to $46m by the end of October 2021. The largest holding is Weatherford, but the portfolio also includes investments within the E&P, drilling, and shipping sectors.
“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 decarbonisation 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 concluded.
