Paragon Offshore - Complete Fleet Status As Of October 17 And Commentary

| About: Paragon Offshore (PGNPQ)

Summary

Paragon Offshore released its October fleet status on October 17, 2016. The semi-submersible MMS1 is now idle and the JU B391 was awarded 30-day contract in North Sea @$53k/d.

Contract Backlog estimated is $348 million as of October 17, 2016.

A good entry point should be in the range of 0.57 to 0.62, assuming a positive ruling by the Judge Sontchi.

This article is an update to my preceding article about Paragon Offshore (OTCPK:PGNPQ), published on September 20, 2016.

Bildresultat för MSS1

To read the company fleet status report, October 17, 2016, click here.

1. Class: Jackups

# Name

Year

Built

Spec.

Feet/K feet

Contract

End

Current

Day rate

Location

Rate at 0 revenue

1 Dhabi II

1982/2006

120/20

mid 7/17

76

[NDC ZADCO]

UAE

2

M1161

1980

300/20

Early 4/18

62

[Dynamic Drilling/ONGC]

Bareboat chartered

India

3

B152

1982/2004

150/20

Late 11/17

81

[NDC]

UAE

4

(L1112)

Noble Ed Holt

1981/2003

300/20

Late 10/18

38

[Dynamic Drilling/ONGC]

Bareboat chartered

India

5

L784

1981/2002

300/20

Early 11/16

95

Early termination

[NDC/ZADCO]

UAE

6

L786

1983/1998

300/25 mid 3/18 53

[Dynamic Drilling/ONGC]

Bareboat chartered

India

7

C461

1982

205/25

Late 10/16

Late 10/16 - mid 12/17

68

113

[Tulip Oil]

[ONE]

NL

8 M1162 328/30 Late 1/19

85

rate in discussion

[NDC/ADMA OPCO]

UAE

9

HZ1

1981

Early 11/16 - Early 12/16

53

[Wintershall]

NL

Light well intervention services

10

Prospector 5

6/2014

JU 2000E

HS-HE

mid 11/17

218

[Total]

UK NS

Sold to SinoEnergy

11

B 391

1981-2001

JU Late 10/16 - Late 11/16 53

[Centrica]

UK NS

Light well intervention services

Click to enlarge

3. Prospector Offshore HE-HS Jack-up new build.

#

Name

Year built

Spec.

Feet/K feet

Contract

End

Information

1

Prospector 6

Delayed

JU 2000E

HS-HE

Available Option
2

Prospector 7

delayed

JU 2000E

HS-HE

Available Option
3

Prospector 8

delayed

JU 2000E

HS-HE

Available Option
Click to enlarge

Note: The company has the option to delay the delivery of Prospector 6. The three rigs (P6, P7 and P8) are being constructed on a non-recourse basis with no parent company guarantees. They do not figure into the fleet status anymore.

Cold Stacked and Ready Stacked Rigs

Note: Ready stacked includes warm stacked, hot stacked and available (When the status or rig name is marked in blue you can click to get more information).

Name Year built Location Last contract date status
Drillships
1 DPDS1 1979 US GoM 11/14 Cold stacked
2 DPDS2

1981/2002

2011

Puerto Rico 9/15 Cold Stacked
3 DPDS3 1977/2005 2013 Puerto Rico 8/16

Cold stacked

Semi-submersibles
1 MDS1 1975 UAE 10/15 Cold Stacked
2 MSS1 1979-2000 North Sea 10/16 Ready stacked
3 MSS2 1977-2004 Puerto Rico 4/16 Cold Stacked
Jack-ups
1 C462 1982 NL 10/15 Cold Stacked
2 L1111 1982/2004 US GoM 11/13 Cold stacked
3 L1113 1975/1993 US GoM 5/15 Cold stacked
4 L1114 1982 US GoM 10/14 Cold stacked
5 L1115 1976/2001 UAE 10/15 Cold stacked
6 L1116 1977-1996 US GoM 11/13 Cold stacked
7 L783 1982-2003 Cameroon 7/15 Cold stacked
8 L785 1981-1995 Malaysia 5/15 Cold stacked
9 M531 1972-1998 US GoM 12/14 Cold stacked
10 M821 1976-2003 US GoM 2/15 Cold stacked
11 M823 1979-1999 US GoM 11/14 Cold stacked
12 L781 1982-1998 US GoM 5/15 Cold stacked
13 B301 1976-1993 US GoM 6/15 Cold stacked
14 M841 1975/1997 US GoM 9/15 Cold stacked
15 M824 1982 US GoM 9/15 Cold stacked
16 L782 1981/1995 Cameroon 10/15 Cold stacked
17 C20052 1980 North Sea 2/16 Cold Stacked
18 M826 1983/1990 UAE 2/16 Cold Stacked
19

M842

1975/1995 GoM 3/16 Cold Stacked
20 C463 1982 North Sea 4/16 Cold Stacked
21

M825

1984/2003 Cameroon 5/16 Cold Stacked
22 C20051 1982/2005 UK 8/16 Ready stacked per Rigzone
23 Prospector 1 2013 UK 9/16 Planned maintenance until mid-Dec 16. NL
Click to enlarge

The Semi-Submersible MSS1 and the JU C20051 have not been classified as "stacked" in the October FSR despite being effectively out of work according to Rigzone.

The company indicated a backlog of $472 million as of June 30, 2016, (now estimated at $348 million):

Paragon's total contract backlog at June 30, 2016, was approximately $472 million compared to $806 million at March 31, 2016. Although Paragon continues to contest the approximately $143 million of backlog associated with what we believe to be an early release of the Paragon DPDS3 by Paragon's customer Petrobras, we have removed that amount from our June 30, 2016 backlog total. The March 31, 2016 backlog total included this disputed amount.

Paragon Fleet Status

Total Drillship Semi-submersible Jack-up
Working 11 0 0 11
Stacked/idle 29 3 3 23
Total 40 3 3 34
Click to enlarge

Commentary:

Paragon Offshore released another depressing FSR, with only one new contract for 30-day for the JU B391 with Centrica in the UK North Sea @$53k/d, for a light well intervention services. Total additional backlog is estimated at $1.6 million.

The Semi-submersible MSS1 has ended its small contract and is now classified as "ready stacked" by Rigzone. The contract Backlog is now estimated at $348 million and has been eroding at a fast pace since March 31, 2016. Below is the rate of erosion the past 7 months.

As a reminder, Paragon Offshore has "projected" the future revenues indicated below, in the Bankruptcy plan.

2015 2016P 2017P 2018P 2019P
Revenues 1,492.427 674.933 701.920 934.150 1,109.272
Click to enlarge

Yes, it is not a typo, the total revenues projected from 2017 to 2019 is $2,745 million, whereas, the actual "real" backlog from 2017 to 2019 is $290 million. The company expects to get at least $2,584 million in new contract backlog, assuming a 95% efficiency? I let you be the judge.

Bankruptcy update:

Paragon's confirmation hearing before the Court concluded on September 30, 2016 and we are now awaiting the judge's decision. I am expecting that the Judge Sontchi will deliver his decision probably early November 2016. Whether to confirm or not the Plan, of course.

Paragon Offshore has indicated what will happen assuming a positive decision, here.

I will not comment on the other catastrophic alternative -- which is Plan denied, back to square one -- we know what will happen in this case.

I am expecting a confirmation -- despite my firm belief that the company will be back in bankruptcy no later than H2 2017 -- unless the Judge Sontchi is well aware of the business situation, that will probably get much worse for Paragon Offshore, at least until H2 2018, which is evidently too late.

If the plan is approved? Let's be positive.

I think it is reasonable to expect a positive reaction with a stock price trading higher, at least for a few hours. The question is how high and how long before most of the traders take their profit off the table and run? Many day traders will participate in the trading frenzy.

Click to enlarge

A good entry point should be in the range of 0.57 to 0.62, assuming a positive ruling by the Judge Sontchi.

I have accumulated a fair amount of shares, that I intend to sell out the same day as the decision is released, thereby, expecting a profit or unfortunately a loss.

I will not be the only one, I am afraid, and I recommend to be very careful and set a reasonable profit. Warning, The price per share will not reflect the fair price and will be used as a simple trading tool, it will be futile to guess a value based on the balance sheet. Good luck to all.

Important note: Do not forget to follow me on Paragon Offshore and other offshore drillers. Thank you.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own a trading position that I intend to sell soon.

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