Will Sembcorp Marine's West Rigel standstill be extended again?

Analysts say it’s likely to happen.

The standstill agreement between Sembcorp Marine (SMM) and North Atlantic Drilling (NADL) for the West Rigel semisubmersible expires on July 6, but analysts from UOB KayHian reckon that this would likely be extended again.

"The agreement has seen an extension three times, with no firm resolution for the unit in sight. The previously rumoured acquisition of the semisubmersible by Transocean has yet to materialise," analysts Foo Zi Wei and Andrew Chow said.

The two noted that the semisubmersible should have seen keen demand from potential buyers, given the supply shortage for harsh environment semisubmersibles highlighted by Bassoe Offshore.

"However, it appears there continues to be disagreements on price. Ending the standstill will not be favourable for SMM as it introduces stacking costs to its income statement, which runs between US$10,000 and US$15,000 per day. As such, the most favourable outcome will be another extension," the analysts explained.

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