OSV fleet’s DCF value is 2.5 times its market value

Written by Nick Blenkey
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Standard Viking (ex Volstad Viking)

MAY 8, 2017 — The global OSV fleet’s Discounted Cash Flow (DCF) value is currently $79.9 billion, or 2.5 times higher than its current market value of $30.9 billion, according to VesselsValue (VV).

The online valuation service is launching daily Discounted Cash Flow (DCF) valuations for offshore support vessels (OSVs) to its offshore industry coverage, which already includes s daily updated market and demolition values for offshore support vessels (AHTs, AHTS’ and PSVs) and MODUs (including drillships, semisubmersibles and jack-ups).

By comparing DCF values to market values, customers of VesselsValue can look for buy/sell/hold signals. For instance, if you can purchase a vessel when the market value is lower than the DCF value, you could potentially earn more money over the course of its lifetime than you spent. Therefore, this is a buy signal.

On the other hand, if the DCF value is lower than its market value, this implies you can sell the vessel for more than it will earn you for the rest of the vessel’s life. For example, the Standard Viking (ex Volstad Viking) was bought by Standard Drilling on January 2017 for $13 million. The day before the sale VesselsValue was providing the large PSV with a market value of $10.1 million and a DCF value of $29.4 million. This meant that, based on VV’s assumptions, the Standard Viking has the potential to earn double the amount Standard Drilling spent on the vessel.

Methodology for Discount Cash Flow Valuations

The VV DCF valuation module calculates the long term value of each asset by calculating the discounted cash flow for every individual vessel for each year of its remaining life. Focusing on the revenue, cost, commission and other factors provided by VV, these assumptions are vessel specific to reflect the differences in earning potential and running costs for vessels of the same type but of different specification and quality. VesselsValue currently also offers DCF values for cargo vessels types (tanker, bulker, container, gas vessels) and customers will be able to modify the assumptions and add fixed charters to calculate custom DCF values.

VesselsValue Standard Viking

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