Breakeven, page-22

Hi V_H.

Re stacked vessels and possibly making a comeback I think this is largely an industry unknown. The longer the boats have been parked up in the weeds the more it’s going to cost to get them going again.

None the less I suspect that MRM has slightly different problems with recent contracts. This years Subsea 7 contract for 3 years of a high spec boat likely means that this food asset is tied up to lowly just breakeven cash rates for another say 2.5 years. If this is the case it’s going to 2.5 years before a new contract can move the needle on this asset. So even if daytates and use goes up in the industry, these type of contracts will lock low for some time. Obviously it’s a survival tactic but hedges have both pros and cons.

As for pricing in the long term call option it’s a punters game as to how much this might be worth.

I think you might be right about re cap Mark 2 in 18 months time. At that time some form of profitable operations may be in sight. But geeze better of waiting till that before loading up stock.

Michael Kum suggested that 20 cents was too much for him to participate in the re cap and I think he is right that the right price is lower than 20.