Due diligence performed on floating drilling units

Due diligence case study header

Understanding the financial risk of investing in highly-complex technical assets

Client background

For strategic reasons, the client maintains the confidentiality of its identity and investment targets. The client is an Asia-based company with multi-billion dollar turnover.

Project scope

With the current market conditions, the client has recognized the economic opportunity investing in the drilling industry presents. However, effectively assessing the value of inherently complex drilling assets requires many different technical and operational experts. It was impossible for the investor to assemble such a team on its own in the time frame it had to fully capitalize on market conditions. 

The client needed an independent third-party to provide objective assessments, valuations, risks and economic implications associated with a variety of drilling assets in order to make informed decisions on possible investment transactions.

How Lloyd’s Register Energy helped

We assembled a team of multidiscipline experts to conduct both on-site and desk-top evaluations of assets involved with the potential transactions.

Process followed

  • Kick-off meeting to understand the client’s requirements
  • Office-based information gathering and analysis
  • On-site surveys
  • Results compilation and analysis
  • Reporting and close-out discussions
Time frame

Completed within one month with multiple teams (this was a time sensitive project)

Types of surveys conducted
 
  • On-site surveys to assess actual condition of equipment, maintenance level, verify against desktop information obtained
  • On-site surveys to verify progress and quality of the new build
Types of analysis performed

Management system review, risk identification, possible cost outlay implications, budgetary reasonableness

During the assessment and analysis, several potential show-stopping issues were identified and resolved. If these issues had not been identified, the client could have made a multibillion dollar investment with unmanaged risks substantial enough to cause a major or total loss.
 
Throughout the project, we provided the client interim reports on our assessments and analysis. We maintained a schedule of frequent communications with the client to discuss our findings, including their possible economic risks and implications.
 
Results
 
With our detailed due diligence reports in hand, our client was well informed on the condition, value and risks associated with the complex technical assets. As a result, our client was more prepared to make decisions, negotiate the transaction and avoid unknown risks.
 
Benefiting the industry
 
While we typically survey assets for safety and environmental considerations, more and more, the drilling industry is turning to Lloyd’s Register Energy subject matter experts and survey methods for financial purposes.