World’s Most Sophisticated Wind Turbine Installation Vessel Project

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In a major development, Scorpio Bulkers Inc. announced that they have signed a Letter of Intent to construct a Wind Turbine Installation Vessel (“WTIV”) with options for additional vessels, says a press release published on their website.

What is it?

Scorpio Bulkers signed an LOI for what is presently the most sophisticated and capable dedicated wind turbine installation vessel in the world

  • The project will cost $265 –$290 million and the vessel will deliver in 2023
  • Offshore wind industry is forecast to grow at a CAGR of >15%
  • Improving technology makes wind one of the lowest-cost sources of electricity in certain regions
  • Shortage of WTIV vessels capable of installing larger turbines in deeper waters
  • Additional 10 vessels required to meet 2024 demand
  • Current contract rates of $220k/day imply attractive cash flow and return on capital
  • Potential for rates to improve as the market tightens over the next 3 4 years
  • Potential for rates to be higher for larger vessels

Large turbines moving away from shores

  • Technological innovation has led to an increase in turbine size and capacity factors
  • Offshore wind installations are also moving further from shore and into deeper water where better quality wind resources are available
  •  Most projects commissioned through 2018 have been within 50 km of shore, however, several large projects in the pipeline are 100 km or more from shore

Strategy to align with growing public policy momentum

Emanuele A. Lauro, Chairman and Chief Executive Officer, commented, “Scorpio Bulkers is embarking on a new and exciting journey. The
world urgently needs to reduce emissions and offshore wind will make a pivotal contribution. We appreciate the encouragement and assistance of multiple partners – including suppliers, customers, and shipbuilders – as we take a significant first step in transitioning the Company towards a sustainable future. This strategic direction now aligns with our future customers, investors, finance providers and the growing momentum in global public policy. At the same time, the Board of Directors carefully considered this project and believes that this transition will result in higher and more predictable shareholder returns in a structural growth market. Our transition has begun.”

He added “Scorpio has a history of executing complex maritime projects and of building teams and expertise to enter new markets. We are fully committed to this new direction as an area of significant value creation for our shareholders and alignment with our multiple stakeholders. “

How will it be done?

  • The initial vessel will be built by Daewoo Shipbuilding and Marine Engineering Inc. for delivery that is scheduled in 2023.
  • This WTIV is an NG-16000X design GustoMSC (a subsidiary of National Oilwell Varco NOV:NYSE), and includes a 1500 Leg Encircling Crane (LEC) from Huisman Equipment B.V.
  • The total project cost is expected to be approximately $265-$290 million, subject to final design modifications.
  • The contract is expected to be signed in early Q4 2020 and will include options to construct up to an additional three units having similar
    specifications.

Key features of the vessel

  • This WTIV will be one of the most sophisticated dedicated turbine installation vessels in the world.
  • It will have the capacity to install onto pre-prepared foundations the largest wind turbines currently designed, at a height of over 185 meters above sea level and in water depth in excess of 65 meters.
  • The vessel incorporates various features and green innovations that significantly improve the operating window and efficiency and accelerate all-important “time to first power” for customers.

Why this is essential?

In the European Union wind is set to play a central role and has the potential to become the largest source of electricity supply. Reducing Cost Will Continue to Drive Market Share of Electricity Supply

Future of offshore technology

Offshore wind is a proven technology and represents a significant opportunity for the world to respond to the challenge of emissions
reduction.

It is expected to grow at a compound annual growth rate of over 15% for the next decade.

There is a growing shortage of vessels that can install and maintain next-generation turbines core to this growth. The increasing maritime complexity and innovation of the offshore wind sector plays to Scorpio’s strengths and the Board of Directors believes the Company is in a good position to build an industry-leading presence.

Conference call on results

A conference call to discuss the Company’s results was held on Tuesday, August 4, 2020, at 9:00 AM Eastern Daylight Time / 3:00 PM
Central European Summer Time. Those wishing to listen to the call dialed 1 (866) 219-5268 (U.S.) or 1 (703) 736-7424 (International)
at least 10 minutes prior to the start of the call to ensure connection. The conference participant passcode is 7794355. The information
provided on the teleconference is only accurate at the time of the conference call, and the Company will take no responsibility for providing
updated information.

There was also a simultaneous live webcast over the internet, through the Scorpio Bulkers Inc. website www.scorpiobulkers.com.
Participants to the live webcast registered on the website approximately 10 minutes prior to the start of the webcast.
Webcast URL: https://edge.media-server.com/mmc/p/tg4ckw6t

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Source: Scorpio Bulkers

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