Endeavour jack up rig leaves Homer Harbor for Cosmo Unit
By Naomi Klouda
Endeavour travels past Bishop's Beach en route to the Anchor Point well site, the Cosmopolitan Unit on Friday at about 11 a.m. Photo by Sean Pearson/Homer Tribune
The jack up rig Endeavour is now underway in Kachemak Bay, leaving for the Cosmopolitan Unit. It was moved alongside three tugs, departing at about 8:15 a.m. Friday.
This is good news for Buccaneer Energy, which has been stymied since its arrival in Homer last August due to a backlog of work to get the rig ready for its work drilling in Cook Inlet.
The Cosmopolitan Unit is three miles off Anchor Point, where natural gas reserves are believed to be significant.
The Endeavour lost points in its petroleum property assessment for lingering so long at the dock. That marked it down when state petroleum assessors looked to assess its tax value.
Choppy seas and freezing spray on Monday calmed down for Tuesday’s announced travel date but the waters didn’t sufficiently calm down until Friday morning. Rig operators notified Harbormaster Bryan Hawkins that the Endeavour would leave Tuesday afternoon. Again, they set a leave time for 3 p.m. Thursday, but choppy seas and heavy winds caused it to put off that plan until Friday.
Three tugs were standing ready to tether the Endeavour and it was packed up for travel. Not all of the certifications are yet in place, but Buccaneer got the green light to get to the Cosmo Unit and put its 400-foot long legs down.
The Kenai Peninsula Borough released the tax assessment on the Endeavour this week. Finance Manager Craig Chapman said figures were based upon a preliminary assessment of $40,241,590. The following tax revenue amounts would be recognized for tax year 2013:
• The Homer portion would be 4.50 mills equaling $181,087.16.
• The Borough portion would be 4.50 mills equaling $181,087.16
• The South Hospital would be 2.30 mills equaling $92,555.65
“Something to keep in mind is that unless the Endeavour is stored at the City of Homer dock next winter, the additional tax revenue amount for the City of Homer would more than likely only be for one year,” Chapman said.
The purchasing price of the Endeavour was $68 million when it was bought in Malaysia by a partnership formed between Buccaneer, Ezion Holdings and the Alaska Industrial Development and Export Authority. AIDEA is a for-profit state agency that invests in economic projects. In December, AIDEA paid a $20.7 million dividend into the state general fund for fiscal year 2014. Its portion of the investment was $24 million.
The Spartan 151 jack up rig, owned by Furie Operating Alaska with interest held by its original purchaser, Escopeda, was valued at $17,629,460. In 2012, that rig paid the South Peninsula Road Service Area $6,500 and a total of $$21,000 according to the borough. Spartan spent the 2012 season drilling in the Kitchen Lights Unit, up the Inlet, so its tax payments were shared between service areas.
All of the rigs that are used for exploration are assessed by the state petroleum assessor. That’s James Greeley’s job at the Department of Revenue. He answers the question of why a rig’s price tag is different from the valuation when it comes to being assessed for taxes.
“The rig is valued under exploration – its standard of value isn’t what they paid. It’s market value,” Greeley said. “The market for jack up rigs in Alaska is a complicated one. Basically you don’t see market participates acquiring these rigs. They spend less than that because of the incentives by the state. These rigs arrived in Alaska after the statutory provisions were created.”
The assessment also looks at three types of depreciation that ratchet the valuation down. Greeley looks at the physical property, looks at its functional obsolescence and its external obsolescence.
Part of the equation asks whether additional capital is required to get the rig up to speed for work.
Both the Spartan and the Endeavour suffer from needing more capital investments. And it didn’t help the Endeavour’s value that it has been tied to the dock the past seven months.
“When we look at its external obsolescence we ask how much it’s being used? If it’s sitting around instead of being used, depending on what causes the down time, the rig is depreciated,” he said. “That rig is suffering from functional and external elements.”
The evaluation took place in January and February.
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Posted by Newsroom
on Mar 29th, 2013 and filed under Headline News
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