Posted on June 8, 2021
Drilling contractor Transocean Ltd. reports that it has agreed with Sembcorp Marine’s subsidiary, Jurong Shipyard Pte Ltd, on the delayed delivery of the ultra-deepwater drillships Deepwater Atlas and Deepwater Titan. As part of the agreement, JSPL has agreed to accept deferred payment for both rigs.
The Deepwater Atlas and Deepwater Atlas are the world’s first eighth generation ultra-deepwater drillships and only rigs to feature a 3,000,000 pound hook-load. According to Transocean, they are the “most capable and highest specification rigs in the world” and will include the first 20,000 psi well control system. In addition to their state-of-the-art drilling capabilities, these rigs are also designed and equipped to optimize fuel consumption and reduce emissions, and thus minimize the associated carbon footprint of each offshore project.
Deepwater Atlas: Delivery of the drillship is now expected to be in December 2021. Upon delivery, Transocean will make a $50 million payment to JSPL; the balance of payments owed to the shipyard, or approximately $370 million, will be payable during a five-year period following delivery pursuant to a secured financing arrangement with the shipyard.
Transocean also has agreed with BOE Exploration & Production (Beacon) that drilling operations on the Shenandoah project in the U.S. Gulf of Mexico are expected to commence during the third quarter of 2022. Transocean expects Beacon to commence drilling on its Shenandoah project utilizing the Deepwater Atlas following a final investment decision from Beacon and its partners. That decision is expected to be made on or before July 31, 2021.
Deepwater Titan: Delivery of the drillship is now expected to be in May 2022. Upon delivery, Transocean will pay JSPL 80% of amounts owed, or approximately $350 million. Twenty percent (20%) of amounts owed, or approximately $90 million will be deferred and payable over a five-year period following delivery pursuant to a deferred payment arrangement with the shipyard.
Transocean also has agreed with Chevron U.S.A., (Chevron) that commercial operations of the Deepwater Titan are expected to commence in the first quarter of 2023. Transocean’s contract with Chevron maintains its duration and estimated backlog of $830 million, excluding mobilization and reimbursables.
Payments under each arrangement will be made in accordance with the respective payment schedules over the terms of each arrangement. Principal balances will carry an interest rate of 4.5% per annum.
“These agreements clearly represent a monumental achievement for Transocean. As the result, we will take delivery of the two highest specification ultra-deepwater drillships in the world, and the only two assets capable of drilling and completing 20,000 psi wells. Notably, as a critical element of these agreements, we will receive shipyard financing, which materially improves our year-end 2022 liquidity by over $450 million, thus extending our runway and providing us with additional investment flexibility as the industry recovers,” said Jeremy Thigpen, Transocean president and CEO.
According to a Transocean presentation, the 20,000 psi capacity is needed, with a growing number of wells exceeding the current 15,000 psi BOP capacity in the Gulf of Mexico.
Sembcorp Marine Ltd says the amended agreements “took into due consideration work disruptions arising from the COVID-19 pandemic.”
“The completion of the amendment agreements is a significant step forward and underlines the collaborative spirit of all parties and their determination to see two drillships built to the highest specifications for ultra-deepwater deployment be put into operation,” said Wong Weng Sun, President & CEO of Sembcorp Marine. “In the face of challenges stemming from the COVID-19 pandemic, Transocean has demonstrated understanding of the situation and confidence in Sembcorp Marine’s EPC capabilities to complete the two highly complex drillship projects. Excluding these two drillships, Sembcorp Marine has delivered eight drilling rigs to Transocean.”
