Transocean delays delivery of two new very deep water drilling vessels
As further demonstration of the continued pressures on the offshore oil sector, drilling operator Transocean announced that it had agreed to delay delivery of its two new ultra-deep water drill vessels and to defer payments to the shipyard. The company also said it had entered into new financing terms with the shipyard to improve its balance sheet, while scheduling contracts with major clients.
Transocean initially ordered the two advanced drilling vessels from Sembcorp Marine’s subsidiary Jurong Shipyard in 2014, with delivery scheduled for 2017 and 2018. Since then, with the current industry downturn, Transocean has delayed delivery. Known as the Deepwater Atlas and Deepwater Titan, Transocean claims that the two drilling rigs are the world’s first eighth generation designed for ultra-deep water operations. These are the only rigs to have a 3,000,000 pound hook load and will feature the world’s first 20,000 psi well control system.
Under an agreement with the shipyard, Transocean now plans to take delivery of the Deepwater Atlas in December 2021. Deepwater Titan is now expected to be delivered in May 2022.
Jeremy Thigpen, President and CEO of Transocean also pointed out that “as an essential part of these agreements, we will receive shipyard funding, which will significantly improve our year-end 2022 cash flow by over 450 million dollars, thus extending our track and providing us with additional investment flexibility as the industry recovers.
Under the terms, Transocean will make a payment of $ 50 million upon delivery of the Atlas, with the balance owed to the shipyard of approximately $ 370 million payable over five years. Upon delivery of the Titan, Transocean will pay JSPL 80% of the amounts due, or approximately $ 350 million, with the remaining $ 90 million being deferred and payable over five years.
Along with the agreement with the shipyard, Transocean also announced new customer agreements for the early deployment of the two vessels. Atlas is expected to be used by BOE Exploration & Production on the Shenandoah Project in the Gulf of Mexico in the United States, which is expected to begin drilling in the third quarter of 2022, subject to a final investment decision by Beacon and its partners. by July 31. , 2021. Titan is expected to begin operations in quarter 2023 as part of Transocean’s agreement with Chevron USA
“These agreements clearly represent a monumental achievement for Transocean,” said Thigpen. “As a result, we will take delivery of the two most demanding ultra-deep water drill ships in the world. “
Discussing market conditions and performance last month in the first quarter report, Thigpen referred to the reduction in activity for ultra-deep water units, which were stacked or unused, in Asia and North America, such as the One of the factors contributing to a decline in contract drilling revenues. Transocean, he said, remained optimistic as the global economy began to emerge from the pandemic which they said would lead to increased contracting activity. They reported an increasing number of customer inquiries for projects in both harsh environments and ultra-deep water.