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Offshore drilling contractor Transocean has won a bundle of new contracts and extensions in Mexico, Australia, Norway, Lebanon, and the East Mediterranean Sea for six rigs in its fleet, propelling its total contract backlog to a whopping $9.2 billion.
After reporting the largest annual backlog in 2022 since before the downturn hit the industry in 2014, Transocean has continued to secure new deals left and right, which enable it to reap the benefits of the tightening offshore drilling market and higher day rates. The total backlog in Transocean’s previous fleet status report, covering the period up to 18 April 2023, was about $8.6 billion, following new deals with an aggregate incremental backlog of approximately $546 million.
Transocean’s new fleet status report, released on 19 July 2023, gives the inside scoop on its fleet of offshore drilling rigs, outlining its recently secured deals with the aggregate incremental backlog associated with these fixtures of around $1.2 billion while the company’s total backlog is about $9.2 billion. Assuming all contract options are exercised, the potential incremental backlog associated with the contract options is approximately $480 million to $500 million.
The offshore drilling giant’s rig fleet contains 37 mobile offshore drilling units, including 28 ultra-deepwater floaters and nine harsh environment floaters. In addition, the firm holds a noncontrolling ownership interest in a company that is constructing one ultra-deepwater drillship. While the rig owner only disclosed deals for semi-submersible rigs in its previous fleet status report, the latest one contains a drillship contract along with new semi-sub work.
New drillship gig
Transocean got its hands on a long-term contract with an undisclosed operator for a high-specification seventh-generation, ultra-deepwater drillship, which has been booked for work in the Gulf of Mexico, offshore Mexico. Three drillships – Deepwater Invictus, Deepwater Thalassa, and Deepwater Proteus – have made the cut and are on the list of candidates for this 1,080-day assignment.
As a result, one of these three rigs will be picked by the offshore drilling player no later than one year prior to the earliest date in the contract commencement window, which is currently expected to be between the fourth quarter of 2025 and the second quarter of 2026. The deal, which comes with a day rate of $480,000, is expected to contribute around $518 million in backlog, excluding revenue for mobilisation and demobilisation.
The 2014-built Deepwater Invictus drillship was scheduled to wrap up its job with Woodside in April 2023 and move to its assignment with an undisclosed company in the Gulf of Mexico. The 2016-built Deepwater Thalassa drillship is currently working for Shell in the U.S. Gulf of Mexico (GOM) at a day rate of $480,000. This deal is scheduled to end in February 2026.
The 2016-built Deepwater Proteus drillship is also carrying out an assignment for Shell in the Gulf of Mexico, which is currently slated to end in May 2026. The day rate is $481,000. These three drillships are capable of operating at 12,000 feet of water depth and drilling to depths of 40,000 feet.
Five semi-subs find more work
The rig owner won a five-well contract, which contains a one-well extension option, for the Transocean Equinox semi-submersible rig in Australia at a rate of $455,000. In addition, the firm got a 16-well binding award for this rig in Australia at a rate of $485,000, plus 21 one-well options at rates between $485,000 and $540,000.
This is expected to start in the first quarter of 2025 in direct continuation of the rig’s previously announced five-well, 300-day commitment, currently slated to begin in the first quarter of 2024. The 2015-built Transocean Equinox semi-submersible rig is of GVA 4000 NCS design. Constructed by DSME, the rig can accommodate 130 people.
Furthermore, Transocean’s Transocean Endurance semi-submersible rig was awarded a two-well contract in Norway at a rate of $385,000. This rig has a multi-well plug and abandonment assignment lined up in Australia, which is expected to start in January 2024.
The 2015-built Transocean Endurance is a semi-submersible CAT D rig of GVA 4000 NCS design. It can accommodate 130 people. The rig’s maximum drilling depth is 27,887 ft. It was constructed at Daewoo Shipbuilding & Marine Engineering in South Korea.
TotalEnergies has now booked the Transocean Barents semi-submersible rig for a one-well contract in Lebanon at a rate of $365,000. This deal contains three one-well options at rates that may vary between $350,000 and $390,000. In addition, the French giant exercised a one-well option for this rig in the East Mediterranean Sea at a rate of $370,000.
The oil major’s Benriach well, which is located in Block 206/05c West of Shetland, was spudded by this rig at the end of March 2023. The 2009-built Transocean Barents rig is of Aker H-6e design. It was constructed at Aker Kvaerner Stord and can accommodate 140 people. The rig is capable of operating in water depths of up to 10,000 ft and its maximum drilling depth is 30,000 ft.
Moreover, six one-well options were exercised for the Transocean Encourage semi-submersible rig in Norway at a current rate of $464,000. The estimated 370 days of work, expected to start in direct continuation of the current firm term, will contribute approximately $172 million in backlog.
This is expected to keep the rig busy through February 2026. The rig is currently on an eight-year contract with Equinor while a new nine-well contract with the Norwegian state-owned energy giant is expected to start in November 2023.
The rig’s drilling programme in the Norwegian Sea entails spinning the drill bit on the Tyrihans, Verdande, Andvare, and Vigdis fields, with Verdande and Andvare expected to be tied into the Norne field. This drilling programme has now been further extended with six more wells. Transocean Encourage is a harsh-environment semi-submersible rig of GVA 4000 NCS design. The 2016-built rig can accommodate up to 130 people.
According to Transocean, a one-well option in Norway at a current rate of $365,000 and three one-well options at a current rate of $420,000 were exercised for the Transocean Norge semi-submersible rig. This rig won a 17-well contract in September 2022 after two oil and gas companies – Wintershall Dea and OMV – entered into an exclusive partnership with Transocean for the drilling of all firm and additional potential wells in the period 2023 to 2027.
The 2019-built Transocean Norge sixth-generation Moss Maritime CS60 semi-submersible rig was constructed at Jurong Shipyard in Singapore. This rig can accommodate 150 people and its maximum drilling depth is 40,000 ft.
A multi-year upcycle seems to be in full swing, as the offshore drilling market flourishes, thanks to rising rig demand, which enables rig owners to snap up higher day rates, as illustrated by the new batch of contracts secured by Transocean’s rivals: Valaris, Noble Corporation, and Diamond Offshore.
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