Ultra-Deepwater Drillships Delayed at DSME

An illustration of the Atwood Archer drillship. Image credit: Atwood Oceanics

Houston-based Atwood Oceanics says it has reached an agreement with Daewoo Shipbuilding & Marine Engineering to delay delivery of two ultra-deepwater drillships Atwood has on order with the South Korean shipbuilder.

The agreement calls for delivery of the two newbuild drillships, the Atwood Admiral and Atwood Archer, be delayed to Septemeber 30, 2017 and June 30, 2018, respectively. Delivery of the drillships were originally planned for 2015 and 2016, according to Atwood Oceanics’ website.

As part of the agreement, Atwood has agreed to make payments of $50 million for each drillship on December 31, 2015, and DSME will extend all remaining milestone payments, $93.9 million for the Admiral and $305 million for the Archer, until their respective delivery dates. Atwood will also retain the option to take earlier delivery of each vessel, subject to a 45 day notice period to DSME.

For struggling DSME, the agreement is better than nothing. The shipbuilder has been hit hard this year by the slumping offshore industry, leading to big losses this year due to delivery delays and order cancellations. In October, creditors agreed to provide $3.7 billion in funds to help the shipbuilder complete offshore projects and ease concerns about its cash position. The company is also seeking to cut staff and sell its non-core business units amid a ongoing restructuring plan.

Atwood Oceanics (NYSE: ATW) has been in business since 1968 and currently owns 11 mobile offshore drilling units and has the two drillships under construction.

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