London-baed drilling contractor Noble Corporation has agreed with Royal Dutch Shell to amend the long-term charter contracts for three ultra-deepwater drillships citing the challenging environment for offshore exploration and production projects.
The contract amendments pertain to the Noble Bully II, Noble Globetrotter I and Noble Globetrotter II, which are currently operating under 10-year term contracts that commenced in April 2012, July 2012, and September 2013, respectively.
Under the new agreements, dayrates for each rig are now determined by taking the higher of either a newly established minimum dayrate, aka floor dayrate, or the dayrate adjustment mechanism, as originally included in the contract.
The contract amendments for the Noble Globetrotter I and Noble Globetrotter II provide for a dayrate floor of $275,000 per day. The Noble Bully II contract meanwhile contains a floor dayrate, which is $200,000 per day plus daily operating expenses.
Shell has also opted to excersize its right to idle the Noble Globetrotter II for a period up to 730 days, which is expected to begin in January 2017. During this period Shell will pay a negotiated day rate of $185,000. Noble said Shell is also expected to exercise the right to idle the Noble Bully II for a period of up to 365 days, commencing no later than May 2017, for a dayrate of $200,000.
“This mutually beneficial agreement provides Noble with clarity on dayrates and subsequent operating cash flows through the duration of the contracts on each of the three rigs,” said David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation. “We also retain the future upside if the recent oil price recovery drives new market opportunities. These amendments will provide Noble with enhanced financial flexibility at a time when the offshore industry is experiencing a cyclical bottom and the timing of the inevitable recovery remains unknown.”
The primary term for each of the drillships Noble Bully II, Noble Globetrotter I, and Noble Globetrotter II are unchanged, with contracts expected to conclude in April 2022, July 2022 and September 2023, respectively.