Ocean Rig Orders Ninth Drillship from Samsung Heavy

Ocean Rig’s Ocean Rig Mylos, a 7th generation drillship based on the SAIPEM 10000 design. Image credit: Ocean Rig

International deepwater drilling contractor Ocean Rig UDW (NASDAQ: ORIG) on Tuesday announced that it has signed a contract to construct a ninth ultra deepwater drillship at Samsung Heavy Industries for approximately $600 million.

The 7th generation drillship is a sister ship to the three drillships (Ocean Rig Skyros, Ocean Rig Athena, Ocean Rig Apollo) currently under construction at Samsung, and is scheduled to be delivered in December 2015.

Like its sister ships, the newbuild will be capable of drilling in 12,000 feet of water and is based on the Saipem 10K design complete with full dual derrick enhancements and DP Class 3 dynamic positioning.

In addition to the newbuild order, the company has also announced the delivery of the Ocean Rig Mylos, which is the first of the three new generation ultra deepwater drillships expected to be delivered this year. Ocean Rig says the drillship is currently being mobilized offshore Brazil and is expected to commence drilling operations under the 3-year drilling contract with Repsol Sinopec Brasil S.A. by November 2013.

George Economou, Ocean Rig’s Chairman and Chief Executive Officer, commented:

“We have taken advantage of our strong balance sheet and our long-term relationship with Samsung to order at a very attractive price an additional newbuild drillship, sistership to our existing 7th generation ultra deepwater drillships. We expect that our new drillship will be financed through a combination of available cash and debt to be secured prior to the delivery of the drillship in December 2015.

With all of our 2013 newbuild drillships as well as our first 2015 newbuild drillship, the Ocean Rig Apollo, already contracted to investment grade counter-parties, we are setting the stage for moderate growth going forward. We believe that the ultra-deepwater drilling market for high quality assets will remain strong in the foreseeable future and are excited about the future employment prospects of our high quality homogeneous fleet.”

Ocean Rig UDW, a majority owned subsidiary of drybulk and petroleum products shipper DryShips, now owns and operates a total of 11 ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 9 ultra deepwater drillships, including the two more scheduled to be delivered in 2013 and two of which are scheduled to be delivered during 2015.

What is 7th Generation?

Classifying a rig as “7th generation” appears to be a concept developed post-Macondo to describe rigs that are now being built to satisfy new, more stringent requirements of deepwater operators.

In speaking with an offshore drilling expert today, he notes that the derricks being built for deepwater rigs are now being built much more robust to handle hook loads of 2 million pounds or more.  Such loads might be seen while running deepwater casing strings.

In addition, dual BOPs and DP-3 is becoming the standard, along with higher capacity (100-ton or greater) heave-compensated cranes and winches.

7th generation might also describe a vessel that is outfitted for dual gradient drilling.

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