Seadrill Orders Four New Dual Activity Drillships

Seadrill Ltd. announced today that they have awarded the Korean shipbuilder Samsung Heavy Industries a $1.08B contract to build four new dual-activity drillships. This is the first new drillship order this yard has seen in two years, however since 2000, Samsung has won the bid on 61% of the 51 drillships which have been built worldwide.

West Gemini (c) Seadrill — Seadrill's newest dual activity drillship, West Gemini

These new drillships will be built with ultra-deepwater capability and will be the first rigs to include a 7-ram BOP configuration in their standard package. It is likely these rigs will be put in operation in either the Gulf of Mexico, Brazil, or West Africa.

This is interesting timing as well considering it comes on the heels of Pride International’s announcement last week regarding the “For Sale” sign they now have hanging on their front door. Figuratively of course.

The press release from Seadrill is as follows:

Hamilton, Bermuda, November 11, 2010 – Seadrill has entered into a turnkey contract to build up to four new ultra-deepwater drillships at the Samsung yard in South Korea. The first two drillships are firmly ordered with delivery in the first and second quarter 2013, respectively. Total project price per rig is estimated to be less than US$600 million, which includes a turnkey contract with the yard, project management, drilling and handling tools, spares, capitalized interest and operations preparations. The contract further includes a fixed price option for further two drillships to be declared during the first quarter 2011.

The dual derrick drillships are of an improved design compared to the three previous drillships Seadrill has taken delivery of from Samsung, with further enhanced capacity related to water depth, technical capabilities as well as increased accommodation capacity. The new dynamic positioning drillships will be capable of operations in water depths up to 12,000 feet and with a hook load capability of 1,250 tons especially targeting operations in challenging areas such as the Gulf of Mexico, Brazil and West Africa. The drillships will be the first newbuilds to be outfitted with seven ram configuration of the BOP (Blow Out Preventer) stack.

The decision to add another two ultra-deepwater newbuilds to the existing fleet is based on the continued strength of the offshore drilling market, the return that these investments are expected to deliver and the financial flexibility generated by the Company’s contract backlog. The order of new drillships is considered financial superior to other alternative investments.

Alf C Thorkildsen, Chief Executive Officer of Seadrill Management AS, says: “Our commitment to establish Seadrill as a leading drilling contractor through investing in new high specification offshore drilling units built by quality yards has been well received by our customers and investors. With the most modern drilling fleet in the world and a total contract backlog of US$11.5 billion, we have created a solid platform for further growth and a continued high return to our shareholders. These orders confirm our positive view on the market outlook as well as our good experience with this design and the Samsung yard.”