Transocean Orders $1.2 Billion in New Drillships

The new rig is based on Jurong Shipyard’s proprietary Jurong Espadon drillship design. Image: SembMarine

Transocean, the Switzerland-based offshore drilling contractor which has seen its share price dragging along the bottom of its 52-week low recently, has just announced plans to upgrade its fleet with the newbuild order of two DP3-equipped ultra-deepwater drillships.

The $1.24 billion order was placed with Singapore’s Jurong Shipyard, a Sembcorp Marine subsidiary, and includes options for three additional rigs of the same design at a cost of $620 million each.

“These newbuild drillship orders highlight continued execution of our long-term asset strategy,” commented Steven Newman, President and Chief Executive Officer of Transocean. “We are committed to reinvesting in our fleet through the addition of differentiated, high-specification and high-return assets that will appeal to a wide spectrum of our customers.  We are very pleased to partner with Sembcorp Marine’s Jurong Shipyard in this effort.”

The rigs are due for delivery in Q2 2017 and Q1 2018 and will be of the Jurong Espadon III design.

In Transocean’s Q4 earnings conference call, CEO Steven Newman notes that they currently have 7 new drillships on order and that all of them are backed by contracts upon delivery.  The company’s backlog currently stands at $27 billion and Newman notes that his company’s long term strategy is to continue to make capital investments while reducing debt and returning excess cash to shareholders.  Along with that, he says an additional focus is to increase revenue efficiency by focusing on training and competency and furthering their relationships with key vendors.

Revenue efficiency was an important factor for Transocean in 2013 as problems with well control equipment on a few of their ultra-deepwater rigs resulted in significant lost earnings.

NEW RIGS

Transocean will not be the first offshore contractor to get their hands on this new rig design however.  In 2012, Sete Brasil placed an order for seven of these rigs which are all planned for delivery by the end of 2016.  The first two will be built in Singapore, while the last 5 will be built in Brazil according to Sembcorp Marine spokesperson, Ms. Judy Han.

THE DESIGN

Sembcorp notes this rig a large moon pool to accommodate a larger riser angle and a hull designed for superior motion characteristics.  The drillships will also feature a large deck space with an enclosed riser bay, a flexible mud system for completion operations, and Transocean’s patented hybrid power system for lower emissions and improved fuel economy.

The dual-activity rigs will be equipped with Dynamic Positioning Class 3 (DP-3) capabilities, and the drillships’ 1,250-ton load path will enable operations in up to 12,000-foot water depths and drilling depths of up to 40,000 feet.  The rig will initially be outfitted with a single 15,000 psi stack with an option to add a second should a prospective client request it.  Accommodations on board will support a crew of 220.

Transocean currently owns and operates six drilling rigs built by Sembcorp Marine’s yards, including three jack-ups and one semi delivered by PPL Shipyard, and two semi-submersibles built by Jurong Shipyard.

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