Transocean Reaches Deal for Delayed Delivery of New Ultra-Deepwater Drillships

Offshore drilling contractor Transocean announced today it has reached an agreement with Sembcorp Marine’s Jurong Shipyard on the delayed delivery of the two ultra-deepwater drillships under construction.

Jurong Shipyard, located in Singapore, has also agreed to accept deferred payments on both the newbuild rigs.

The drillships, Deepwater Atlas and Deepwater Titan, are the world’s first eighth-generation ultra-deepwater drillships

The drillships are said to be the most capable and highest specification rigs in the world and will include the first 20,000 psi well control system. They are also the only rigs to feature a 3,000,000 pound hook-load.

According to Transocean, delivery of the Deepwater Atlas is now expected to be in December 2021, at which point Transocean will make a $50 million payment to Jurong. The balance of payments owed to the shipyard, or approximately $370 million, will be payable during a five-year period following delivery pursuant to a secured financing arrangement with the shipyard.

Deepwater Titan is now expected to be delivered in May 2022 and, upon delivery, Transocean will pay Jurong 80% of amounts owed, or approximately $350 million. Approximately $90 million will be deferred and payable over a five-year period following delivery pursuant to a deferred payment arrangement.

“These agreements clearly represent a monumental achievement for Transocean. As the result, we will take delivery of the two highest specification ultra-deepwater drillships in the world, and the only two assets capable of drilling and completing 20,000 psi wells. Notably, as a critical element of these agreements, we will receive shipyard financing, which materially improves our year-end 2022 liquidity by over $450 million, thus extending our runway and providing us with additional investment flexibility as the industry recovers,” said Jeremy Thigpen, President and CEO.

Transocean also has agreed to contract terms with customers for the rigs.

For Deepwater Atlas, Transocean agreed with BOE Exploration & Production to commence drilling operations using the Deepwater Atlas at Shenandoah project in the U.S. Gulf of Mexico. Drilling operations are expected to commence during the third quarter of 2022 following a final investment decision expected to be made on or before July 31, 2021.

For Deepwater Titan, Transocean has agreed with Chevron U.S.A. for the rig to commence operations in the first quarter of 2023. The contract with Chevron maintains its duration and estimated backlog of $830 million, excluding mobilization and reimbursables.

“On behalf of Transocean, I sincerely thank JSPL, Chevron, and Beacon Offshore for their significant contributions to this process. I would especially like to thank our customers, as these agreements clearly demonstrate the trust that they have in Transocean’s track record of successfully introducing revolutionary new technologies to the industry, and the confidence that they have in our ability to consistently deliver safe, reliable and efficient drilling operations across our global fleet. We are extremely excited about these initial campaigns for the Deepwater Atlas and Deepwater Titan and we are excited about the expanding list of 20,000 psi opportunities requiring the extraordinary capabilities of these rigs,” added Thigpen.

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