Seadrill defers deliveries of newbuild rigs

Offshore staff

HAMILTON, BermudaSeadrill has issued an update on its rig building program and market prospects for drilling.

The company has 15 rigs under construction comprising four drillships, three semisubmersibles and eight jackups, with remaining yard instalments totalling around $4.3 billion.

Scheduled delivery of the jackups has been pushed back, with five now due to be received next year and tow more in 2017.

Earlier this year Seadrill signed a provisional commitment with PEMEX to extend the contract of the semisub West Pegasus by two years which lifts the total value by $221 million.

In addition, Seadrill and SeaMex have agreed on a reduced day rate for five jackups for a period of 365 days, contingent on final confirmation of the West Pegasus’ new contract terms. Jackups included in this agreement are the West Oberon, West Intrepid, West Defender, West Courageous, and West Titania.

Elsewhere, Seadrill secured a new 18-month extension from Eni for the jackup West Ariel offshore Congo, with potential extra revenue of $53 million. And Seadrill has tentatively agreed with Husky to reduce the day rate on the West Mira due to late delivery of the unit.

Prices for ultra-deepwater rigs through 2016 will likely be influenced by high levels of excess capacity, Seadrill says, with 91 floaters already idle and 92 additional units ending their current contracts by the end of 2016.

Usage of ultra-deepwater rigs is around 81% of the marketed capacity, the contractor adds, compared with 71% for deep and mid-water floaters. Seadrill expects stacking and scrapping activity to continue through the second half of 2015 and well into 2016 – 40 floaters have been scrapped since the end of 2013, equivalent to 12% of the total fleet, and currently there are 28 cold stacked units.

Lower than anticipated stacking costs and a commodity price recovery may delay scrapping decisions in certain cases.

Currently the global order book for ultra-deepwater rigs stands at around 78 units, Seadrill claims, of which 29 are Sete newbuilds. Around 145 units, or 51% of the total marketed floater fleet, are coming off contracts between now and end-2017, and many are due for a 15- or 20-year classing.

In light of the likely cold stacking, scrapping activity, and newbuild delays there will probably be limited or zero growth in the marketed fleet between now and 2018, the contractor adds.



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