Ultra Deepwater Drilling Poised to Take Advantage of Supply Demand Imbalance

By SiHien Goh, Kapitall, The Motley Fool

Posted 12:50PM 09/07/12

The stars are aligned for the success of the ultra-deepwater (UDW) drilling industry. As crude oil prices remain substantially high, oil exploration companies are going farther offshore to obtain new supply sources, supporting the demand for UDW drilling. At the same time, the cost of purchasing UDW drillships remains low, as shipbuilders clamor for any sort of construction orders (rigs and ships) because of the extreme downturn in the shipping industry.

UDW drilling refers to drilling beginning at water depths of more than 7,500 feet. Companies in this field contract out their UDW drilling rigs along with the necessary equipment and work crew on a daily rate basis to drill wells for customers. The nature of the business is very specialized, meaning that it is difficult for a new entrant to replicate the business model and attempt to muscle itself into the picture. Furthermore, the business model is fairly simple. Companies aim to profit from the difference between the daily rates that they charge their customers, and the daily operating expenditures (“OPEX”) that they incur while servicing drillships. So long as daily rates remain high and OPEX stays low, UDW drillers will make a tidy profit.

Fortunately for drillers, the demand and supply dynamics of the industry is in their favor. A typical drillship scheduled for delivery in 2015 can be purchased at around US$650 million, while the ongoing daily rate of a typical UDW drillship is around US$600,000. Assuming daily OPEX of US$200,000, a UDW drillship should bring in about US$400,000 daily. Considering these assets cost an average of US$650 million each and estimated useful lives of around 25-30 years, this spread between daily rates and OPEX could potentially generate US$730 million for the rig owner in five years.

Following the 2010 oil spill incident by BP in the Gulf of Mexico, increased regulation and greater scrutiny has limited the entrant of new UDW players. These policies entrench the incumbent UDW drillers and support the daily rate that companies can charge oil exploration companies such as ExxonMobil. At the same time, prices of new drillships remain low as the global shipbuilding industry goes through a deep cyclical trough. This means that shipbuilding houses are more likely to charge lower prices to obtain any business possible to make up for lost orders from the shipping sector.

Here are some of the drilling companies that have a higher proportion of exposure to UDW drilling and could potentially profit from the demand and supply imbalance in the industry. (Click here to access free, interactive tools to analyze these ideas.)

1. Ocean Rig UDW
ORIG is a pure play that allows one to invest in the deepwater water drilling market as it derives all of its revenue from that particular niche sector. 75% of its rigs are contracted into 2015, thus ensuring some kind of cash flow stability over the next three years. It has six high-spec UDW rigs on the water and three newbuilds scheduled for delivery in 2013. Of its six UDW rigs, it has two semi-submersibles that can drill up to 30,000 feet and four drillships that can drill up to 40,000 feet. Daily rates of all six ships are at least US$450,000, and up to US$675,000.

Furthermore, in August 2012, two of the newbuilds have already been contracted at daily rates of around US$640,000. However, a potential investor might be concerned that its assets are pledged as collateral to loans that are beginning to mature from September 2013 onward. For example, its two semi-submersibles Eirik Raude and Leiv Eiriksson are pledged to a US$1.04 billion revolver that is maturing in 2013.

2. Pacific Drilling (NAS: PACD)
Pacific Drilling derives 100% of its revenue from deepwater drilling. As such, it is one of the only two pure-play UDW drillers on the market. It has a fleet of six UDW drillships, with four delivered and two newbuilds to be delivered by 2013. It has the youngest fleet in the industry. Similar to Ocean Rig, it’s poised to profit from the upturn in deepwater daily rates and a lack of near-term supply of such expertise. The contract backlog for Pacific Drilling is at around US$2.2 billion and consists contracts ranging from one to five years. Two of the rigs operate in Nigeria, one in Brazil and another in the Gulf of Mexico.

One of the concerns about the company is that it has a fairly small fleet and has all its exposure to the deepwater drilling market. Should crude oil prices turn south for a considerable amount of time, the company might run into trouble.

3. Atwood Oceanics (NYS: ATW)
ATW is an international offshore drilling contracted founded in 1968. It currently derives 83% of its revenue from deepwater drilling and has eight rigs on the water, with five semi-submersibles and three jackups. It also has five newbuilds that are ready for delivery by 2014. Given its smaller size compared to the other players in the field, roughly 75% of its revenue is generated from its three largest customers: CVX Australia, Sarawak Shell, and Kosmos Energy Ghana.

The company is poised to take advantage of the upturn in the industry with most of its rigs contracted for a number of years. Its earliest rig repricing will come in December 2012, and this will allow it to have a chance of renewing the contract at a higher daily rate. Furthermore, the company has pretty low leverage compared to its peers with its debt to capital ratio at 26%, far lower than the industry average of around 35%.

4. SeaDrill Limited (NAS: SDRL)
Seadrill derives 66% of its revenue from deepwater drilling in FY2011 and has a mix of deepwater floaters, high-spec Jackups, and newbuilds. A huge advantage in investing in Seadrill is its aggressive dividend yield, which is currently at 9%. Its fleet consists of 66 offshore rigs, with 19 of them being newbuilds. It also has stakes in other offshore drilling companies such as Archer Limited (40%), SapuraKencana (6%), Varia Perdana (49%), Asia Offshore Drilling (34%), and Sevan Drilling ASA (29%). Its EBITDA margin and operating margin over the last two years has also been above those of its peers at 53% and 41%, respectively. However, similar to Ocean Rig, Seadrill has a tremendous amount of debt with its debt to capital ratio over 60%, while its peers are averaging around 35%. While in a rising daily rate environment Seadrill will do well with its leverage, it will suffer if and when the industry suffers a slowdown.

5. Noble Corp. (NYS: NE)
Noble Corp is a leading player in the offshore drilling industry with an existing fleet of close to 70 rigs. The fleet consists of nine drillships, 16 semi-submersibles and 43 jackups. In FY2011, it derived 61% of its revenue from deepwater drilling and will be a benefactor from the uptrend in daily rates of ultra deepwater drilling rigs.

In terms of geographical reach, Noble Corp is everywhere. It has 19 rigs in the Middle East, 12 rigs in Mexico, 10 rigs in Brazil, 10 rigs in the Gulf of Mexico, nine rigs in the North Sea, two rigs in the Mediterranean, one in Alaska, and five in other regions.

6. Transocean (NYS: RIG)
Transocean currently derives 59% of its revenue from the deepwater drilling sector. Unfortunately for the company, it was involved in the Macondo oil spill in the Gulf of Mexico in 2010. As a result, there is a lot of uncertainty surrounding the company. However, Transocean is definitely a force to be reckoned with in the offshore drilling market. It has the largest fleet of offshore rigs, with 130 rigs on water and five newbuilds. Furthermore, it has a large cash pile of close to US$4.0 billion and generates close to US$2.0 billion in cash from operations every year. This makes it a prime target to renew and upgrade its existing fleet of UDW rigs to take advantage of the latest uptrend in daily rates. Unfortunately, the Macondo event and its ensuing troubles will probably keep its share price depressed for the foreseeable future.

Source

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Maersk Bags Gulf of Mexico Contract for Its Under-Construction Drillship

More than one year prior to delivery Denmark’s Maersk Drilling has signed a contract with a major oil company for the first in a series of four identical ultra deepwater drillships currently under construction.

The contract duration is three years and commencement is expected by end 2013 upon delivery from Samsung Heavy Industries in South Korea and mobilization to the US Gulf of Mexico. The estimated contract value is USD 610 million including mobilization, but excluding cost escalation and performance bonus.

“With the signing of this contract for the first of our four ultra deepwater newbuild drillship we are able to add another USD 610 million to our contract backlog providing a solid basis for our further growth,” says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board of the A.P. Moller – Maersk Group. “The US Gulf of Mexico remains a focus area of Maersk Drilling, and we are pleased to enhance our presence in this attractive market. With permitting activity normalizing after the Macondo incident in 2010 and the lease sales in the region, we believe the fundamental demand for our services in this region is in place”.

Maersk Drilling has performed deepwater operations in the US Gulf of Mexico since 2009 with the ultra deepwater semi-submersible MÆRSK DEVELOPER.

Facts about the four newbuild ultra deepwater drillships

In 2011 Maersk Drilling ordered four ultra deepwater drillships at Samsung Heavy Industries in South Korea. The rigs will be delivered in 2013 and 2014. The total investment was USD 2.6 billion.

The design and capacities of the new drillships include features for high efficiency operation. Featuring dual derrick and large subsea work and storage areas, the design allows for efficient well construction and field development activities through offline activities.

With their advanced positioning control system, the ships automatically maintain a fixed position in severe weather conditions with waves of up to 11 metres and wind speeds of up to 26 metres per second.

Special attention has been given to safety onboard the drillships. Equipped with Multi Machine Control (MMC) on the drill floor, the high degree of automation ensures safe operation and consistent performance. Higher transit speeds and increased capacity will reduce the overall logistics costs for oil companies.

Source

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Recap: Worldwide Field Development News (May 11 – May 17, 2012)

This week the SubseaIQ team added 4 new projects and updated 19 projects. You can see all the updates made over any time period via the Project Update History search. The latest offshore field develoment news and activities are listed below for your convenience.

Europe – North Sea RWE Begins Development Drilling on Breagh May 17, 2012 – RWE Dea has begun development drilling at the Breagh gas field in the Norwegian sector of the North Sea. The ENSCO 70 (250′ ILC) has been deployed to start the Breagh development drilling program. Previously drilled wells 42/13-3 and 42/13-5Z, which were suspended for future use as early development wells, will be re-entered and sidetracked to re-drill the reservoir interval. Including the recompletion of these two wells, up to eight development wells are expected to be drilled, completed and put on production over the next two years. First gas from Breagh is expected in the second half of 2012. Project Details: Breagh Marathon Takes Reins at Vilje Field May 16, 2012 – Statoil has transferred operatorship of the Vilje field in the North Sea to Marathon Oil. The agreement does not involve any change of stakes in Production License 036D. Project Details: Alvheim Total Begins Elgin Well-Intervention Operation May 15, 2012 – Total has started a well-intervention operation to stop the leak from the G4 well at its Elgin complex in the North Sea. The well intervention operation consists of pumping heavy mud into the well from the main support vessel, the West Phoenix (UDW semisub) drilling rig via a temporary pipeline connected to the G4 wellhead. Depending on the precise conditions inside the well, the operation and subsequent observation period will last a few days before it is possible to confirm whether the operation has been a success, Total said. Project Details: Elgin/Franklin BP Gets Govt Nod to Drill Snadd Outer Prospect May 15, 2012 – BP has received consent to use the Polar Pioneer (mid-water semisub) drilling facility to drill exploration well 6507/3-9 in the Norwegian sector of the North Sea. Well 6507/3-9 is part of Production License 212 E and the well lies in a water depth of 1,194 feet (364 meters). The objective of the well is to investigate a prospect named Snadd Outer. Drilling will commence soon. Project Details: Skarv/Idun Statoil to Commence Drilling Campaign in Barents Sea May 14, 2012 – Statoil and partners have established a plan to advance exploration drilling in the Skrugard area. The exploration campaign will comprise four new prospects and is scheduled to commence in late 2012. The objective of the drilling campaign is to follow up on the Skrugard and Havis discoveries and to test further upside potential of the area. The four prospects will be drilled back-to-back with the West Hercules (UDW semisub) drilling rig, which will be winterized to meet the weather conditions in the Barents Sea. The drilling campaign will start in PL532 with the Nunatak prospect due to be spud in December this year. Then the rig will proceed to the Skavl prospect located in the same license, and thereafter to the Iskrystall prospect in the neighboring licence PL608. The fourth prospect to be drilled will be announced at a later stage. Premier Spuds Carnaby Prospect May 14, 2012 – Premier commenced drilling at the Carnaby exploration well 28/9-5 in the North Sea. The well is being drilled by the Sedco 711 (mid-water semisub) and is being managed by Applied Drilling Technology International. Drilling operations are expected to take about 25 days. Project Details: Carnaby Providence Confirms Significant Reservoir Potential at Barryroe May 11, 2012 – Providence Resources has reported that the 48/24-10z appraisal well, the second well to be tested in the basal sands and the sixth well to be drilled at the Barryroe oil discovery, has successfully logged hydrocarbons. In addition to carrying out comprehensive flow testing, significant data acquisition was also carried out utilizing modern wireline equipment. The newly acquired wire-line log data has now been used to evaluate the potential to directly map the hydrocarbon bearing basal reservoir sands, which were successfully tested in the most recent Barryroe 48/24-10z well. This modeling has confirmed that the basal reservoir sandstone package has a defined seismic response which can be detected clearly within the inverted 3D seismic volume. A preliminary review of the inverted 3D seismic volume indicates that the reservoir sequence is widely developed in the Barryroe area. Detailed interpretation of the inverted seismic data has now commenced and will be used to better define the static oil in place estimates for the Barryroe accumulation. Project Details: Barryroe Africa – Other Eni Scores Big in Coral-1 Discovery May 16, 2012 – Eni has made a “giant” natural gas discovery in Area 4, offshore Mozambique, at the Coral-1 well. The Coral discovery is estimated to contain between 7 and 10 Tcf of gas in place, exclusively located in Area 4. With these new results at Coral-1, Eni estimates that the resources range between 15 and 20 Tcf of gas in place. The new discovery further increases the total potential of the Mamba complex, which holds between 47 and 52 Tcf of gas in place, according to recent estimates. The discovery well encountered a total of 246 feet (75 meters) of gas pay in single high-quality Eocene sand. This discovery is particularly significant since it confirms a new exploration play, which is independent of those drilled so far in previous Mamba wells. Eni will run a production test on the Coral-1 discovery. Project Details: Coral (ENI) BG Makes Mzia Discovery May 16, 2012 – BG Group has made a gas discovery in the Mzia-1 exploration well in Block 1 offshore southern Tanzania. Mzia-1 is the company’s first discovery within the deeper Cretaceous section and opens an extensive new play fairway within Blocks 1, 3 and 4, to complement the now proven Tertiary fairway. Preliminary evaluation of the results indicates 180 feet (55 meters) of natural gas pay in good quality sands. An extensive logging program has been completed, including the acquisition of pressure data and gas samples. The well has de-risked a number of adjacent Cretaceous prospects, which could form part of a future Mzia hub, stated the operator. These prospects are expected to be tested in a future appraisal program to be defined following incorporation of data from this new well and 3D seismic. The new resources proven by Mzia and the potential of adjacent prospects are currently under evaluation. Project Details: Mzia BG Group to Spud Papa Prospect in June May 16, 2012 – BG Group plans to spud the Papa-1 prospect in Block 3 offshore Tanzania in June 2012. The operator will use the Deepsea Metro-1 (DW drillship) to perform drilling operations in a water depth of 9,843 feet (3,000 meters). Project Details: Papa S. America – Brazil OGX Declares Waimea Complex Commercial May 15, 2012 – OGX has presented to the National Petroleum, Natural Gas and ANP a Declaration of Commerciality for a portion of the Waimea Complex, of which the proposed new designation is Tubarao Azul field in Block BM-C-41. This declaration of commerciality occurred after assessing results gathered during the Extended Well Test (EWT). The EWT, conducted through the OGX-26HP well, has confirmed excellent perm porosity reservoir characteristics. The development plan estimates a total recoverable volume of 110 million barrels of oil from Tubarao Azul field over the concession period’s production phase. Australia Apache Agrees to Sell LNG to Tohuku Electric Power Company May 17, 2012 – Apache and partners have agreed to sell LNG from the Chevron-operated Wheatstone project in Western Australia to Tohuku Electric Power Company (THE). The Wheatstone partners and THE signed a Heads of Agreement to supply up to 1 million metric tons per annum (MTPA) of LNG for up to 20 years. Through its 13-percent share in Wheatstone, Apache Julimar Pty Ltd, an Apache subsidiary, will supply up to 0.13 MTPA, or approximately 19 million cubic feet of natural gas per day, to THE. Wheatstone is under development; the foundation phase of the project will include two LNG trains with a combined capacity of 8.9 MTPA and a domestic gas plant. Project Details: Wheatstone Origin Disappointed by Thistle May 15, 2012 – Origin Energy will plug and abandon its Thistle-1 exploration well after reaching a total depth of 7,431 feet (2,265 meters). No shows were encountered in the objective Waarre sandstones. The well was drilled by the Stena Clyde (mid-water semisub). Project Details: Thistle FMC to Supply Offshore Loading Arm Systems for Prelude Development May 14, 2012 – FMC Technology will supply offshore loading arm systems as part of the Shell Prelude FLNG project. FMC’s scope of supply includes seven offshore footless marine loading arms, four for liquefied natural gas and three for liquefied petroleum gas. FMC’s Loading Systems business in Sens, France will design and manufacture the equipment. The Prelude facility will be built by TSC at the Samsung Heavy Industries shipyard in Geoje, Korea. It will measure 1,600 feet (488 meters) from bow to stern and weigh around 600,000 tonnes when fully loaded. It will be moored over 120 miles (200 kilometers) from land and will produce gas from offshore subsea fields. The facility will treat and liquefy the gas onboard via a cooling process before storing and export it via conventional LNG carriers. Project Details: Prelude Black Sea Melrose to Acquire Seismic Data offshore Romania in June May 17, 2012 – Melrose plans to commence a work program over its Muridava concession offshore Romania in June 2012. The company will acquire 474,442 acres (1,920 square kilometers) of 3D seismic, sufficient to cover both blocks. A contractor has been selected to conduct the seismic program and detailed contract negotiations are ongoing. Melrose Obtains Reservoir Data Program over Galata May 17, 2012 – Melrose Resources has recently conducted a reservoir data acquisition program on the shut-in Galata field to confirm the remaining reserves and gather information required to update the gas storage feasibility study. The results of the program were positive and confirmed remaining reserves of at least 6 Bcf and more limited aquifer movement than previously predicted. Furthermore, the field data indicates that the field could be placed back on production as early as next year, which will be discussed with the Bulgarian authorities over the forthcoming months. The interpretation of the recent 3D seismic survey over the Galata Block is being finalized and a number of structures have been identified within three high graded areas in the central area of the concession. The interpretation is expected to complete in June when the Company will be in a position to provide details of the survey findings and confirm the future drilling plans. An independent prospective resource report is also being prepared for the block by the Company’s reserves auditors. Project Details: Galata Area N. America – Canadian Atlantic Statoil Preps for Newfoundland Drilling Campaign May 14, 2012 – Statoil has reached an agreement to use Seadrill’s West Aquarius (UDW semisub) to conduct exploratory drilling offshore Newfoundland. Starting late 2012, the operator will begin a three-well drilling program, including two exploration wells in the Flemish Pass Basin, as well as an exploration well in the Jeanne d???Arc Basin. S. America – Other & Carib. Borders & Southern Spuds Stebbing Prospect May 14, 2012 – Borders & Southern has spud exploration well 61/25-1 at the Stebbing prospect in the Falkland Islands. The Stebbing prospect is a thrust cored anticline structure with an area of 33 square miles (85 square kilometers). Objectives comprise Tertiary and Upper Cretaceous sandstone reservoirs. The well duration is estimated to be 49 days. Project Details: Stebbing Africa – West Afren Hits Additional Pay in Ebok May 17, 2012 – Afren announced that the Ebok North Fault Block exploration well encountered 370 feet (113 meters) true vertical thickness of net oil pay in excellent quality reservoir sands. The Ebok NFB exploration well was spudded on April 12, 2012 by Afren and Oriental Energy Resources, and reached a total vertical depth of 4,320 feet (1,317 meters), with the Transocean Adriatic lX (350′ ILC) drilling rig. The well was targeting a separate fault block structure located to the north of the main Ebok field, and encountered good quality oil in the same Tertiary reservoir sands equivalent to those that have been developed and are in production at the main Ebok field development. The well will be suspended while the partners determine the optimal development solution. Project Details: Greater Ebok-Okwok Complex Tap Oil Updates Ops in Accra Contract Area May 16, 2012 – The Ministry of Energy, Ghana has granted Tap Oil Limited a 12-month extension of the Initial Exploration Period under the Petroleum Agreement in respect of the offshore Accra Contract area. The IEP now ends on Sept. 23, 2013, by which the commitment well must be drilled. New 3D seismic was acquired over the deepwater part of the Contract Area in early 2011. Interpretation of the data at hand indicates multiple large prospects within both the post-rift Upper Cretaceous fan sands (the same play type as Jubilee) and pre-rift Lower Cretaceous rotated fault blocks (the same play type as the Espoir and Baobab oil fields). To date several prospects and leads have been mapped and have unrisked prospective resources of greater than 3 billion barrels. It is anticipated that the commitment well will likely target a large, deepwater, Jubilee look-a-like trap with prospective resources in the range of half a billion barrels. Well planning is in progress with various rig options currently being investigated. Rialto Energy Granted Exclusive Exploitation Area over Gazelle May 15, 2012 – Rialto has received formal confirmation from the government of Cote d’Ivoire that the company has been granted an Exclusive Exploitation Area over the Gazelle field on Block CI-202. The EEA granted Rialto with the right to produce hydrocarbons from Gazelle over a tenure period of 25 years. The Gazelle field is the current focus of an initial three-well drilling campaign by Rialto, which commenced with the drilling of the Gazelle-P3 development well in March 2012 and which will be followed by further development and exploration drilling in and around Gazelle during the coming months. The current drilling program is aimed at converting the 58 MMboe of gross mean contingent resources at Gazelle to reserves as well as testing the high impact Chouette oil prospect, which contains a gross mean prospective resource of 84 MMbbls. Project Details: Gazelle Chariot Drills Duster in Tapir South May 14, 2012 – Chariot O&G will plug and abandon its Tapir South pre-salt exploration well (1811/5-1) in the Namibe Basin, offshore Namibia. The well reached a total depth of 16,005 feet (4,789 meters) without encountering commercial hydrocarbons. The well encountered 568 feet (173 meters) of net reservoir sand of Cretaceous age, including two zones in excess of 98 feet (30 meters) with average porosities of 24 percent. Carbonate intervals were also penetrated with porosities of up to 18 percent over a net interval of 92 feet (28 meters). Chariot said that detailed analyses will be conducted on the data collected during the drilling of Tapir South and the information will be used to calibrate the firm’s existing data set. A resource update of the remaining prospectivity in the block will be provided once this evaluation is complete. Project Details: Tapir South N. America – US GOM ClampOn to Provide Detectors for Tubular Bells Project May 14, 2012 – ClampOn will supply multiple subsea acoustic sand vibration detectors and PIG detectors for the Tubular Bells project. The development is slated for production in 4Q 2014. Project Details: Tubular Bells Asia – SouthEast PTSC M&C to Construct Wellhead Platforms for White Lion Project May 11, 2012 – PTSC M&C has won a major detailed engineering, procurement, construction, installation, hook-up and commissioning contract. The scope of work includes two wellhead platforms, Thang Long and Dong Do, with topsides weighing about 1,100 tonnes each, 9-mile (15-kilometer) infield pipeline and 87-ton PLEMs and PLET. The project completion is scheduled for August 2013. The White Lion field is slated to come online in October 2013. Su Tu Trang Jacket, Topside Leaves Yard for Field Installation May 11, 2012 – Thang Long JOC reported that the Su Tu Trang jacket and topside for the White Sealion field has sailed away from the PTSC M&C fabrication yard in Vung Tau City. Su Tu Trang is a turn-key project which was awarded to PTSC M&C in March 2010 by Cuu Long JOC for engineering, procurement, construction, installation, hook-up and commissioning of a 1,400-ton topside, 1,200-ton jacket, 1,000-ton jacket pile, 19.5 kilometer-long infield pipeline and the additional modification for the existing Su Tu Vang Central Processing Platform. The detailed design work was completed in November 2011 by Nippon Steel Engineering Company Limited (NSEC) under the supervision of PTSC M&C. Overall project management; procurement and fabrication was carried out and managed by PTSC M&C as part of its turn-key, EPCI contractor???s responsibilities. PTSC M&C is now targeting the finish date of offshore installation campaign to be in early July 2012.

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UK: Nautronix to Supply Acoustic Positioning System for Noble’s New Drillship

Nautronix have secured another order for the supply of their NASDrill RS925 deepwater acoustic positioning system for Noble Corporation’s fourth new ultra-deepwater drillship. In 2011, Nautronix was awarded the contracts for supplying their NASDrill RS925 system for Noble’s first three new drill ships.

All new vessels will be constructed at Hyundai Heavy Industries shipyard in Ulsan, Korea and will be based on a Hyundai Gusto P10000 design. The rigs will have DP-3 station keeping abilities and the capacity to handle two complete BOP systems allowing for operation in water depths of up to 12,000 feet.

Mark Patterson, Nautronix CEO, commented “This order further strengthens our relationship with Noble Corporation and I believe that it demonstrates their confidence in our NASDrill RS925 system”.

NASDrill RS925 has been designed specifically to meet the requirements for a reliable, stable DP and position reference system for demanding offshore operations, in particular deepwater drilling vessels.

The system combines the two most accurate deepwater acoustic positioning technologies – Short Baseline (SBL) and Long Baseline (LBL) – to calculate multiple independent position solutions providing reliable, repeatable input to the vessel DP system; with SBL mode providing accuracies of 0.15% slant range and LBL mode providing accuracies up to 1m RMS independent of water depth.

The NASDrill RS925 system is supplied with all external interfacing to the Dynamic Positioning System for automatic station keeping and can be used as part of an integrated acoustically-aided INS positioning solution.

The system is also fully upgradable to use NASeBOP and NASNet® (Nautronix unique underwater GPS).

As with all Nautronix leading commercial acoustic systems, NASDrill RS925 utilises Nautronix proprietary ADS² (Acoustic Digital Spread Spectrum) broadband signalling technology which has been proven, with over ten years of successful subsea operations, to provide superior accuracy, repeatability and reliability for dynamic positioning of vessels during deepwater drilling operations.

Source

Ocean Rig Corcovado Starts Drilling Offshore Brazil

Ocean Rig UDW Inc., a global provider of offshore deepwater drilling services, today announced that on May 15, 2012,  its Ocean Rig Corcovado drillship completed the general testing of equipment as required by Brazil’s oil giant Petrobras.

The drillship has now commenced revenue-generating drilling operations in Brazil. The Ocean Rig Corcovado will stay with Petrobras for three years on a contract worth approximately $650 million.

This is the second Ocean Rig’s drillship under a contract with Brazil’s state controlled Petrobras. The company’s Ocean Rig Mykonos drillship had started drilling offshore Brazil in March this year under a similar contract.

Ocean Rig’s drillships are based upon the Saipem 10K design, and built by a proven shipyard, Samsung Heavy Industries. They are a successful and well proven design complete with full dual derrick enhancements to ensure optimal operational efficiency.

The company owns and  operates 9 offshore ultra deepwater drilling units, comprising of 2 ultra deepwater semisubmersible drilling rigs and 7 ultra deepwater drillships, 3 of which remain to be delivered to the company during 2013.

Source

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Seadrill Expects Stronger Second Quarter after Robust 1Q 2012

by  Jon Mainwaring

Press Release

Monday, May 14, 2012

Norwegian deepwater drilling company Seadrill said Monday that it expects earnings for the second quarter of 2012 to be favorably affected by the starting up of operations in April and June of its ultra-deepwater semi-submersible rigs West Leo (UDW semisub) and West Capricorn (UDW semisub).

Reporting its first quarter results, the firm said that it also expects to receive a full quarter of earnings from its harsh environment jack-up West Elara (490′ ILC) – which began operations for Statoil in March.

West Leo began its contract with Tullow Oil offshore Ghana in April, while West Capricorn is due to begin operations for BP in the US next month.

For 1Q 2012 Seadrill reported operating profits of $456 million, compared with $430 million for 1Q 2011. However, net income was lower than for 1Q 2011, at $480 million compared with $934 million, on account of a one-off $477 million gain last year in connection to the deconsolidation of Seadrill’s subsidiary Well Services.

Total revenues for the three month period to March 31 were broadly in line with last year at $1,050 million (1Q 2011: $1,100 million).

“We are pleased to report another solid quarter for Seadrill reflecting a strong underlying operational performance,” said Seadrill Chief Executive Officer Alf Thorkildsen.

“Furthermore, the outlook and fundamentals for the oil and gas industry remain strong. Encouraging exploration successes in established as well as frontier basins are leading to an increasing backlog of appraisal and development drilling projects. These strong fundamentals support the expectation of continued strength in all sectors of the contract drilling industry for the foreseeable future. As a consequence we have ordered six newbuilds in the last three months and the Company now has 18 drilling units under construction.”

A former engineer, Jon Mainwaring is an experienced journalist who has written about the technology, engineering and energy industries. Email Jon at jmainwaring@rigzone.com.

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Strong Demand for UDW Drillships Spurs Seadrill to Order One More from SHI (South Korea)

Seadrill continues to see strong demand for modern ultra-deepwater (UDW) drilling rigs driven by high oil prices and large deep-water discoveries and increased development drilling. Specific interest, mainly from operators in West Africa and the Americas, demonstrate a trend towards higher day rates and longer term contracts.

With yard costs at very attractive levels and Seadrill’s proven track record with respect to successful new build construction the Company today announced the order of a sixth drillship from Samsung Heavy Industries (SHI) with delivery in the second quarter of 2014. The expected total project cost is less than USD600 million, in line with the 5 units under construction and with delivery in 2013 and 2014. The yard contract was originally between a party related to Seadrill’s major shareholder Hemen Holding and Samsung, as part of a larger shipyard deal, but Seadrill has been given the right to take over the contract at original terms.

Seadrill’s current new build program now includes 17 units: 6 ultra deep-water drillships, 1 harsh environment semi submersible, 5 tender rigs and 5 jack ups, all to be delivered in the period from Q4 2012 to Q1 2015. In addition, Seadrill has received a fixed price option for a further ultra deep-water drillship. The six drillships under construction are of the same design and will have a hook load capability of 1,250 tons and a water depth capacity of up to 12,000 feet targeting operations in areas such as the Gulf of Mexico, Brazil and West and East Africa. Also, these units will be outfitted with seven ram configuration of the Blow out Preventer (BOP) stack and with storing and handling capacity for a second BOP.

CEO of Seadrill Alf Thorkildsen says:

“With the available capacity in 2013 and 2014 Seadrill is uniquely positioned among its peers to take advantage of strong demand for drilling services with high dayrates and longer charter contracts. We will continue to aggressively build Seadrill’s earnings and further expansion of the building program is expected in the months to come. Together, these developments provide for continued value creation and an increased dividend capacity.”

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Cyprus: Ocean Rig Receives LoA for its UDW Drillship

Ocean Rig UDW Inc., a global provider of offshore deepwater drilling services, headquartered in Cyprus, today announced that it has received a Letter of Award for its ultra deepwater drillship “Ocean Rig Olympia”, from a major oil company.

The Letter of Award is for a three- year contract for drilling offshore West Africa, with an estimated backlog of approximately $652 million. The Letter of Award is subject to completion of definitive documentation and receipt of regulatory approvals. The  contract is expected to commence in direct continuation of the Ocean Rig Olympia’s  existing contract in West Africa. The customer would have the option to extend the  contract for two periods of one year each, with the first option exercisable within one  year from the commencement date under the drilling contract, and the second option  exercisable within one year after the date of exercise of the first option.

With this latest fixture, Ocean Rig no longer has any rigs available in 2012.

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