Dolphin Drilling getting over $20M for rig cancellation

Norway-headquartered offshore drilling contractor Dolphin Drilling has struck a deal with a North Sea operator to receive a compensation fee for the early termination of a drilling campaign one of its semi-submersible rigs was hired to carry out on the UK Continental Shelf (UKCS).

The Borgland Dolphin rig, which came to Las Palmas a few months ago to spend about ten months at the Astican facilities for reactivation work related to its job in the UK, was scheduled to start its 137-day drilling contract with EnQuest after leaving the ship repair yard. The rig was expected to begin its journey to the United Kingdom during the first quarter of 2025.

Thanks to a letter of intent from December 2023, the Borgland Dolphin semi-submersible was slated to begin a 500-day drilling campaign in the UK after the 137-day assignment. However, Dolphin Drilling confirmed on November 20, 2024, that an agreement was reached with EnQuest regarding the early cancellation of the previously announced 137-day drilling program for the rig.

Commenting on the cancellation, EnQuest said: “At Kraken, the joint venture partners were unable to agree a 2025 asset drilling programme. EnQuest therefore has reached an agreement with Dolphin Drilling to terminate the rig contract, at a net cost of $14.6 million. This cancellation provides the opportunity to reduce 2025 net capex by c.$60 million. EnQuest plans to reschedule the Kraken infill wells as part of a wider programme of drilling in 2026.”

As a result, the operator will pay the rig owner a total fee of $20.75 million before the end of the month in exchange for the termination of the contract. While the Borgland Dolphin is still at Las Palmas in Gran Canaria, the contract cancellation has led the offshore drilling player to pause the planned class renewal until future contract opportunities have been assessed.

Bjørnar Iversen, CEO of Dolphin Drilling, commented: “While disappointing to receive the cancellation of the contract, we continue to focus our efforts on securing long term backlog for the Borgland. The timing of the termination allows us to pause the SPS, improve liquidity, and carefully plan the next steps.”

Even though the rig is currently tendered toward several campaigns with “attractive economics,” according to the company, no further commitments are planned to be made before the signing of a firm agreement. With a weight of 18,000 tons, a length of 109 meters, and a beam of 67 meters supported by 12 sturdy pillars, the Borgland Dolphin rig was built in 1977 by Harland & Wolff.

The rig received major upgrades in 1998/1999 and can accommodate 100 people. With a maximum drilling depth of 27,800 ft, the rig can carry out operations in water depths of 1,476 ft.

Dolphin Drilling, which decided to sell one of its rigs for recycling only months after acquiring it from Transocean, recently confirmed the start of a new assignment off the coast of India for another one of its semi-submersibles.