Norway: Statoil Orders Two cat D Rigs from Songa Offshore

Norway’s Statoil has awarded Songa Offshore with contracts for two newbuild “cat D” semisubmersible rigs. This award follows the agreement of July 2011 between Songa Rig AS and Statoil for the first two cat D rigs. The contract period is for eight years with an aggregated value of USD 2.66 Billion, with options for extensions of another 12 years (4×3 years) per rig.

“Statoil is committed to maximising the value of the NCS,” says executive vice president of Development and Production Norway in Statoil, Øystein Michelsen.

Michelsen continues,“We have a world-class project portfolio on the NCS with a robust production outlook. In addition to the safe and efficient development of new fields, we continue to step up our efforts to improve recovery from existing fields. We are convinced that new efforts are needed to secure a rig fleet that can handle the demanding tasks ahead.”

By increasing the capacity of category D rigs, the drilling and completion of production wells will be carried out at lower costs, more efficiently and in a safe manner. Reducing rig costs is important in order to realise the values in existing discoveries. New discoveries are often made close to existing fields. Fast development of such discoveries is necessary to utilise the existing infrastructure.

“In order to further revitalise the NCS, Statoil sees the need for adding new rig capacity. We are targeting the allocation of rigs and rig concepts to ensure more capacity in the market, and we are already seeing results of these efforts,” says chief procurement officer in Statoil, Jon Arnt Jacobsen.

One of the new category D rigs will be used on the Norne, Heidrun and Åsgård licences, the other will be part of Statoil’s strategic rig fleet and set up for year-round operations in the Barents Sea.

Asbjørn Vavik, CEO of Songa Offshore SE is pleased with the extended cooperation with Statoil: “We are proud to extend our industrial cooperation with Statoil, and look forward to assuming our position as a leading drilling contractor on the Norwegian Continental Shelf. The cat D rigs are the building blocks in Songa Offshore’s long-term strategy of advancing its position in the harsh waters of the North Sea and the Barents Sea. Songa Offshore will operate three semisubmersible rigs for Statoil from second half of 2012 and with the delivery of these four new cat D rigs in 2014/15, Songa Offshore will take a lead role in the region with a total of seven rigs carrying out exploration and production drilling for Statoil and its partners.”

Daewoo Shipbuilding & Marine Engineering Co (DSME) in South Korea will build the rigs at a fixed price of USD 570 million per unit, inclusive of optional Statoil upgrades that include Barents Sea winterization and other enhancements. The drilling package will be delivered by Aker Solutions.

The 20/80 payment terms are staggered by the delivery schedule. Statoil has granted Songa Offshore a bridge financing for the 20% down payment to DSME that is based on standard market terms and conditions. Further construction costs will be funded from a combination of ongoing cash flows in addition to traditional bank loan financing.

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Offshore Energy Today Staff, February 24, 2012