Rig deals lift Transocean’s total backlog to $8.6 billion

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Offshore drilling contractor Transocean has tucked under its belt new contracts and extensions in Norway and Australia for four rigs in its drilling fleet, raising its total contract backlog to $8.6 billion.

The total backlog in Transocean’s previous fleet status report, covering the period up to 9 February 2023, was about $8.5 billion, following new deals with an aggregate incremental backlog of approximately $1.9 billion. The offshore drilling giant had a lucrative 2022, securing the largest annual backlog since before the downturn, which hit the oil and gas industry and the offshore drilling market in 2014.

Within its new fleet status report, released on 18 April 2023, Transocean provided updated information for its fleet of offshore drilling rigs, detailing some of its recently announced deals with the aggregate incremental backlog associated with these fixtures of around $546 million while the company’s total backlog is approximately $8.6 billion. However, in its latest fleet status report the firm only disclosed deals for semi-submersible rigs while the previous one contained both semi-sub and drillship deals.

Transocean explains that the Transocean Enabler harsh environment semi-submersible rig was awarded a 19-well contract in Norway at a current rate of $377,000 per day, as adjusted for foreign currency exchange plus eight-well options. The rig’s drilling assignment is with Equinor at the Johan Castberg field and the total contract value is estimated at $415 million, with the fixed part accounting for $295 million. The new contract will come into effect between 1 April and 1 July 2024. Currently, the rig is on an eight-year contract with Equinor that expires on 1 April 2024.

The 2016-built Transocean Enabler semi-submersible rig was constructed at Daewoo Shipbuilding & Marine Engineering in South Korea as Songa Enabler. The rig was owned and operated by Songa Offshore prior to Transocean’s acquisition of the company in 2018. This rig is of GVA 4000 NCS design and can accommodate 130 people.

Furthermore, the offshore drilling contractor secured a nine-well contract in Norway at a rate of $350,000 per day for the Transocean Encourage harsh environment semi-submersible rig, which will mainly carry out operations in the Norwegian Sea. The rig’s drilling programme in the Norwegian Sea entails spinning the drill bit on the Tyrihans, Verdande, Andvare and Vigdis fields, with Verdande and Andvare expected to be tied into the Norne field. This drilling programme may be further extended to add six more wells. The estimated total value of the nine-well deal is around $191 million.

The rig is currently on an eight-year contract with Equinor that is slated to end on 1 December 2023 and the new drilling campaign with the Norwegian state-owned energy giant is expected to start on the same date. The 2016-built Transocean Encourage rig is of GVA 4000 NCS design and can accommodate up to 130 people. Just like the Transocean Enabler rig, this is a sixth-generation fully winterised, harsh environment semisubmersible rig with automated drilling control specially designed for operations on the Norwegian continental shelf. 

Moreover, the Transocean Endurance rig won a multi-well plug and abandonment contract in Australia at a rate of $380,000 per day plus options with an undisclosed operator. The estimated 240-day contract is expected to start in January 2024, contributing approximately $91 million in backlog – excluding fees for mobilisation. The series of available options could potentially keep the rig busy in Australia through the fourth quarter of 2025.

The 2015-built Transocean Endurance is a semi-submersible rig of GVA 4000 NCS design. It can accommodate 130 people. The rig’s maximum drilling depth is 27,887 ft. It was constructed at Daewoo Shipbuilding & Marine Engineering in South Korea.

In addition, Transocean’s customers exercised four one-well options in Norway at $338,000 per day, $358,000 per day, $358,000 per day, and $408,000 per day, respectively – as adjusted for foreign currency exchange – for the Transocean Norge rig, thanks to a 17-well contract, which the rig got in September 2022.

The contract at day rates between $350,000 and $430,000 was awarded after two oil and gas companies  – Wintershall Dea and OMV – entered into an exclusive partnership with Transocean for the use of the Transocean Norge rig for the drilling of all firm and additional potential wells in the period 2023 to 2027.

The 2019-built Transocean Norge sixth-generation Moss Maritime CS60 semi-submersible rig was constructed at Jurong Shipyard in Singapore. This rig can accommodate 150 people and its maximum drilling depth is 40,000 ft.

As 2022 enabled the offshore drilling market to emerge from the doldrums that swept across the sector in the previous eight years, offshore drilling contractors are anticipating a multi-year upcycle with further growth in rig demand bringing higher day rates and fleet utilisation.

This is hammered home by the new contract awards and expectations revealed not only by Transocean but also by its rivals: Seadrill, Vantage, Shelf Drilling, Diamond Offshore, Noble, and Valaris.

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