Seadrill racks up over $400 million in contracts during first quarter

Offshore drilling contractor Seadrill Limited has won over $400 million in new deals during the first quarter of 2021 bringing the company’s total backlog to $2.1 billion.

Seadrill said on Thursday in its first-quarter update that the deal for the West Tellus drillship with Petrobras was shortened.

The deal for the drillship was arranged in November 2019 and was supposed to end in December this year. Due to the earlier termination of the deal, the West Tellus will be working for Petrobras until September 2021 under a $211,311 dayrate.

On the positive side, Seadrill was able to win a contract for two wells and additional intervention work plus two optional wells with Shell Brazil in direct continuation to the Petrobras contract.

This deal adds a backlog contribution of $23 million and the West Tellus will work for Shell from October 2021 until the end of January 2022.

Seadrill won another deal in Brazil during the first quarter, this time with Equinor, as the Norwegian oil major awarded the West Saturn a four-year firm contract, with four one-year options.

The contract was awarded for work on the Bacalhau offshore field and is expected to begin in April 2022 and add a backlog contribution of $354 million.

Currently, the West Saturn is working for ExxonMobil on a $225,000 dayrate and will complete work for the supermajor in November 2021.

The final drillship to find work during the first quarter of the year was the West Neptune. Houston-based oil and gas player Talos Energy hired the drillship from Seadrill for a well on the Tornado field, located in the U.S. Gulf of Mexico.

According to the oil company, the well will provide additional production as part of the first-ever deepwater intra-well waterflood project. Work on the well started this month and will end in July 2021.

But that was not all for the West Neptune as Seadrill secured a further contract with Kosmos for one well firm set to start in direct continuation of the Talos contract. Work for Kosmos will be done during July and August. Dayrates for both deals were undisclosed.

The only Seadrill semi-submersible drilling rig to have some luck with new deals was the West Hercules. Equinor exercised options for the rig to work in Norway adding $34 million to Seadrill’s backlog. It is worth noting that the rig is also currently on contract with Equinor.

According to the fleet status report, the West Hercules will work for Equinor in Norway and the UK until June 2022, with options included in that. The dayrate for the rig on six different back-to-back deals range from $275,000 to $315,000.

As for the total backlog of the company, Seadrill said that, as of 20 May 2021, it stands at $2.1 billion. That number, according to the offshore driller, is one of the highest among its peers.

Seadrill is currently contracted to work across all major oil and gas basins in the world with 13 rigs in operation globally, including in the Arabian Gulf, the Americas, and Norway.

The company further stated that it was making ‘good progress’ on its financial restructuring. The comprehensive restructuring plan will likely require substantial impairment and losses for current shareholders.

“As a result, the company currently expects that shareholders are likely to receive minimal recovery for their existing shares”, Seadrill said.

To remind, Seadrill is currently under Chapter 11 bankruptcy protection. At the point of filing, Seadrill had approximately $650 million in cash and did not require debtor-in-possession financing.

The rig owner has recently asked creditors to write off more than 85 per cent of its debts in exchange for a 99 per cent stake in the reorganized company.