Transocean bags $830M drilling contract with Chevron for newbuild drillship

Offshore driller Transocean has entered into an offshore rig deal with Chevron which will see Transocean lease “industry’s most capable ultra-deepwater drillship” to Chevron for Gulf of Mexico operations starting in 2021.

Transocean on Friday said it had signed a rig design and construction management contract, as well as a five-year drilling contract, with Chevron USA, Inc. for one of its two dynamically positioned ultra-deepwater drillships currently under construction at the Jurong shipyard in Singapore.

The drilling contract has an estimated backlog of $830 million, excluding mobilization and reimbursables. The drilling contract is subject to design, construction, and delivery requirements set forth in the construction contract, Transocean said. Transocean did not say how much it would need to invest further in the drillship construction.

The rig will be the first ultra-deepwater floater rated for 20,000 psi operations and is expected to start operations in the Gulf of Mexico in the second half of 2021.

Transocean ordered the two drillships of the Jurong Espadon 3T design back in 2014. They were originally scheduled to be delivered in the second quarter of 2017 and the first quarter of 2018. This was then put off for 2020.

Substantial termination fee

In the event of termination for convenience by Chevron, Transocean will be compensated for its incremental 20,000 psi subsea investment in the rig. Additionally, a termination for convenience occurring after April 2020, would result in “a substantial termination fee”, Transocean said.

According to Transocean, the drillship will feature the most advanced capabilities and state-of-the-art technology available including dual 20,000 psi blowout preventers, net hook-load capacity of three million pounds, 165-ton active heave compensating crane, and an enhanced dynamic positioning system. The rig’s high-reliability power plant will also be configured to comply with Tier III International Maritime Organization emissions standards, Transocean said.

“We are extremely pleased to announce that we have entered into an agreement with Chevron to construct and operate the industry’s most capable ultra-deepwater drillship,” said Jeremy Thigpen, President and CEO. “Transocean has a long and storied history of introducing new technologies that enable our customers to safely and efficiently access the world’s most challenging reservoirs. Adding to that history, we are proud to be delivering the industry’s first rig capable of drilling and completing wells requiring subsea equipment rated to 20,000 psi.”