Transocean clinches $252 million contract for newbuild drillship

Offshore drilling contractor Transocean has been awarded a $252 million firm contract by BOE Exploration & Production for the newbuild ultra-deepwater drillship, the Deepwater Atlas.

The contract also includes a mobilization fee of $30 million, Transocean said on Thursday. Additionally, the contract provides for a significant performance bonus opportunity based upon agreed operating metrics.

This award results from the final investment decision of BOE and the Shenandoah working interest owners to sanction the previously announced Shenandoah project.

Shenandoah is located 160 miles off the coast of Louisiana in the Walker Ridge area of the Gulf of Mexico. Earlier this month, BOE signed a contract with Hyundai Heavy for the design, procurement, construction, and delivery of a floating production system (FPS) and its installation on the Shenandoah field.

The Shenandoah program comprises two phases. Once delivered from the shipyard, the Deepwater Atlas is expected to start operations in the third quarter of 2022, initially using dual blowout preventers (BOP) rated to 15,000 psi. The initial drilling program is expected to last approximately 255 days and result in approximately $80 million of contract drilling revenue.

Upon completion of the initial drilling program, a 20,000 psi BOP will be installed on the rig, making it Transocean’s second asset with a 20,000 psi-rated well control system. The BOP installation and commissioning is expected to last 45 to 60 days, contributing approximately $17 million of revenue.

Following the 20,000 psi BOP installation, the Deepwater Atlas will start the second phase of the project – the well completion program. This phase is expected to last approximately 275 days and contribute approximately $125 million of contract drilling revenue.

Transocean President and Chief Executive Officer, Jeremy Thigpen, “We are extremely pleased to have secured the maiden contract for the Deepwater Atlas; the first of our two 8th generation ultra-deepwater drillships that will enter the market in 2022, both of which will be outfitted for 20,000 psi ultra-deepwater well operations.

“We are very encouraged by the growing list, across multiple customers, of 20,000 psi opportunities in the U.S. Gulf of Mexico. And, with the only two assets in the world specifically designed to maximize efficiencies for 20,000 psi well completions, we are the undisputed market leader in this space, and thus excited about the future prospects for these state-of-the art assets”.

Transocean has previously been awarded a contract for drilling and completion services on the Shenandoah project while it was operated by LLOG. The contract was awarded in July 2020. In the meantime, LLOG’s interest and operatorship of the project were acquired by Beacon Offshore (BOE).

Come June 2021 and Transocean agreed with Sembcorp Marine’s subsidiary, Jurong Shipyard, on the delayed delivery of the Deepwater Atlas and Deepwater Titan. Jurong also agreed to accept deferred payment for both rigs.

Under this new agreement, the first drillship is expected to be delivered in December 2021 and the second in May 2022.

Following the agreement with the shipyard, Transocean then also agreed with Beacon that drilling operations on the Shenandoah project would start during the third quarter of 2022.