Diamond Offshore secures long-term deal in Brazil

As the offshore drilling market fundamentals continue to improve, Diamond Offshore has been awarded a new drilling programme with Petrobras in Brazil for the Ocean Courage rig.

Diamond Offshore's Ocean Courage rig
Diamond Offshore’s Ocean Courage; Source: Sembcorp Marine

In its 3Q 2022 report on Monday, Diamond said that the Ocean Courage semi-submersible rig had been awarded a four-year project with an unpriced option for an additional four years. The total estimated value of the firm term of the award is approximately $429 million, including a mobilization fee and the provision of certain additional services.

The new contract is expected to be signed imminently and begin late in the fourth quarter of 2023 after the conclusion of the rig’s current contract and new contract preparations. The 2009-built rig has been working for Petrobras since June 2021.

Bernie Wolford, Jr., President and Chief Executive Officer, stated: “This award is a testament to the exceptional performance of our crews and allows Diamond to continue serving the world’s largest operator of deepwater drilling rigs. This program is in addition to the $1.6 billion of backlog we reported as of October 1, 2022.”

Diamond’s contract drilling revenue for the third quarter totalled $190 million compared to $177 million in the second quarter of 2022. The increase in revenue was primarily driven by the Ocean BlackHawk beginning work for Woodside in Senegal during the quarter, the Ocean Apex and Ocean Patriot both benefitting from a full quarter of utilization, and the Ocean Patriot operating under terms of a contract extension with a favourable dayrate increase.

These increases in contract drilling revenue for Diamond were partially offset by the Ocean Onyx completing its contract in Australia and currently being stacked in Western Australia while the company continues to pursue prospects in the region. Contract drilling expense for the third quarter increased by 9 per cent, reflecting a higher operating cost structure for the Ocean BlackHawk in Senegal as well as the beginning of reactivation activities for the Ocean GreatWhite.

The Ocean GreatWhite, considered to be the largest rig of its type in the world, started its journey from Tenerife towards the UK North Sea in mid-October and reached the UK by the end of the month.

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Diamond Offshore’s net income for the quarter was $5.5 million, inclusive of a $23 million non-cash tax benefit, as compared to a net loss of $22 million in the prior quarter.

Remarking on the outlook for the offshore drilling market, Wolford commented, “Market fundamentals continue to improve in our industry, driving improved day rates and growing visibility of future demand.”

It is worth reminding that another drilling contractor has recently been re-approved as an official rig supplier and will be invited to participate in Petrobras’ upcoming rig tenders in Brazil.