Is third time the charm for a drillship that previous owners cancelled twice?
Offshore drilling contractor Transocean has set the wheels into motion to acquire an interest in a high-specification, ultra-deepwater newbuild drillship, after entering into a new joint venture. Two orders for this drillship, placed with the South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering (DSME), were cancelled by previous owners.
Transocean revealed on Thursday that one of its subsidiaries – together with Perestroika and funds managed by Lime Rock Management – have formed a joint venture called Liquila Ventures, which agreed with DSME to purchase Hull 3623, the ultra-deepwater newbuild drillship formerly known as West Aquila, for approximately $200 million.
Furthermore, Transocean confirmed that it has made a $15 million noncontrolling investment in Liquila Ventures and maintains the exclusive right to market and manage the operations of the new drillship, which is expected to be delivered from DSME in the third quarter of 2023.
The offshore drilling giant highlighted that Hull 3623 is a high-specification, 1400 short-ton hook load, seventh-generation, ultra-deepwater drillship, which will have a large deck space, high load capacities, and will be dual-stack ready.
This drillship is one of two drillships – known as the West Aquila and the West Libra – that were originally ordered in 2013 by Seadrill. The deliveries of these two rigs were postponed in 2016 for the second quarter of 2018 and the first quarter of 2019. However, the offshore driller cancelled the contracts in March 2018 due to it going into Chapter 11 protection in September 2017.
After the cancellation by Seadrill, John Fredriksen’s offshore drilling firm Northern Drilling entered into agreements to buy the two rigs from DSME in May 2018. Thanks to this, the West Aquila and West Libra were supposed to be delivered in January and March 2021, respectively. However, by May 2021, the fate of these two rigs was still uncertain as neither was delivered to its new owner.
Come August 2021, it became clear that Northern Drilling would not become the new owner of the West Aquila drillship as it cancelled its resale contract with DSME due to the delay of delivery as well as a repudiatory breach of contract. As the firm also cancelled the order for the second drillship in October 2021, it was left with no rigs in its fleet.
Regarding Transocean’s outlook for its rigs, the offshore drilling contractor disclosed earlier this month that it expects the demand to remain high in the offshore drilling market, leading to a further improvement in day rates and fleet utilisation.