No new rig contracts for Noble. Dayrates talks underway

Offshore driller Noble Corporation has issued a monthly rig fleet status report, where, under the section titled New Contracts/Extensions/Modifications/Letters of Intent, the company posted this: “Nothing to Report”.

While there are no new contracts on the horizon, Noble’s current contracts are not safe either.

As the oil prices have fallen to historic lows – a 12-year low on Friday – oil companies have tightened their belts, decided to spend less on exploration and thus, hurt the drillers who depend on oil firms’ capex.

The drillers have now resorted to various tactics, such as warm stacking, cold stacking, scrapping their less capable rigs, in order to reduce costs and survive the downturn, at the same time praying for the oil prices to go up.

There is also a pressure from the existing clients looking to either exit already signed contracts or reduce the dayrates. In addition, the drillers are now being forced to defer newbuild deliveries, keeping the rigs in the shipyards until the market conditions improve.

Noble is not immune to the market situation. The company in December lost its contract for the Noble Discoverer drillship after Shell decided to terminate it earlier than expected, as the oil major abandoned its Alaska drilling plans.

While Shell paid the company for the remaining term, the Noble Discoverer is now being mobilized to Singapore where, due to a lack of contract opportunities, is expected to be scrapped.

The driller is also in discussions with Freeport-McMoRan, with which it has two drilling rigs under contract by July 2017, and November 2017.

As the oil company recently revealed plans to reduce number of rigs it uses in the Gulf of Mexico, Noble on Thursday said it was willing to discuss restructuring of existing contracts – for the Noble Sam Croft and Noble Tom Madden drillships – probably meaning a dayrate reduction, as the two rigs command the highest dayrates in Noble’s fleet. The dayrate for the Noble Sam Croft is $643.000, and $637.000 for Tom Madden.

In 2015, Noble cut dayrates for jack-ups operating for Saudi Aramco. However, the dayrates downfall will probably follow the oil price curve.

Given the current market conditions, Noble said on Thursday, the company is currently in discussions with the customer to determine operating rates for 2016 for the four rigs it has under contract with the Saudi oil giant.

Offshore Energy Today Staff