Rowan faces rig terminations, bags new jack-up deals

Drilling contractor Rowan Companies is facing a couple of early terminations of drilling contracts while also winning new jack-up deals. 

Rowan confirmed in its latest fleet status report on Tuesday that its customer Cobalt will pay approximately $96 million in exchange for the right to terminate the contract for the 2014-built ultra-deepwater drillship Rowan Reliance as early as March 31, 2017.

This deferred revenue is expected to be amortized from April 1, 2017, to February 1, 2018, at the latest. If operations continue after March 31, 2017, the dayrate will be reduced to approximately $262,000. The drillship is working for Cobalt in the U.S. Gulf of Mexico.

Further, according to the fleet report, the 2010-built jack-up rig Rowan Viking has been awarded six 90-day priced options with dayrates ranging from $180,000 – $230,000 by Lundin in Norway. The rig will be available in November 2017.

The company also reported that the 2002-built jack-up rig Rowan Gorilla VII has been stacked since mid-August and will remain stacked until it goes to work for Perenco in mid-November. Apache paid a standby rate of $153,000 from mid-August until mid-October and a lump sum termination fee of approximately $9 million.

The rig’s contract with Perenco was awarded at an undisclosed dayrate below $100,000 with an estimated duration of 60 to 200 days with a priced option of 15 to 110 days. The work is expected to start in mid-November.

Further, ConocoPhillips gave notice of its intent to Rowan to terminate the contract for convenience for the 2000-built jack-up Rowan Gorilla VI at the end of 2017. Upon termination, ConocoPhillips will pay $250,000 per day for the remaining term of the contract through March 2018.

Should the company source alternative work for the rig, the $250,000 dayrate will be offset by any contract revenues in excess of $100,000 per day.

In addition, the 1998-built jack-up rig Rowan Gorilla V has been awarded a contract extension from Total in Norway of eight months plus six-month priced option at an undisclosed dayrate below $100,000. The rig will have expected off rate time in 3Q 2017 for repairs and inspections.

Finally, the driller has a binding agreement to sell the 1984-built jack-up Rowan Gorilla II as a non-drilling unit. The agreement is expected to close in the fourth quarter of 2016.

Offshore Energy Today Staff