Transocean optimistic about contracting after securing new rig jobs

Following new contract awards to three of its ultra-deepwater drillships, two of which are idle, and one harsh environment rig, Transocean is optimistic that oil prices will remain constructive and drive an increase in contracting through the rest of the year.

Transocean released its financial report for the first quarter of the year on Monday, revealing its net loss had increased sequentially but the loss was reduced in the year-over-year comparison.

Commenting on the company’s performance, Jeremy Thigpen, Transocean President and Chief Executive Officer, said: “We are encouraged by the increasing number of customer inquiries for both harsh-environment and ultra-deepwater projects.

“And, as the global economy begins to emerge from the pandemic, we are optimistic that oil prices will remain constructive, driving an increase in contracting activity as we move through the year”.

The result of this is visible in Transocean’s latest fleet status report, published last week, where new deals and options were announced for three drillships and one semi-submersible rig.

Namely, the Deepwater Asgard drillship has been awarded a three-well contract, plus a one-well option, in the U.S. Gulf of Mexico with Beacon. The drillship, which has been idle since January 2021, will work for Beacon until October 2021.

The first well is set to start in June and end in July the second one from July until August and the third one from August till October 2021. The day rates are mixed with $240,000 expected for the first and third stretch of time and $280,000 in the second.

Furthermore, BHP has exercised a one-well option for the Deepwater Invictus drillship in the U.S. Gulf of Mexico. With this option, instead of finishing operations for BHP in June 2021, the drillship is expected to complete operations in August 2021.

The day rate for the one-well gig is $215,000, which is an increase compared to the previous day rate with this operator, which totalled $157,000.

Next up, the Deepwater Nautilus semi-submersible, which has been idle since December 2020, has been awarded a three-well contract, plus three one-well options. A customer also exercised a one-well option for this semi-sub rig.

The fleet status report shows that the Deepwater Nautilus is under contract with POSCO from April until July 2021 and again from July until August 2021 with a day rate of $135,000.

Finally, Equinor has exercised a one-well option in Norway for the Transocean Norge semi-submersible rig. The option is scheduled to last from May until June 2021 with a day rate of $297,000.

Transocean also revealed in the report that Chevron postponed the start date of a contract for the Deepwater Titan drillship from H1 2022 to H2 2022. As a result, the end date has also been moved from H1 2027 to H2 2027.

In addition, Shell has reduced the day rate for the Deepwater Pontus drillship from $475,000 to $473,000. The rig is working for Shell in the U.S. Gulf of Mexico.

Furthermore, Petrobras has reduced the day rates for Deepwater Corcovado and Deepwater Mykonos drillships from $194,000 to $188,000 from the first one and from $213,000 to $207,000 for the second one.

On the other hand, Petrobras increased the day rate for the Petrobras 10000 drillship from $307,000 to $309,000.

Back to Transocean’s financial performance, the rig owner reported that its total contract drilling revenues were $653 million in the first quarter of 2021 compared with $690 million in the fourth quarter of 2020 and $759 million in the first quarter of 2020.

According to Transocean, its contract drilling revenues for 1Q 2021 decreased sequentially primarily due to the sale in the first quarter of one harsh environment rig previously operating in the fourth quarter 2020, two fewer calendar days in the first quarter, and reduced activities for ultra-deepwater units, which were stacked or idle, in Asia and North America. 

These decreases were partially offset by a lower loss of revenue associated with a shipyard during the quarter.

The company’s net loss attributable to controlling interest was $99 million compared with a net loss attributable to controlling interest of $37 million in the fourth quarter of 2020 and a loss of $392 million in 1Q 2020.

The first-quarter 2021 results included net favourable items of $18 million due to a $51 million gain on retirement of debt and $27 million in discrete tax items. These favourable items were partially offset by a $60 million loss on the disposal of assets.

After consideration of these net favourable items, the first quarter 2021 adjusted net loss was $117 million.

The contract backlog was $7.4 billion as of April 2021.