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Transocean agrees with shipyard to delay delivery, defer payments of newbuild drillships

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Transocean announced that it has agreed with Sembcorp Marine subsidiary Jurong Shipyard (JSPL) on the delayed delivery of the ultra-deepwater drillships Deepwater Atlas and Deepwater Titan. As part of the agreement, JSPL has agreed to accept deferred payment for both rigs.

The Deepwater Atlas and Deepwater Titan are the world’s first eighth-generation ultra-deepwater drillships and only rigs to feature a 3 million-lb hook load. The rigs will also include the first 20,000-psi well control system.

Delivery of the Deepwater Atlas is now expected to be in December 2021. Upon delivery, Transocean will make a $50 million payment to JSPL; the balance of payments owed to the shipyard, or approximately $370 million, will be payable during a five-year period following delivery pursuant to a secured financing arrangement with the shipyard.

Transocean has also agreed with Beacon Offshore Energy to start drilling operations on the Shenandoah project in the US Gulf of Mexico in Q3 2022. Transocean expects Beacon to commence drilling on its Shenandoah project utilizing the Deepwater Atlas following a final investment decision from Beacon and its partners. That decision is expected to be made on or before 31 July.

Delivery of the Deepwater Titan is now expected to be in May 2022. Upon delivery, Transocean will pay JSPL 80% of amounts owed, or approximately $350 million. Approximately $90 million, or 20% of amounts owed, will be deferred and payable over a five-year period following delivery pursuant to a deferred payment arrangement with the shipyard.

Transocean also has agreed with Chevron to start commercial operations of the Deepwater Titan in Q1 2023. Transocean’s contract with Chevron maintains its duration and estimated backlog of $830 million, excluding mobilization and reimbursables.

Payments under each arrangement will be made in accordance with the respective payment schedules over the terms of each arrangement. Principal balances will carry an interest rate of 4.5% annually.

“These agreements clearly represent a monumental achievement for Transocean. As the result, we will take delivery of the two highest specification ultra-deepwater drillships in the world, and the only two assets capable of drilling and completing 20,000-psi wells. Notably, as a critical element of these agreements, we will receive shipyard financing, which materially improves our year-end 2022 liquidity by over $450 million, thus extending our runway and providing us with additional investment flexibility as the industry recovers,” said Jeremy Thigpen, President and CEO of Transocean.

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