Global rig provider Transocean said it will scrap two more rigs from its fleet taking the total number of floaters it is planning to scrap to 18, the company announced on 1 April 2015.
The two rigs joining its soon to be departed brethren are the GSF Aleutian Key and Sedco 707. In March, the company had already added four other rigs to the scrap pile: Deepwater Expedition, Transocean Legend, Transocean Rather, and GSF Arctic III.
Transocean says the rigs will be held for sale, and expects its 1Q 2015 results to include an estimated non-cash charge of $90 million to $110 million, net of taxes.
“As the company continues to evaluate the long-term competitiveness of its fleet, additional rigs may be identified as candidates for scrapping,” the company said.
In December and January, Transocean had said it would scrap a total of 12 lower-specification deepwater and mid-water rigs. They are: Discoverer Seven Seas, Sedco 710, Sovereign Explorer, Sedco 700, Sedco 601, J.W. McLean, GSF Arctic I, Falcon 100, Sedneth 701, Sedco 703, Sedco 709, and C. K. Rhein, Jr.
In December Bloomberg listed Transocean, along with Noble Corp. and Ensco, as three of the worst performers on the Standard and Poors 500 Index, adding that Transocean and Hercules Offshore were expected to scrap the most vessels. Hercules Offshore has six rigs, all in the Gulf of Mexico, that have been cold-stacked since 2009. In total 15 rigs have been cold-stacked by the company.
This has been a hard year for Hercules. In February, the company reported a loss from continuing operations of $154.1 million on its 4Q 2014 results, and for the 12-month period ended December 31, 2014, Hercules reported a loss from continuing operations of $216.1 million. In March, it received a termination notice from Saudi Aramco on 27 March for its Hercules 261 jackup. Hercules said the rig is continuing drilling operations on current platform while discussions with the customer continue.
In its February announcement Hercules Offshore CEO and President John T. Rynd attributed the company’s losses to both a challenging US Gulf of Mexico market and a softening international drilling market.
“Poor industry conditions were reflected in our fourth quarter utilization rates, and we expect further weakness in both utilization and dayrates from our drilling operations in 2015, at least until commodity prices stabilize and improve from current levels,” he said. “Furthermore, International Liftboats continue to suffer from curtailment of activity in Nigeria, which we expect will last at least through mid-2015.”
Ensco announced in its 4Q 2014 report that three rigs — ENSCO DS-2, ENSCO 58 and ENSCO 90 — will be held for sale. All were in the process of being cold-stacked in order to reduce expenses. And another four rigs in continuing operations have commenced cold stacking preparations since the start of 2015, Ensco said in February.
Similarly, Diamond Offshore Drilling announced in October its plans to retire and scrap six of its mid-water semisubmersible rigs. The retired units include the Ocean Epoch, Ocean New Era and Ocean Whittington, which had been cold-stacked, and the Ocean Concord and Ocean Yatzy, which are idle in Brazil. The sixth unit, the Ocean Winner, will be retired and scrapped upon completion of its current contract term in Brazil.
Hit by delays
Also announced on 1 April, Atwood Oceanics said it would again delay delivery of two of its newbuild ultra-deepwater drillships, the Atwood Admiral and Atwood Archer. The rigs are under construction at Daewoo Shipbuilding & Marine Engineering (DSME) in South Korea. Atwood said the rigs would be delayed at its option until 2016 and 2017, respectively. Both rigs were originally scheduled for completion in 2015 and 2016, respectively. Both rigs are DP3 drillships capable of operating in 3658m (12,000ft)of water, and drilling to depths of up to 12,200m (40,000ft).
Houston-based Northern Offshore similarly announced at the end of March that they will delay the deliveries, for nine months, of two of its newbuild high-specification jackups, Energy Engager and Energy Encounter, from Cosco Shipyard in China. The new delivery dates are 2016 and 2017, respectively. Orginally, both drilling rigs - LeTourneau Super 116E Class jackups - were to be delivered during the first and third quarters of 2016, respectively.
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