Offshore drilling company Transocean expects its two ultra-deepwater drillships under construction in Singapore to cost it $2,25 billion in total, more than a double on the original order price.
Transocean first ordered the drillships - now named the Deepwater Titan and the Deepwater Atlas - on speculation from Sembcorp Marine's Jurong Shipyard in 2014 for a price of $540 million each, and for delivery in 2017 and 2018, but the delivery dates have been put off several times.
In December 2018, Transocean finally signed a hefty five-year $830M contract for the Deepwater Titan, with Chevron, however, the contract called for the rig to be upgraded for 20,000 psi operations lifting the construction costs.
The drillship will feature dual 20,000 psi blowout preventers, net hook-load capacity of three million pounds, 165-ton active heave compensating crane, and an enhanced dynamic positioning system.
This then left Transocean to work and find a contract for the second drillship, the Deepwater Atlas, which, until recently had an expected delivery date scheduled for September 2020.
Atlas for Shenandoah
In a conference call in June, Transocean's CEO Jeremy Thigpen said that the delivery date of the Deepwater Atlas - which was still without a contract- might slip to the end of the year, or into early 2021 due to shipyard challenges caused by the COVID-19 pandemic.
He then said that there was a high customer interest in the Deepwater Atlas, and its potential to become the industry's second 20,000 psi ultra-deepwater drillship [after the Deepwater Titan], despite the generally depressing situation in the offshore drilling market created by low oil prices.
A month later, Transocean confirmed the Deepwater Atlas was expected to drill at the Shenandoah project in the Gulf of Mexico, under a conditional agreement with Beacon Offshore Energy [a partner in LLOG-operated Shenandoah]. It also said the project would require a 20,000 psi well control system.
In a statement on Friday, July 31, Transocean shared the estimated cost projections for the two rigs.
The drillship duo had been expected to cost $1,08 billion when it was ordered in 2014, then in the Annual Report for 2019, Transocean said the cost would be around $2,07 billion in total - $925M for the then uncontracted Atlas, and $1,15B for the Titan.
Now, Transocean expects the drillships will cost it around $2,25 billion in total.
See below the latest chart shared by Transocean detailing the expected spend on the two drillships.
Transocean said that subject to the signing of the firm contract for the Deepwater Atlas, the rig would be equipped by one 20,000 pounds per square inch blowout preventer and other equipment required by the customer. Some of this equipment would be delivered and commissioned in the year ending December 31, 2023, subsequent to placing the drillship in service.
If the conditions are satisfied, the Deepwater Atlas is expected to start operations under the drilling contract in the first half of 2022.
"We will only commit to these incremental capital expenditures [the 20K PSI upgrade and other equipment] with the backing of a firm commitment by the customer," Transocean said.
Transocean also said that the Deepwater Titan, under-construction and the same shipyard and chartered by Chevron, as mentioned before, is now expected to start operations under its drilling contract in the first half of 2022. Worth noting, under the terms signed in 2018, the rig had been expected to begin drilling for Chevron in the second half of 2021.
" [For the Deepwater Titan] the projected capital additions include estimates for an upgrade for two 20,000 pounds per square inch blowout preventers and other equipment required by our customer," Transocean said.