Ocean Rig announces new business as market demand in the offshore floating platform sector is improving, the company's CEO said on Monday, revealing new contracts for its fleet. The Ocean rig announced on Monday that it has signed a new drilling contract with Chariot Oil & Gas for a one-well drilling program, for offshore drilling in Namibia using the drillship Ocean Rig Poseidon.
The contract is expected to commence in direct continuation of the previously announced program with Tullow in the third quarter of 2018. In addition, Ocean Rig reported that it has entered a Letter of Intent (“LOI”) with a major European oil company for a two-year program. firm wells plus two optional wells for offshore drilling in West Africa.
The contract is expected to commence on the direct continuation of the program with Chariot Oil & Gas Limited in the fourth quarter of 2018 and will also be carried out by Ocean Rig Poseidon. Ocean Rig, which said nothing in the dayrates, said the contract was subject to negotiation and execution of definitive documentation and other approvals. In addition, Swedish operator Lundin Petroleum, through its subsidiary Lundin Norway, declared its seventh option to extend the existing Leiv Eiriksson semi-submersible rig contract.
Leiv Eiriksson is expected to have secure employment through December 2018. If Lundin exercises the remaining five options from a well, the rig could be employed until the third quarter of 2019. Ocean Rig did not speak about the daily rate of the rig. rig, the rig previously had a daily rate of around $ 150000. Last but not least, Ocean Rig said that previously announced discussions with Total E&P Angola Block 32 for the Ocean Rig Skyros drilling contract have already been completed.
The result is an amendment to the existing drilling contract that includes a clause that the daily rate will remain fixed for the remainder of the contract at approximately US $ 573,000/day. The agreement with Total is the most important as it keeps the rig working a substantial day longer. Although Ocean Rig this time did not talk about the duration of the contract with Ocean Rig Skyros, information found on its website shows that the rig should work for Total until mid-2021.
Pankaj Khanna, President and CEO of the Company, commented: “We are pleased with the progress of the floating market and look forward to further developments in the coming months that could increase utilization of the Company's drilling rigs in 2019. Completion of the Skyros discussions eliminates any uncertainties regarding the company's estimated order backlog and solidify our strategic relationship with Total. "We currently see higher levels of research in the market which we expect will translate into higher utilization in the coming months for the global float fleet."
While demand may be increasing, levels are still far from strong. This was recently shown by Ocean Rig, which in June decided to delay the delivery of an 8th generation drillship. The drilling company has agreed with Samsung Heavy Industry to delay the delivery of Ocean Rig Crete from Q1 2019 to September 2020, with an option to bring the date forward at Ocean Rig's option.
According to Bassoe Analytics, Ocean Rig has only two drilling rigs – Leiv Eiriksson and Ocean Rig Skyros. In addition to these rigs, Ocean Rig has 11 more rigs, of which two are under construction, six cold stacked and three hot stacked (including Poseidon). As stated above, Poseidon is about to start drilling Tullow, after which it will drill Chariot in Namibia.