Transocean Secures Two $500k-Plus Day Rig Commitments

Drillships Deepwater Asgard and Deepwater Atlas have fresh US Gulf Mexico campaigns upcoming that will earn the driller more than $500,000 per day.

Drillship Deepwater Asgard.
The Deepwater Asgard will be the first of the two rigs to transition to a $500k-plus commitment.
SOURCE: Transocean

Offshore driller Transocean has landed a pair of new contracts for use of its ultradeepwater drillships that eclipse the vaunted $500,000 day rate range.

In April, the contractor scooped a 365-day contract extension in the US Gulf of Mexico (GOM) for the Deepwater Asgard with Hess. The program is slated to begin in June as a direct continuation of the current campaign.

As part of the agreement, Transocean will be upgrading the rig’s blowout preventer with Kinetic Pressure Control Blowout Stopper units or K-BOS.

K-BOS is a device that improves blowout-preventer (BOP)-sharing capability and is retrofittable to existing BOPs. It is also designed to significantly shorten the time for the rig to complete an emergency disconnect, which facilitates the ability to expand the minimum operating water depths of deepwater floaters. The Deepwater Asgard will be the third unit to receive the K-BOS system in Transocean’s fleet.

“We are encouraged by the positive feedback received from our customers and BSEE (Bureau of Safety and Environmental Enforcement) and are pleased to see an increased willingness from our customers to pay for this transformational technology,” company president Jeremy Thigpen told investors earlier this week.

Also, in the GOM, Transocean signed a contract for an additional four wells of 15K work on the Deepwater Atlas at $505,000 per day in direct continuation of its current program with Beacon Offshore, expected to last between 240 and 360 days.

“As we move through the next several months, we expect numerous long-term contracts to be awarded at increasing day rates, reflecting industry participants' recognition of the tightness in the market,” added Thigpen. "Healthy contract durations are one of many factors supporting improved supply/demand dynamics. Excluding the TotalEnergies 10-year contract award, which we consider to be something of an anomaly, contract durations for new ultradeepwater fixtures reached a robust 511 days in the quarter, largely in line with the 2023 average of 526 days and up from 302 days in 2022.”

Transocean expects that the Deepwater Atlas may be the next rig to get the 20k capability upgrade following its current string of commitments. Transocean Chief Commercial Officer Roddie Mackenzie told investors that following the four-well extension, the rig will likely undergo the upgrade.

“The transition for her to go to the 20,000 is probably going to take place in the next contract,” said Mackenzie. “We finish out the one that we’re currently on in the Shenandoah development. Then, we go into this additional kind of 240 to 360-day program, and I think after that, we’re transitioning into the much more attractive work.”

McKenzie added the contractor is hearing that many of its competitors are negotiating new deals in the $500,000 per day range or even higher, and Transocean expects within the next few months that there will be four to five additional awards in the GOM above $500,000 per day.