Some significant developments in the offshore drilling sector
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Exxon and Guyana
Exxon Mobil (XOM) has been quite active in Guyana waters. Just saw an article on three more successful drilling outcomes. The article goes into more detail on the production developments too
https://www.rigzone.com/news/exxon_does_it_again_three_more_…
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Diamond Offshore (DO)
Late last month, offshore driller Diamond Offshore (DO) came out of bankruptcy protection and relisted on the NYSE. DO is also active as manager of drilling assets for other entities e.g. Aquadrill
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Seadrill (SDRL.OL)
In Feb 2022, offshore driller Seadrill (SDRLF on OTC markets) also announced post-bankruptcy plans. This week, Seadrill started trading again on the Oslo stock market. In the last 7-10 days, Seadrill has provided several contract updates. Some events are contract extensions, and others are new contract awards
https://www.seadrill.com/investors/news/
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Was perusing through the Seadrill (SDRL.OL) prospectus that was included as part of the company’s Oslo relisting event.
Some interesting data-points:
#1. In April 2022, sold two semi-submersible rigs to New Fortress Energy (NFE). Will come back to this item
#2. During the time Seadrill was under bankruptcy protection (in 2021), the company opted to sell a jack-up rig to New Focus Energy (NFE). Given that NFE had
indicated its “Fast LNG” plans were based on utilizing two jack-up rigs in shallow waters, that asset sale made sense.
#3. (Back to #1). The two semi-submersible rigs sold to NFE are specially designed rigs. The typical semi-submersible rig is a four-sided shape. These two rigs, and a sister rig, were acquired by Seadrill from another drilling entity, Sevan drilling, and have a circular base. Each rig has ultra deep-water capability (> 7500 ft). The two rigs were sold to NFE for a combined $24M. IIRC, Seadrill paid more than $1B to acquire the Sevan drilling assets (2 operating rigs, a newbuild-in-progress, and an option for a fourth newbuild)
a. Deterioration of asset values: Seadrill paid $700M - $850M for those two rigs, then disposed them for a combined $24M
b. NFE plans: Are the two rigs to be used as a pair for one project? Or individually, for two projects?
#4. Lots of interesting data on multi-year fleet utilization
Seadrill prospectus:
https://www.seadrill.com/investors/
Image of one of the Sevan drilling rigs–
https://sevanssp.com/sevan-brasil/
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It looks like NFE stole a billion dollars worth of drilling equipment.
It might be interesting to see just how NFE is running. Is it possible that they could be bought by the big guys that just came out of bankruptcy?
How clean are the balance sheets of the cleared bankruptcy companies? What are the take rates on drilling rigs?
As it is pretty clear, without an economic collapse, we will not see declining oil or gas consumption before 2025 maybe as late as 2030, that we should see medium term projects approved. In other words, any project that can pay back in 36 to 60 months is probably going to get funded.
This may seem to short for offshore oil, but even 20 years ago a well could be drilled flow rated and capped in 8 weeks and a large (12 inch) pipeline could be laid a hundred miles in another 8 weeks. My guess is that those times have been cut in half in the last 20 years.
Cheers
Qazulight
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Earlier I said New Focus Energy. It should be New Fortress Energy (NFE)
It might be interesting to see just how NFE is running. Is it possible that they could be bought by the big guys that just came out of bankruptcy?
I don’t see NFE being a drilling company. They are acquiring the drilling assets to help with processing/production of gas, then converting the gas to easier transportable LNG.
In the two Jack-up set-up, one jack-up assists with the collecting and processing, and the other has the liquefier unit and some storage set-up.
That’s what puzzles me about the Sevan rig - everything seems tightly packed on the rig. Where does the liquefier go? That’s why earlier I asked,
are the two rigs for one project or two? Personally, I think two. But then, what’s the arrangement for the liquefier and some storage?
TBD, but still interesting.
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