Diamond Offshore Rakes In $610 Mn In Second Quarter Rig Deals
Offshore driller Diamond Offshore has announced $610 million of contract awards in the second quarter of 2022.
Diamond Offshore said that the $610 million in new deals was in addition to the $995 million of backlog reported as of July 1, 2022. In total, the company has a backlog of $1.6 billion.
The company agreed deals for the harsh environment semi-submersible Ocean GreatWhite in the UK North Sea, the semisubmersible Ocean Apex in Australia, and two 7th generation drillships – the Ocean BlackHornet and a Diamond-managed rig – in the U.S. Gulf of Mexico.
"We are pleased to announce these significant backlog additions. The contract for the Ocean GreatWhite is a testament to the capabilities of this high-specification harsh environment asset and comes at a time when energy security and longer-term demand in the sector are increasingly visible. With the rig now contracted, we will have three assets working in the UK sector of the North Sea, allowing us to better serve our customer base while growing our presence in an established market," Bernie Wolford, Jr., President and CEO, said.
The Ocean GreatWhite was awarded a contract for five wells, with an estimated duration of 300 days. The contract start is expected in the first quarter of 2023. The total contract value of the committed scope is approximately $80 million. The contract also includes priced options for up to eight additional wells.
The Ocean Apex has been awarded three new contracts for work on the Northwest Shelf of Australia. The first new award starts in the second quarter of 2023, with an estimated duration of 75 days. The second award is also for an estimated duration of 75 days, starting in direct continuation of the previous award. The third award has an estimated duration of 150 days with a scheduled start date in 2024. The combined awards add approximately $90 million of backlog to the Ocean Apex.
"A potential fourth new contract currently under negotiation would fill out the remaining availability in 2023, and combined, keep the rig fully contracted until late 2024," Wolford added.
The Ocean BlackHornet has secured a two-year extension with its current client in the U.S. Gulf of Mexico in direct continuation of the rig's current term. The two-year extension will keep the rig working until early 2025. The total contract value for the extension is approximately $290 million.
An undisclosed Diamond-managed rig has been extended by its current client for work in the U.S. Gulf of Mexico for an additional one-year term in direct continuation of the rig's current term. The contract value for this extension is approximately $150 million.
Diamond manages two drillships, Auriga and Vela, on behalf of Aquadrill Offshore, formerly known as Seadrill Partners. The Auriga has been working for BP in the Gulf of Mexico since the first quarter of 2022 with the firm period end date set for January 2023 after which an option is available from February 2023 until January 2024, according to Aquadrill’s fleet status report from July 2022.
Vela is scheduled to start working for BHP Petroleum, now a part of Woodside, in the Gulf of Mexico starting in September 2022. This contract was announced in March 2022.
"With improved dayrates and approximately 75 percent of 2023 marketed capacity contracted, we have an opportunity to earn considerably higher margins in 2023. I would like to thank everyone involved in securing this backlog, as these awards are a testament to the class-leading Diamond Offshore brand, our unwavering commitment to HSE, and the hard-working people who contribute to the Diamond Difference," Wolford noted.
Another positive thing for the offshore driller is an increased contract drilling revenue for the second quarter. It reported $177 million compared to $150 million in the first quarter of 2022 primarily driven by the Ocean Apex returning to active service, the completion of shipyard stays for the two UK rigs and a full quarter of drilling operations for the Auriga.
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