Transocean-Murphy Deepwater Rig Cancellation Highlights Deepwater Cutbacks
The deep dive in commodity prices has taken out another deepwater drilling contract.
Transocean Corp. confirmed Monday that Murphy Exploration & Production, a subsidiary of Murphy Oil Corp., had ended its November contract for the Discoverer Deep Seas (UDW drillship) early, electing instead to pay a lump-sum termination payment.
The cancellation comes two months after another offshore cancellation for Transocean. At the end of 2015, Royal Dutch Shell plc ended its contract for Transocean’s Polar Pioneer (mid-water semisub), prior to its July 2017 end date.
Analysts at Raymond James said the Murphy termination was expected, based on the company’s announcement in January it would cancel two Gulf of Mexico contracts – the Transocean drillship and one owned by Diamond Offshore. Similar to other deepwater operators, Murphy has cut its capital spending program for 2016. Cancelling the two contracts was expected to cost Murphy about $282 million.
Consequently, while the announcement was net neutral to Transocean’s backlog, analysts at Raymond James said, “It continues to demonstrate the lack of demand across the deepwater market.”
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Manages 53 Offshore Rigs
- Oil's Biggest Rigs Headed to Junkyard as Daily Losses Mount (Oct 18)
- Transocean To Buy Norwegian Rig Firm Songa Offshore For $1.1B (Aug 15)
- Borr Drilling Signs Deal With Transocean to Buy 15 Rigs (Mar 20)