While working to emerge from Chapter 11, offshore drilling contractor Seadrill has secured more work for its rigs in the U.S. Gulf of Mexico and added about $0.5 billion to its backlog in the period after the end of the third quarter of 2021.
The company’s CEO believes that the offshore drilling market conditions are improving, but there still needs to be more asset rationalisation and market consolidation.
The improvement in the market is evidenced by, among other things, the new contract awards for the rig owners and Seadrill, during the third quarter of 2021, continued to sign contracts, contributing $145 million to backlog. The total backlog as of 30 September 2021 was at $2.1 billion. Furthermore, in the period after the 3Q 2021, Seadrill added over $0.5 billion to its backlog.
In addition to the recently announced deals with Petrobras for the West Carina and West Tellus rigs, which will work on the Búzios field offshore Brazil, Seadrill has also secured more work for two rigs in the U.S. Gulf of Mexico.
According to Seadrill’s 3Q 2021 update on Monday, the Sevan Louisiana semi-submersible rig has been awarded one firm well contract with Eni in the U.S. Gulf of Mexico. The contract is expected to start in late December 2021 and continue until late May 2022. Eni also has an additional option under the contract which, if exercised, would see the 2013-built rig continue working for the company until October 2022.
Currently, the rig is under contract with Walter Oil & Gas, also in the Gulf. The gig is set to end by December 2021 with possible options up to January 2022.
Moreover, the West Neptune drillship has secured further activity in the Gulf with LLOG exercising an option adding $10 million in the backlog. It is worth reminding that the drillship in September started drilling operations on LLOG’s third Buckskin development well located in the U.S. Gulf of Mexico.
Under the firm contract with LLOG, the rig will be operating for the company until May 2022 with options until August 2022.
After that, the rig is slated to work for 90 days for Talos until November 2022, contributing $26 million in the backlog. The rig also previously worked for Talos on the Tornado field.
Seadrill is currently under Chapter 11 bankruptcy protection and it has recently received a confirmation for its reorganisation plan from the U.S. Bankruptcy Court. The company is expecting to emerge early in 2022 contrary to previous expectations that this would happen in 4Q 2021. Ahead of its emergence, Seadrill has appointed a new, independent, seven-member board of directors who will take up their positions in the successor company upon emergence from Chapter 11.
The board will be comprised of high-calibre professionals, including Julie Johnson Robertson, the former CEO of Noble Corp., who will join as Chair of the Board, Mark McCollum, who most recently served as President and CEO of Weatherford, will join as Chair of the Audit and Risk Committee, and Jean Cahuzac, who was until recently the CEO of Subsea 7, will join as the member of the board.
Stuart Jackson, Seadrill Chief Executive Officer, commented: “The offshore drilling industry has experienced a period of turbulence in recent times and many companies have undertaken significant corporate changes to align to a new market environment. While market conditions are improving, further asset rationalization and market consolidation is needed to provide a more secure footing for offshore drillers to grow value for their stakeholders.”
