Noble to Build 4th High-Spec Newbuild This Year

- Noble to Build 4th High-Spec Newbuild This Year

Thursday, September 01, 2011
Noble Corp.

Noble announced that a subsidiary has exercised its option with Hyundai Heavy Industries Co. Ltd. ("HHI") for the construction of an additional ultra-deepwater drillship, the fourth such drillship to be ordered this year subject to the parties executing an agreed form of construction contract, which is expected to occur within the next several weeks. The additional ultra-deepwater drillship, to be named at a later date, will be constructed on a fixed price basis at HHI's shipyard in Ulsan, Korea, with expected delivery from the shipyard during the second half of 2014. Following shipyard delivery, the unit is expected to undergo the customary 90-120 day period for mobilization and acceptance prior to being ready to commence a contract. The rig is uncontracted at this time.

The delivered cost of the new drillship is expected to be $630 million and includes the turnkey construction contract, Company furnished equipment, project management and spares, but excludes capitalized interest. The construction contract contains favorable payment terms that incentivize on-time delivery.

"We continue to see an increase in deepwater demand, both near and longer-term," said David W. Williams, Chairman, President and Chief Executive Officer, Noble Corporation. "This view is bolstered not only by geologic successes in the traditional regions offshore the U.S. Gulf of Mexico and Brazil, but also by emerging regions offshore West Africa, Indonesia, the Black Sea, India and eastern Africa. With the addition of this fourth HHI newbuild drillship, by 2014 Noble will have one of the newest, most versatile and technologically advanced floater fleets in the industry with a total of 28 units, 16 of which will be dynamically positioned."

The new drillship announced Wednesday is based on a Hyundai Gusto P10000 hull design and is designed for operations in waters of up to 12,000 feet, but will be delivered fully equipped to operate in up to 10,000 feet of water. The unit will be equipped with DP-3 station keeping, the ability to handle two complete BOP systems, and multiple parallel activity features that improve well construction and overall project efficiencies, including a heave compensated construction crane to facilitate deployment of subsea production equipment. The drillship will also have accommodations for up to 210 personnel, in addition to a number of other operational enhancements beyond the shipyard's base specifications.

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Newbuild Deliveries Are A Headwind for Utilization

- Newbuild Deliveries Are A Headwind for Utilizatio

Friday, July 01, 2011
Rigzone Staff
by Trey Cowan

Offshore rig activity levels have improved slightly over the last twelve months. There are 534 rigs (i.e. jackups, drillships, and semisubs) under contract now versus an overall count of 528 rigs contracted a year ago. The same cannot be said for utilization rates, which have fallen year-over-year to 71% in the most recent month compared to 76% for the same period last year. The reason for the drop is that the supply of rigs has grown at a much faster pace due to newbuild arrivals. Specifically, 53 deliveries (39 in 2010 and 24 YTD) of newly built units versus ten decommissioned units (5 rigs in 2010 and 5 YTD) in aggregate have increased the overall fleet size by 43 rigs in the last twelve months.

We also note that global utilization has been trending flat at 71% for the last four months in spite of the fact that the number of rigs on contract has increased by 25 rigs since February 2011. Additionally, the global rig-to-rig utilization rate is below the 5-year historical average of 81 percent. Considering that there are 32 newbuilds expected for delivery in the second half of 2011 (12 drillships, 12 jackups, and 8 semisubs), a reversion to the mean does not seem likely in the near term, even though the current appetite for tenders continues to grow.

Of the three main types of rigs (drillships, semisubs, and jackups), the global drillship fleet currently commands the highest average monthly dayrates ($445 k/day, up 14% y/y) and utilization (80%, flat y/y). The demand for equipment capable of drilling in ultra-deepwater environments, where recent large oil discoveries have been located, is the main catalyst for the continued strength of the drillship segment. In the past year, the number of contracted drillships has increased from 43 to 51, a 19% improvement.

The results for semisubs, on a year-over-year comparison, are favorable. Both contracts and dayrates have increased 2 percent to 161 rigs at an average of $360 k/day, respectively. However, current utilization at 79% is weaker than levels of 84% a year ago. What we are seeing in terms of demand for newer, higher specification equipment points to an overall trend that we would classify as a replacement cycle, not an expansion cycle. Hence, older mid-water rigs (that are less capable) are likely to sit on the sidelines even as future demand swells.

The effect of this replacement cycle underway is most pronounced with jackups. Global jackup utilization has fallen precipitously over the past twelve months to 67% versus 73% last year. Dayrates have also slumped and are now $106 k/day or 8% below what contract drillers were charging just one year ago. As we mentioned earlier, there are 12 new jackups slated for delivery during 2H11. Considering that the contracted jackup count of 322 rigs globally is 15 rigs below a year ago levels, flat utilization (if not down slightly) over the next six months appears in the cards. We would note that the new rigs coming to market are high-spec jackups capable of drilling for deep gas. As such, these premium rigs are being utilized at much higher rates than the overall jackup market.

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