Transocean Buys Stake in Seadrill Rig

Offshore driller Transocean has bought a 33.3% interest in the West Rigel, a newbuild harsh environment semi-submersible rig built by a Sembcorp Marine yard for a subsidiary of Seadrill. 

The interest has been bought through a joint venture with funds managed and/or advised by Hayfin Capital Management (Hayfin), Transocean said on Wednesday.

Transocean added that the total purchase price for the rig, built by Sembcorp Marine’s Jurong Shipyard, is $500 million. The rig had been ordered at the Jurong yard by a Seadrill’s subsidiary, North Atlantic Drilling Limited (NADL), but never delivered.

Namely, following several previous delays, Seadrill agreed with Jurong to delay taking delivery of the West Rigel until July 6, 2018, at which point, if NADL had not secured acceptable employment for the rig, it was to be sold into a joint asset holding company with Jurong.

Meanwhile, Jurong was working on a specific third party sale of the rig and, on April 5, 2018, Seadrill entered into a settlement and release agreement with Jurong in respect of the West Rigel whereby Seadrill agreed that the share of sale proceeds from the sale of the West Rigel by Jurong would be $126 million.

Transocean has initially invested $83 million in the joint venture with an additional investment of $83 million to be made at a later date in accordance with the terms of the joint venture arrangements with Hayfin.

Transocean has also invested $8 million for working capital, which includes upgrades and activation cost with additional amounts to be later funded. The rig is expected to be delivered in the fourth quarter of 2018, and available for charter in the first quarter of 2019.

The rig, renamed the Transocean Norge, is a Moss Maritime CS60 design harsh environment semi-submersible and, according to Transocean, is considered to be among the most capable newbuild semi-submersibles in the world.

Transocean noted it possesses the exclusive right to market and operate the Transocean Norge, and will immediately begin engagement with customers.

Transocean’s President and Chief Executive Officer, Jeremy Thigpen, remarked: “Our interest in the Transocean Norge, along with the recent acquisition of Songa Offshore, underscores our commitment to high-grading our fleet in a financially prudent manner to provide our customers with the drilling assets and expertise they seek for projects in harsh environment and ultra-deepwater environments.”

Thigpen continued: “Given the strong demand and improving utilization and dayrates for this class of rig, we expect to secure work for the Transocean Norge in the near future.”

When it comes to rig purchases this week, it is worth mentioning that John Fredriksen’s Northern Drilling made a move to buy two newbuild drillships previously owned by Seadrill, an offshore drilling company which is also controlled by Frederiksen