'Days numbered' for Odfjell rig

Scrapping candidate?: Deepsea Bergen

Odfjell Drilling is contemplating the fate of its veteran semi-submersible rig Deepsea Bergen as the clock ticks to expiry of a firm contract with Statoil next year.

Chief financial officer Atle Saebo, speaking at this week’s Swedbank Nordic Energy Summit in Oslo, said the 1983-built rig “is not part of our long-term asset future”.

The rig is currently working for Statoil off Norway under a long-term charter that expires in mid-2017, with a dayrate of $325,000, and Saebo said a one-year extension “will probably not be declared” as the state-owned client cuts overcapacity in its drilling portfolio.

He believes many of some 18 older rigs working off Norway and the UK that are due for costly special periodic surveys over the next few years ultimately could be scrapped due to a lack of revenue to justify this cost as work dries up amid a drilling market slump.

Saebo said it is not economic for a contractor to put a rig through an SPS, with an average cost of around $115 million, if it does not have a contract.

“As a result, we will see a lot of similar third and fourth-generation units that are 20 to 30 years old being cold-stacked, and many of them will not return to the market,” he said.

The third-generation Deepsea Bergen completed its latest five-year SPS in October last year at a cost of $53 million.

An Odfjell spokesman informed Upstream though "we are actively marketing the rig" for future work.

Odfjell recently kicked off production drilling work for Statoil on the under-development Johan Sverdrup field off Norway using semisub Deepsea Atlantic, one of its present fleet of four semisubs.

The rig is working under an initial firm three-year contract worth $330 million, with a dayrate of around $300,000, but Saebo said this rate could increase to between $330,000 and $425,000 if Statoil exercises extension options due in early 2019, contingent on the oil price at the time.

Furthermore, Saebo added the giant field could ultimately require two rigs to carry out production drilling after the first phase of Sverdrup is brought on stream in late 2019.

Meanwhile, Odfjell’s jointly owned drillship Deepsea Metro II has been sold to a bank for around $175 million at an auction this week, according to a source.

The 2011-built ultra-deepwater unit, originally ordered for around $700 million, was put up for sale by owning entity Chloe Marine, having been laid up in Venezuela after the expiry of a contract with Brazil’s Petrobras last year.

Sister drillship Deepsea Metro I is also currently unemployed after ending its contract with VietGazprom off Vietnam in January and has been docked in Malaysia awaiting more work, which is hard to come by in the current depressed market environment.

Both vessels are owned by joint venture Deep Sea Metro, in which Odfjell holds a 40% stake with partner Metro Exploration – an offshoot of Greek shipping company Metrostar – on the remaining 60%.

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