Downtime for Rowan drillship

Problems: Rowan reports issues with subsea systems aboard newbuilf drillship

A newbuild Rowan drillship has hit a snag in drilling off West Africa due to technical problems about a month after it started an exploration campaign for Repsol that has been delayed more than once.

Rowan said in its latest fleet status report that the Rowan Renaissance "began experiencing issues with its subsea systems" on 19 May.

Repsol's London-listed partner Tower Resources said previously that the problems were related to the rig's blowout preventer control system, which a Rowan spokeswoman confirmed.

"(Rowan) is working to rectify these issues and expects the rig to resume normal operations by the beginning of June 2014," the contractor said. "During this period the company may incur some amount of unbillable operational downtime."

It currently has seven days of off-rate time booked for the rig related to the commissioning of late-arriving equipment.

The rig began working for Repsol on 22 April of this year under a three-year contract. The original dayrate was $619,000 but has been adjusted to $625,000 after mobilisation and modifications were complete.

Repsol had originally expected to take delivery of the rig from South Korean yard Hyundai Heavy Industries in December last year, but delays due to prolonged acceptance testing of the rig pushed the delivery date back until April.

"As (Rowan's) first ultra-deepwater floater, issues during the shakedown period are not wholly unexpected," analysts as Cowen & Co conceded, adding that they had initially been anticipating 30 days of off-rate time in the second quarter 2Q14, a figure that will be revised upward in light of the subsea systems issues.

The latest disclosures prompted Cowen to reduce its 2014 per-share earnings estimate for Rowan from $2.45 to $2.40, due in part to "further complications on the Rowan Renaissance".

Repsol is drilling the closely watched Welwitschia-1 wildcat on PEL 0010 in Walvis Bay off Namibia.

Shortly after spudding last month, the well hit another delay. During installation of the 36-inch casing, the operator saw that the wellhead housing had slumped and decided to plug and abandon the well and re-spud about 50 metres away.

Rowan still has a pair of drillships under construction, one of which is without a contract.

"Rowan's transition into an ultra-deepwater player will need to go smoother during subsequent shakedown periods in order to maintain expected utilisation levels," Cowen said in a research note on Wednesday.

Rowan shares were off 1.16% at $30.65 in afternoon trade in New York on Wednesday.

In other news, Rowan secured a 90-day contract for the jack-up Joe Douglas with Freeport-McMoRan Oil & Gas in the Gulf of Mexico commencing this month at a dayrate of $165,000.

(This article has been amended from the original to correct Tower's listing location from Australia to London and to clarify that Rowan has one uncontracted drillship under construction.)

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