Race is on for last remaining high-spec drillship newbuilds at Asian shipyards

Excitement is building in the bustling newbuild drillship market as potential buyers position themselves for the last remaining newbuild drillships that require new owners to make them operable.

Rig market analysts tell Upstream there are 15 newbuild drillships are being built at shipyards, 13 in Asia, two in Brazil.

The ownership of these drillships has been an issue of intrigue since most of them were abandoned years ago by their original owners and left with the shipyards.

Due to the strong growth in the drillship market, buyers have been circling the stranded drillships and some have pounced, including the new Norwegian investor Eldorado Drilling which has agreed to buy the Dorado and Zonda drillships moored at Samsung Heavy Industries in South Korea.

Of the 15 under construction, it is believed there are only three or four that are currently available for purchase, and there is a lot of buyer interest.

One drillship is the West Libra owned by South Korea’s Daewoo Shipbuilding & Marine Engineering; next is the West Draco owned by Samsung Heavy Industries; the third is the Can Do owned by Singapore’s Keppel Corporation.

Market watchers say rig owners and potential buyers are looking keenly at all three.

Saipem is said to be a leading contender for the West Draco, while the West Libra is also said to be the subject of an imminent deal.

In both instances, the buyers could lease the drillships for a period of time with options to purchase.

Keppel’s drillship Can Do is a slightly different case; it is being built on speculation by Keppel with the original intent of chartering it out.

Keppel channelled its vast rig building expertise into the design of the Can Do, and has established its own rig management company, but the drilling market considers the drillship to be a candidate for a new buyer.

Asian shipyards with newbuild drillships

Officially, Samsung and Daewoo still claim four newbuild drillships each on their books; equating to eight of the 15 under construction globally.

Chinese shipyards have a total of four drillships at their yards; Keppel has one; and Jurong Shipyard in Brazil has two.

However, Samsung has arrangements with Eldorado Drilling for the drillships Dorado and Zonda, and an agreement with Stena Drilling for the Stena Evolution.

Therefore, the West Draco is Samsung’s last unallocated drillship.

Compatriot Daewoo has agreements with Valaris for the DS-13 and DS-14, and with Transocean-led Liquila Ventures for the Aquila drillship.

Therefore, the West Libra is the last in Daewoo’s fleet, and market sources suggest Liquila has a purchase option.

The fate of the Chinese drillships is uncertain and they are not on the radar of major rig contractors.

Likewise, there is uncertainty over the two drillships in Brazil being built for Sete.

Westwood Energy says the two Sete drillships in Brazil are in various states of construction, but are for Brazil operations if and when they are ever delivered.

Keppel is considered to be a seller of its drillship Can Do.

Valaris poised for two new drillships

Global drilling giant Valaris is thrilled with the agreements it reached with Daewoo on the newbuild drillships DS-13 and DS-14.

The company has options to take delivery of the drillships at the end of this year for $119 million and $218 million, respectively.

Given recent drillship contract economics and comparable asset transactions, Valaris chief executive Anton Dibowitz says DS-13 is “a very attractive option and DS-14 is priced in line with recent transactions for comparable assets”.

“Both drillships are among the highest specification assets in the global fleet and have two BOPs [blow out preventers], which remains a preference for customers globally. We will continue to evaluate our options regarding these rigs as we see the market evolve over the course of the year.”

Drillship growth on the rise

Drillships are giant vessels that specialise in deep-water and ultra-deepwater operations around the world especially in the “Golden Triangle” of the Gulf of Mexico, South America and West Africa.

For years, drillships have been synonymous with the discovery of huge oilfields in countries such as Brazil and Guyana, and the Gulf of Mexico.

However, the drillship segment is under some pressure due to the availability of the rigs to meet demand.

Looking to next year, drillship availability is quickly filling up, meaning that only the stacked units waiting to be reactivated — of which there are about 14 — and stranded newbuilds can fill the gap.