LONDON – Seadrill had five floating drilling rigs in operation by the end of 2Q, the company has reported in its latest results review.
The drillship West Neptune remained under contract with LLOG in the Gulf of Mexico, while the drillship West Tellus was contracted to Petrobras offshore Brazil.
In the Norwegian North Sea, the semisubmersible West Hercules continues to work for Equinor with the semi West Phoenix working for Neptune Energy. Elsewhere, the drillship West Carina is on assignment with PTTEP offshore Malaysia.
Seven Seadrill jackups were operating at the end of 2Q, five in the Middle East and two (both harsh-environment jackups) in Norwegian waters. The West Castor and West Telesto are on bareboat charter to the company’s GulfDrill joint venture in Qatar.
During the quarter Seadrill negotiated discounts with Equinor for the remaining firm term of the West Hercules contract (an estimated $8 million). It later signed an amendment equivalent to $10 million of discounts with Saudi Aramco on the AOD I, II, III, and West Callisto across 2020 and 2021.
In addition, the company received a notice of suspension from Aramco for the AOD II for up to 12 months.
Seadrill continues to assess the impact of COVID-19 and is braced for a prolonged period of low demand, with currently depressed levels of offshore activity likely to continue into 2021. But contracting activity should revive in mid-2021 as projects that were put on hold due to COVID-19 return to the market.
As the global supply of rigs continues to outstrip demand, utilization levels and day rates across all segments will likely remain suppressed, the company added, with further reductions in utilization over the coming quarters due to the lack of near-term demand, the impact of contract terminations, and renegotiation of existing contracts.
But there may also be a move toward market rationalization as older and long-term stacked rigs are scrapped.