Seadrill expects to scrap more rigs

March 5, 2021
Seadrill has issued an update on its offshore drilling rig fleet and market prospects.

Offshore staff

HAMILTON, Bermuda Seadrill has issued an update on its offshore drilling rig fleet and market prospects.

At the end of 2020, Seadrill had three harsh environment rigs operating in the North Sea with the semisubmersible West Hercules continuing work with Equinor and the jackups West Elara and West Linus continuing their long-term contracts with ConocoPhillips.

The company had three floaters operating in the Americas. The drillship West Neptune was under contract with Kosmos Energy in the Gulf of Mexico, and the drillship West Tellus remained under contract with Petrobras in Brazil. Walter Oil & Gas awarded the semisub Sevan Louisiana a one-well contract in the US Gulf of Mexico. It includes two optional wells.

As for the jackup fleet, the AOD I, AOD III, and West Callisto were working in the Middle East with Saudi Aramco. The AOD II is also contracted with Saudi Aramco but currently suspended and expected to return to work in mid-2021. The West Castor, West Telesto, and West Tucana were on bareboat charter to its GulfDrill joint venture in Qatar.

Since then, ExxonMobil has exercised the first optional well for the drillship West Saturn offshore Brazil. This extends the program to three wells.

In September 2020, the company sold the harsh-environment jackup rig West Epsilon to Well-Safe Solutions for $12 million. The rig was built in 1993 and has been cold-stacked since 2016. Following the sale, the number of units in Seadrill’s fleet was 34.

The COVID-19 pandemic and oil price environment have led to some operators terminating or renegotiating contracts. Neptune Energy terminated the contract for the semi West Phoenix. The contract concluded in November. Total Angola has indefinitely suspended the contract for the drillship West Gemini.

Seadrill said it is preparing for a prolonged period of low demand as it believes that the depressed levels of offshore activity will remain well into 2021. It is starting to see some demand come back to market, albeit at a slower pace than initially expected. The company anticipates some degree of market recovery by mid-2022.

The company anticipates that it will continue to see accelerated retirement of older, and long-term stacked assets. Coupled with an expected increase in demand in late 2021, it added, this should go toward addressing the imbalance between demand and supply.

On Feb. 10, 2021, the company and some of its consolidated subsidiaries filed for Chapter 11 bankruptcy protection in the US.