Northern Drilling negotiates cut-price deal for deepwater drillship

Northern Drilling has exercised an option for the Cobalt Explorer, a seventh-generation DP-3 ultra-deepwater drillship, with Daewoo Shipbuilding & Marine Engineering.

May 2nd, 2019

Offshore staff

HAMILTON, Bermuda – Northern Drilling has exercised an option for the Cobalt Explorer, a seventh-generation DP-3 ultra-deepwater drillship, with Daewoo Shipbuilding & Marine Engineering (DSME).

The total consideration is $350 million. Both sides have agreed to flexibility on delivery until end 1Q 2021.

According to Northern, this is the sole ‘stranded’ ultra-deepwater drillship from Korean yards that comes with additional spare parts including two BOPs.

The purchase price is close to a 50% discount on the previous owner’s estimated total project cost of $660 million.

Thanks to the back-end loaded payment terms and flexible delivery schedule, Northern says it can wait for further market improvements in the deepwater drilling market before choosing to take delivery.

Tier 1 drillships are now commanding day rates of close to $300,000 for start-up in 2020 and beyond. Northern expects further improvements and has positioned itself accordingly, with three high-spec drillships due to be delivered in 2021.

In addition, Wintershall has chosen to exercise the fourth and final front-end option for the semisubmersible West Mira, bringing forward the start of operations forward into mid-3Q 2019.

05/02/2019

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