ADES strikes deal with Seadrill for seven jackup rigs

Sept. 1, 2022
Seadrill has agreed to sell legal entities that own and operate seven drilling jackups in Saudi Arabia to ADES Arabia Holding for $628 million.

Offshore staff

LONDON  Seadrill has agreed to sell legal entities that own and operate seven drilling jackups in Saudi Arabia to ADES Arabia Holding for $628 million.

The rigs are the AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida and West Leda. ADES will also employ the crews and will assume the rigs’ drilling contract;: four of them are under contract to Saudi Aramco off Saudi Arabia,

Under the transaction, Seadrill may be entitled to further reimbursement to Seadrill for any project costs related to reactivation of the three stacked West Ariel, West Cressida and West Leda jackups. This could amount to $100 million per rig on a ready to drill basis.

Seadrill plans to use the proceeds from the sale to improve its balance sheet and eliminate outstanding capex for the reactivation rigs. It expects the deal to close during the fourth quarter, following clearance from the competition authorities in Saudi Arabia.

In its latest results review, the company revealed that it had now offloaded 11 long-term cold-stacked rigs following the sale earlier this year of the Sevan Brasil and Sevan Driller semisubmersibles.

The others were West Venture, West Freedom, West Pegasus, West Eminence, West Navigator, West Orion, West Alpha, West Epsilon  and West Vigilant, all sold in earlier periods. Five have since been recycled with the remaining six sold for non-drilling purposes.

By mid-2022, the company had three drillships and one semisub operating in the Atlantic Triangle, with West Neptune under contract in the Gulf of Mexico (GoM) to LLOG, West Tellus working for Shell offshore Brazil and West Gemini active offshore Angola.

The benign-environment Sevan Louisiana semisub was contracted to Eni in the GoM.

West Saturn completed its contract with Exxon Mobil and has since been preparing for work with Equinor offshore Brazil. West Jupiter and West Carina are being reactivated for long-term contracts with Petrobras in Brazil, both set to start later this year.

In the Norwegian sector, Seadrill’s harsh-environment West Elara andWest Phoenix semisubs were working respectively for ConocoPhillips and Vår Energi.

Looking ahead

Seadrill sees further encouraging signs for the benign ultradeepwater floater market, with offshore drilling activity increasing in almost every deepwater location. The US GoM leads in terms of day rates, followed by Brazil and Guyana.

Floater demand in rig years should rise by 8% in 2022 and by a further 30% toward the end of the decade, the company added. Operators continue to prefer high-spec ultradeepwater drillships, with overall marketed utilization around 90% globally.

As for the benign jackup sector, marketed was above 90% during second-quarter 2022, with the second highest number of rigs years signed in a quarter for over five years. More than 70% of the awards were in the Middle East.

Now tendering activity is increasing offshore southeast Asia and India, respectively.

Seadrill expects demand for harsh environment rigs to pick up more slowly and not until the latter period of 2023. There could be a tightening of supply should various rigs in this category depart the Norwegian Continental Shelf for work elsewhere.