Rig owner Odfjell Drilling has reported a US $10 million cost increase for its latest newbuild rig Deepsea Aberdeen after an incident late last year at the construction yard in South Korea.

One of the pontoons on the rig took in water, which resulted in the pontoon being partially submerged. As a result the company says it now expects to take delivery of the rig in October or November this year, with the aim of starting drilling with the unit in the first quarter of 2015.

“As a result, the project cost is estimated to increase by $10 million,” Odfjell said, adding that an unspecified incident occurred at the DSME construction yard on 28 December last year, resulting in water ingress to one of the pontoons on the Deepsea Aberdeen while it was moored against a quayside.

The extra $10 million includes additional costs for “project management, preparation for operation, finance costs and net liquidated damages”, it said.

Odfjell has also reported problems with a Blow Out Preventor on another of its units, the Deepsea Metro II drillship: “The BOP challenges causing four weeks at zero dayrate in December 2013 continued for one week into January 2014. In addition, Deepsea Metro II faced new challenges with the BOP in February 2014 causing another three weeks at zero dayrate. The unit is now back in operation,” the Norwegian drilling group disclosed.

Odfjell reported operating revenue for the full year 2013 of $1.174 billion, up 7% or $80 million from the previous year. Full year net profit was $69 million.

Regarding the Mobile Offshore Drilling Unit segment, the company sees a softening in the near-term deep and ultra-deepwater market sectors, “...evidenced by shorter lead times and lack of new long-term tenders”. Odfjell suggests this is being caused by a slowdown in oil companies’ E&P spending and growth in ultra-deepwater rig supply, putting pressure on near-term dayrates. “This will mainly have an effect on the lower spec deepwater units and mid-water units. Odfjell Drilling has a UDW fleet of high spec sixth-generation units, and as such should be less impacted by the market fluctuations.”

Harsh environment sectors such as the North Sea will be in better balance than the UDW market in the near term, the company suggests.

Odfjell’s Deepsea Atlantic is also due to commence a 5-year class survey yard stay at the AF Decomm yard in Vats, Norway, this month. It will also undergo further modification “...to improve the rig’s reliability and compliance with regulations”. The rig is estimated will be out of operation for approximately one month with a total project budget estimated at $55 million.”

Offshore