Transocean has won more than US $2 billion in new extensions for three ultra deepwater drilling rigs in the Gulf of Mexico and Norway although, despite its confidence in the long-term future of the market, it also admitted the possibility of near-term ‘idle time’ for some units.

The Swiss-based rig giant revealed unannounced extensions from US major Chevron for two of its ultra-deep units in the GoM, the Discoverer Clear Leader and the Discoverer Inspiration. The Discoverer Clear Leader, currently on a four- year contract extension at $566,000/d until September 2014 with Chevron, had its lease extended by four years at a new rate of $590,000/d, according to Terry Bonno, vice president of marketing. The Discoverer Inspiration, meanwhile, is on a $521,000/d rate until March 2015, after which it received an extension from Chevron for five years at $585,000/d. Both rigs also have performance incentives.

In addition, Transocean also finalised a one-year contract for the Transocean Barents at $615,000/d for one year offshore Norway. “We are also in final negotiations on several other existing ultra-deepwater rigs,” said Bonno. “Our confidence in the long-term future of the ultra-deepwater market continues to be confirmed by the customer interest in the remaining fleet avail- able in 2013 and into 2014. The tendering pace picked up in the deepwater market after a quiet first quarter, and we are currently in discussions with several customers for the available fleet.”

Bonno commented that the ultra-deep rig market remains healthy: “While the pace of fixtures has moderated, we see ample market opportunities to absorb all of the available capacity over the next several years. While the deepwater market utilisation remains over 90% today, we’re seeing some potential for incremental idle capacity in the near term,” she added.

Discussing the potential concern over short-term overcapacity in the sector, she commented on the sheer number of uncommitted units still available, with 20 new contracts already awarded for ultra-deepwater drilling units during the second quarter. “If you look at 2014 in particular, you end up with a number that we haven’t seen in the industry ever. There are 42 rigs. I think there’s about 14 newbuilds that need to be placed, and the rest is a rollover fleet. As we go back to 2008, I think we’ve averaged about 20 to 25 that have been absorbed by our customers. So I think the number’s just a little bit concerning,” she said.

However, she added that there was “plenty of capacity to drill, plenty of opportunities out there, and we see an increasing pool of that as these discoveries continue to mound up for 2013. But I think we have to be cautious about it, and be prepared for it, and get our rigs to work as quickly as we can”.

Transocean’s Q2 2013 revenues were $2.39 billion, compared to $2.19 billion in Q1, while net income was $307 million, down from the first quarter’s figure of $321 million. Contract backlog is currently at $27.3 billion.

The company’s newbuild program will next see the Asgard and Invictus units completed and start work in the first and third quarters of 2014 respectively. It is also building four units for Shell.

Offshore