Vantage Drilling Company has confirmed the startup of operations for one of its ultra-deepwater drillships in South East Asia, as well as receiving a US $100 million Letter of Intent (LoI) for its Sapphire Driller jackup rig.

However, the rig company has also admitted virtually in the same breath that the future of another part-owned drillship under construction at the struggling STX yard in South Korea is in doubt and that construction is currently suspended.

The successful operational startup in SE Asia is for the company’s Tungsten Explorer drillship, which began work on 20 September, it said. The Sapphire Driller, meanwhile, received an LoI for an 18-month contract plus options to work offshore West Africa. This contract will replace a previously announced 2-year Letter of Award, said Vantage, as it was “unable to satisfactorily resolve significant contract issues with the previous customer”. The estimated revenue over the initial 18-month term of the contract is approximately $100.4 million, including mobilisation.

Related to the situation with the STX yard, Vantage said that Sigma Drilling Ltd. (in which it holds a 42% stake) is contracted to build the ultra-deepwater drillship Palladium Explorer at the STX Offshore & Shipbuilding Co. Ltd. yard. It stated: “As has been widely reported, STX has commenced, with the support of the Korean Development Bank and its other banks, to significantly restructure STX’s operations and finances. In connection with these restructuring efforts, STX has currently suspended construction efforts for the Palladium Explorer. Sigma and Vantage are discussing with STX the possible means for execution of the remaining contracted work scope.

“It is anticipated that an agreeable work plan would result in a delivery in the first or second quarter of 2016. If a new work plan acceptable to Sigma and Vantage is not agreed, it is possible that the contract with STX will be terminated and refund guarantees will be claimed along with other available remedies. Sigma’s investment in the Palladium Explorer is covered by a refund guarantee provided by a Korean bank.”

  • Vantage also noted that it is winding down its efforts with respect to construction oversight of the Dalian Developer, which it has been providing at a shipyard in China on behalf of its customer. Vantage plans to provide additionally limited support, as necessary, and is to receive another six months of revenues from the project.

Vantage has a fleet of four jackup rigs and three ultra-deep drillships (the Platinum Explorer, the Titanium Explorer, and the Tungsten Explorer), as well as an additional ultra-deepwater drillship, Cobalt Explorer currently under construction.

Last year Vantage confirmed it had so far invested US $31 million in the JV established for the purpose of constructing the new, high specification drillship at STX in South Korea, with options for four more beyond that.