Seadrill Orders Four New Ultra-Deepwater Drillships

Seadrill Limited signs turnkey contracts with two separate Korean shipyards for the construction of the drillships.

Two drillships will be built at the DSME yard and the other two at the Samsung yard.The project value price is estimated to be below US$600 million per unit (including project management, drilling and handling tools, spares, capitalized interest and operations preparations).  Delivery of the 4 units is scheduled for the second half 2015.  Seadrill has in addition received fixed priced options for delivery of two further units for delivery in the first half 2016. 


The drillships will have a hook load capability of 1,250 tons and a water depth capacity of up to 12,000 feet targeting operations in areas such as the Gulf of Mexico, Brazil and West and East Africa. Also, these units will be outfitted with seven ram configuration of the blowout preventer (BOP) stack and with storing and handling capacity for a second BOP. The units include design and equipment features, which makes them particularly attractive for development drilling. For two of the drillships, Seadrill has received options to include equipment which makes the units prepared for 20K BOP systems.

Seadrill's construction program now totals 22 units, including 9 drillships, 2 harsh environment semi-submersibles, and 11 high specification jack-ups. In addition the Company has fixed priced options for two ultra-deepwater units.

The offshore drilling market has absorbed approximately 261 new units since 2005 and the utilization of the ultra deepwater fleet has been 100% since Seadrill was established in 2005. In the same period offshore production has been estimated to be marginally down. This illustrates in very simple terms the increased complexity of the development of new oil and gas reserves.

Seadrill has spent significant time and effort analyzing the future demand of the ultra deepwater drilling market.  Ultra deepwater production is estimated to increase from around 1 million barrels per day today to 5 million barrels per day over the next 6 years. In order to reach this target significant new development drilling capacity will have to be added. At the same time, the industry faces a situation where approximately 49% of the current floater fleet is older than 20 years. We have already seen a strong trend where fourth and fifth generation vessels are incapable of meeting oil companies' new requirement for safety margin and deck load capacity and are being replaced with newer units.

The Board of Seadrill indicates it is of the opinion that the current order book for 2014 - 2016 of approximately 39 units will be fully absorbed, and utilization will continue at very high levels with solid dayrates for the modern equipment.