American offshore drilling company Transocean announced that BOE Exploration & Production LLC (BOE) has awarded Transocean a contract worth $252mn for its new-build ultra-deepwater drillship, the Deepwater Atlas, which includes a mobilization fee of $30mn. In addition, the contract offers a significant performance bonus based on agreed operating metrics. This award results from the final investment decision of BOE and the Shenandoah working interest owners to sanction the previously announced Shenandoah project in the US Gulf of Mexico.

The Shenandoah program comprises two phases. After being delivered from the shipyard, Deepwater Atlas is expected to begin operations in the third quarter of 2022, initially using dual blowout preventers (BOP) rated at 15,000 psi. The initial drilling plan is expected to last approximately 255 days and generate approximately $80mn in contract drilling revenue. Once the initial drilling plan is completed, a 20,000 psi BOP will be installed on the rig, making it Transocean’s second asset, equipped with a 20,000 psi well control system. Installation and commissioning of the BOP is expected to take 45 to 60 days and contribute approximately $17mn in revenues. After installing the 20,000 psi BOP, Deepwater Atlas will begin the second phase of the project – the completion plan. This phase is expected to last approximately 275 days and contribute approximately $125mn in contract drilling revenue.

Transocean’s President and CEO Jeremy Thigpen mentioned that it’s a significant milestone for the company as they venture into the “new frontier of ultra-deepwater drilling”. He added, “We are very encouraged by the growing list … of 20,000 psi opportunities in the U.S. Gulf of Mexico” and “we are the undisputed market leader in this space, and thus excited about the future prospects for these state-of-the art assets”.

Transocean’s 11.5% 2027s are up 1.5 points, trading at 100.5 currently.

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