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Transocean reschedules delivery of ultra-deepwater drillships

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Oilfield Technology,

Transocean Ltd. has agreed with Sembcorp Marine’s subsidiary, Jurong Shipyard Pte Ltd (JSPL), on the delayed delivery of the ultra-deepwater drillships Deepwater Atlas and Deepwater Titan. As part of the agreement, JSPL has agreed to accept deferred payment for both rigs.

The Deepwater Atlas and Deepwater Titan are the world’s first eighth generation ultra-deepwater drillships and only rigs to feature a 3 000 000 pound hook-load. The drillships will include the first 20 000 psi well control system.

Delivery of the Deepwater Atlas is now expected to be in December 2021. Upon delivery, Transocean will make a US$50 million payment to JSPL; the balance of payments owed to the shipyard, or approximately US$370 million, will be payable during a five-year period following delivery pursuant to a secured financing arrangement with the shipyard.

Transocean also has agreed with BOE Exploration & Production LLC (Beacon) that drilling operations on the Shenandoah project in the US Gulf of Mexico are expected to commence during 3Q22. Transocean expects Beacon to commence drilling on its Shenandoah project utilising the Deepwater Atlas following a final investment decision from Beacon and its partners. That decision is expected to be made on or before 31 July 2021.

Delivery of the Deepwater Titan is now expected to be in May 2022. Upon delivery, Transocean will pay JSPL 80% of amounts owed, or approximately US$350 million. 20% of amounts owed, or approximately US$90 million will be deferred and payable over a five-year period following delivery pursuant to a deferred payment arrangement with the shipyard.

Transocean also has agreed with Chevron U.S.A., Inc. (Chevron) that commercial operations of the Deepwater Titan are expected to commence in 1Q23. Transocean’s contract with Chevron maintains its duration and estimated backlog of US$830 million, excluding mobilisation and reimbursables.

Payments under each arrangement will be made in accordance with the respective payment schedules over the terms of each arrangement. Principal balances will carry an interest rate of 4.5% per annum.

“These agreements clearly represent a monumental achievement for Transocean. As the result, we will take delivery of the two highest specification ultra-deepwater drillships in the world, and the only two assets capable of drilling and completing 20 000 psi wells. Notably, as a critical element of these agreements, we will receive shipyard financing, which materially improves our year-end 2022 liquidity by over US$450 million, thus extending our runway and providing us with additional investment flexibility as the industry recovers,” said Jeremy Thigpen, Transocean President and CEO.

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