Transocean's latest rig contract revised lower

ZUG, Switzerland, July 22 (UPI) -- Offshore rig company Transocean revealed it started on a new contract for drilling in the deep waters of the U.S. Gulf of Mexico, though at a reduced day rate.

The company issued its latest fleet status report, showing one of its rigs, Sedco 702, was held for sale, while its estimated out-of-service days increased by a net 155 for the year so far. Limited contracts were awarded for British and Norwegian waters and for operations offshore India.

"In May, the newbuild ultra-deepwater drillship Deepwater Proteus commenced operations on its 10-year contract in the U.S. Gulf of Mexico at a current dayrate of $498,000," the company said in its latest report. "In accordance with the drilling contract, this dayrate reflects adjustments for reduced operating costs."

Transocean in March deferred the build of five new rigs until the first quarter of 2020 following a mutual agreement with rig builder Keppel Offshore & Marine, which secured a $1.1 billion contract from Transocean in 2013.

The company in February had two rig contracts canceled early. Since 2015, it had a total of 11 contracts pulled prematurely as energy companies spend less on exploration and production during the market downturn.

The International Energy Agency said the energy industry has cut more than $300 billion in spending over the past two years. Despite the recovery in crude oil prices, a significant increase in investments is unlikely next year, the Paris-based agency said.

In a March letter to shareholders, the Transocean said it moved through the weak energy market in 2015 better than anticipated, but expected significant challenges for 2016.