Transocean said it agreed with a contractor to hold off on at least five new rigs. Lower oil prices means less demand for robust exploration and production programs. File Photo by James Jones Jr./Shutterstock
ZUG, Switzerland, March 8 (UPI) -- Offshore rig company Transocean said Tuesday payments and delivery for five new drilling rigs was now delayed following an agreement with its contractor.
Transocean said it made a mutual agreement with rig builder Keppel Offshore & Marine to defer work on five class Super B 400 jackup rigs.
"The Super B 400 Bigfoot Class jackup drilling rigs are now scheduled to be delivered in two- and three-month intervals beginning in the first quarter of 2020," Transocean said in a statement.
The rigs were originally scheduled for delivery starting progressively from the first quarter of this year.
Transocean handed out the $1.1 billion contract to Keppel in 2013. The agreement included the option for five more rigs and, at the time, the company said the deal was a testament of the strength of the market and of its relationship with Transocean.
Crude oil prices are off about 70 percent from their peak levels above $100 per barrel in mid-2014, leaving energy companies with less capital to invest in exploration and production. With oil trading lower, Transocean said the market does not support sustained demand for drilling rigs.
In February, the company joined its peers in expressing concern about short-term market trends. In a filing to the U.S. Securities and Exchange Commission, the rig company said the market should be "especially challenging" for the immediate future.
An Angolan subsidiary of Exxon Mobil recently canceled a contract for Transocean's ultra-deepwater GSF Development Driller I rig. Murphy Oil Corp. told Transocean in early February it was canceling its contract for the Discoverer Deep Seas rig in the Gulf of Mexico.