Transocean pulls rig off the shelf for work in Canadian waters, but the contract rate is far less than for previous work. File photo by A.J. Sisco/UPI | License Photo
Rig company Transocean reported a new contract emerged for a long-idled rig, but reported the lease rate came in far below the previous contract.
The company reported that Suncor Energy agreed to lease its Transocean Barents rig designed for harsh environments and ultra-deep waters. The 15-month contract calls for work off the Canadian coast starting in the third quarter of next year for a daily rate of $260,000.
Transocean Barents was last leased to Royal Dutch Shell for work in the North Sea at a day rate of $554,000. The rig has been listed as idled for at least a year.
In a separate statement, the company said it was notified by Indian conglomerate Reliance Industries that a contract for the drillship Discoverer India was canceled five years early.
"Transocean will be compensated by Reliance and its partners for the early termination through a lump-sum payment of approximately $160 million," the company said in a statement.
Discoverer India had a day rate of $528,000. No reason was offered by Transocean for the contract termination, though it follows word from India that it plans to spend billions of dollars to tap further into its offshore reserve basins.
According to industry estimates, India's demand for oil grew by almost 7 percent over last year.
Transocean, which has headquarters in Switzerland, reported net income of $77 million during the second quarter, a rare gain for an industry moving through a protracted decline in crude oil prices.
Capital spending for Transocean for the second quarter of $458 million was up almost 25 percent from the previous quarter because of costs tied to the construction of two new offshore drilling platforms, Deepwater Pontus and Deepwater Conqueror. Operating expenses, meanwhile, of $500 million was down in parallel because of reduced activity during the second quarter.
Revenues were impaired further because Transocean was charging companies less to use its rigs.