A subsidiary of Royal Dutch Shell plc has signed a letter of intent (LOI) with Noble Corp. to secure a drilling rig for the Gulf of Mexico (GOM) deepwater.
Under the LOI, Noble agreed to provide the Noble Jim Day, a 12,000-foot ultra-deepwater semisubmersible to operate in the GOM effective Feb. 15 through Jan. 31, 2012. The LOI rates depend on whether Shell is able to secure offshore drilling permits under the revamped requirements enacted by the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement that are being challenged in court (see Daily GPI, Feb. 18; Feb. 8).
"This is an extremely high-quality rig and there was significant customer interest; however, other opportunities that would have required a mobilization out of the U.S. Gulf would have precluded us from being able to begin recognizing revenue until much later in the year," said Noble CEO David Williams. "Furthermore, the terms of the LOI ensure that under the contract we would earn a full operating dayrate beginning no later than Aug. 1 with potential upside if Shell is able to secure a drilling permit sooner. And the short-term nature of the commitment positions us well if dayrates increase as expected in the latter half of the year."
Beginning Aug. 1, or sooner if Shell secures the required federal drilling permit, the operating dayrate for the Noble semisubmersible would be $485,000/day. The drilling unit would be eligible for a performance bonus of up to 15% of the dayrate while the operating permit is in place. The LOI is subject to Shell executing a drilling contract, but the parties have agreed to the basics.
If Shell is unable to secure the required federal permit, Noble would receive a standby rate of $156,000/day from Feb. 15 through May 31; and $242,000/day from June 1 through July 31, according to the LOI.
Noble said the standby rates on three of its other units under contract with Shell in GOM are set to go higher. Effective Feb. 1, the standby rates on the Noble Jim Thompson and Noble Driller increased to $85,000/day from $47,800/day. If the Noble Danny Adkins returns to a standby rate because of a lack of permits, the dayrate is to increase to $156,000/day from $69,000.
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