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Recent letter sent to Rig Lynx from our sources dated April 1, Pacific CEO: With this rapid pace of change we must adapt quickly and make critical decisions that support our longer-term financial viability.
Pacific Drilling CEO:
I want to take this opportunity to communicate with you about the profound impact Coronavirus, or COVID-19, is having on so many around the world and pause to acknowledge each of you who are dealing with this crisis and the uncertainty it continues to present with grace and professionalism.
From a personal and business stand point, COVID-19 is unlike anything our company, our industry or our communities have seen. The levels of commitment and engagement I've seen displayed by so many of you during this crisis are inspiring. Your hard work is having a direct impact on our ability to continue delivering operational excellence.
To everyone working offshore, we are keenly sensitive to the challenges you're confronted with and the unique situation you face during this crisis. More than most, your routine is being impacted. I also recognize the challenges those now working from home are overcoming daily in support of the entire organization. To all, I cannot thank you enough for everything you do for this company.
The outlook for our industry has changed dramatically. You may be aware that both the Sharav and Bora will be finishing their contracts and moving to stacking locations within the coming week. In addition, the Santa Ana is suspending work for the time being at the direction of our client. All of this is a significant change from our outlook of less than two months ago, when we anticipated putting a 5th rig to work on a new long-term contract. I am sharing this unwelcome news so that you may be aware of the extreme challenge the current situation presents and perhaps benefit in some small way from our transparency.
With this rapid pace of change we must adapt quickly and make critical decisions that support our longer-term financial viability. In addition to stacking rigs and reducing crew assigned to rigs transitioning from working to stacked, effective April 1st we will be implementing pay cuts across the entire company. Over the next month, we will also be considering lay-offs, reduced working hours and furloughs as we try to adapt to the new status quo. Although this pay cut will not eliminate the need for further measures, it will certainly reduce the scope and magnitude of those actions.
Please know that none of these decisions will be taken lightly, with undue haste or without consideration for alternatives.
I never lose sight of the fact that the people of Pacific Drilling are the fabric of the company's success, and it is with heavy heart that I communicate our planned actions to you. I am hopeful that we will see a rapid return to better times and, in the meantime, that you and your loved ones stay safe and healthy.
I have the greatest confidence in the Pacific Drilling team and no doubt we will come out the other side of this ready to resume the positive trajectory we were so recently on. Stay safe!
Sincerely,
Bernie Wolford
Photo: Pacific Drilling
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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