Atwood extends drillship contract, negotiating Brazil job

Atwood Advantage

NOVEMBER 10, 2015 — In what’s become unusual in the current market, a drilling contractor today had two pieces of positive news to report.

Atwood Oceanics, Inc. (NYSE: ATW) said today that it had gotten both a contract extension for an ultra deepwater drillship and a letter confirming that it has been chosen to enter exclusive negotiations for the use of one of two under-construction drillships on a Brazil contract.

An extension and rate adjustment with Noble Energy, Inc., effective yesterday, will see the ultra-deepwater rig Atwood Advantage extend its contract for the purposes of a plugging and abandoning four well program in the Gulf of Mexico that has an estimated duration of one hundred and twenty (120) days during the contract term and is anticipated to occur in 2016.

The extension adjusts the operating day rate to approximately $240,000 per day only during the four plug and abandon wells and makes the new contract expiry date approximately August 2017.

The letter of agreement is with an undisclosed operator for a drilling program offshore Brazil commencing in the third quarter of 2017.

The letter specifies that either the Atwood Admiral or Atwood Archer, ultra-deepwater drillships currently under construction at the Daewoo Shipbuilding & Marine Engineering Co. shipyard in South Korea, would be contracted to drill the program.

The letter specifies a number of contractual items that have been agreed by the parties, including the commercial rates, well count, minimum term length, and rig acceptance criteria.