Global Sante Fe orders US$740m drillship
GlobalSantaFe Corp, the offshore oil and gas driller being acquired by Transocean Inc for US$17 billion, ordered an ultra-deepwater drillship for US$740 million to capitalise on increasing demand from producers.
The drillship, to be built by Hyundai Heavy Industries LP, is expected to be delivered by September 2010, the Houston-based company said Tuesday in a statement. The drillship will be able to operate in water depths up to 10,000 feet, with a possible upgrade to 12,000 feet.
The market for deepwater drillships has increased with the price of oil as producers have pushed to meet global demand. GlobalSantaFe placed the order without a contract because of a 'high degree of confidence' in the ultra-deepwater market, chief executive officer Jon Marshall said in the statement.
'You always have to question a speculative investment like this,' said Mark Urness, an analyst at Calyon Securities USA Inc in New York, who rates GlobalSantaFe shares a 'buy' and doesn't own any. 'It sounds like GlobalSantaFe will be able to have a contract within a year.' The new drillship announced Tuesday brings the number of drillships under construction worldwide to 20, nine of which have no contract, according Jud Bailey, an analyst at Jefferies & Co in Houston, who rates Transocean and GlobalSantaFe a 'buy' and doesn't own the shares.
Mr Bailey said GlobalSantaFe probably decided to build the rig to use available shipyard space now, rather than lose it and risk not being able to construct a new rig for delivery until 2011.
'They've been negotiating with oil companies, but negotiations can drag on and on,' he said, adding he thinks this rig will be marketed to BP Plc for work in the deepwater Gulf of Mexico.
Credit Suisse analyst Arun Jayaram said in a note Tuesday that GlobalSantaFe was likely 'engaged in a 'chicken or the egg' discussion with customers and needed to confirm a delivery spot before signing a contract'. Pride International Ltd, another US driller, said in July it would build a drillship without a contract for delivery in 2010, also citing limited shipyard availability.
The GlobalSantaFe drillship will have triple-activity load paths, a derrick rated for £4 million (S$12 million) and dual liquid-storage systems. Ultra-deepwater drillships currently fetch dayrates in excess of US$500,000 in certain markets.
'It's the most expensive drillship I've ever heard of,' said Mr Urness. 'It sounds like this will be the largest and most capable drillship ever.'
The drillship order will increase debt for the combined Transocean and GlobalSantaFe once the merger is complete.
The deal is already expected to raise Transocean's debt-to-capital ratio from 29 to 65 per cent, according to a filing. Transocean has said the new company's US$33 billion backlog will maintain its investment-grade credit rating.
Tuesday's announcement also means more work for manufacturers like National Oilwell Varco Inc and Cameron International Corp, which build rigs and their components, Mr Jayaram said.
The drillship, to be built by Hyundai Heavy Industries LP, is expected to be delivered by September 2010, the Houston-based company said Tuesday in a statement. The drillship will be able to operate in water depths up to 10,000 feet, with a possible upgrade to 12,000 feet.
The market for deepwater drillships has increased with the price of oil as producers have pushed to meet global demand. GlobalSantaFe placed the order without a contract because of a 'high degree of confidence' in the ultra-deepwater market, chief executive officer Jon Marshall said in the statement.
'You always have to question a speculative investment like this,' said Mark Urness, an analyst at Calyon Securities USA Inc in New York, who rates GlobalSantaFe shares a 'buy' and doesn't own any. 'It sounds like GlobalSantaFe will be able to have a contract within a year.' The new drillship announced Tuesday brings the number of drillships under construction worldwide to 20, nine of which have no contract, according Jud Bailey, an analyst at Jefferies & Co in Houston, who rates Transocean and GlobalSantaFe a 'buy' and doesn't own the shares.
Mr Bailey said GlobalSantaFe probably decided to build the rig to use available shipyard space now, rather than lose it and risk not being able to construct a new rig for delivery until 2011.
'They've been negotiating with oil companies, but negotiations can drag on and on,' he said, adding he thinks this rig will be marketed to BP Plc for work in the deepwater Gulf of Mexico.
Credit Suisse analyst Arun Jayaram said in a note Tuesday that GlobalSantaFe was likely 'engaged in a 'chicken or the egg' discussion with customers and needed to confirm a delivery spot before signing a contract'. Pride International Ltd, another US driller, said in July it would build a drillship without a contract for delivery in 2010, also citing limited shipyard availability.
The GlobalSantaFe drillship will have triple-activity load paths, a derrick rated for £4 million (S$12 million) and dual liquid-storage systems. Ultra-deepwater drillships currently fetch dayrates in excess of US$500,000 in certain markets.
'It's the most expensive drillship I've ever heard of,' said Mr Urness. 'It sounds like this will be the largest and most capable drillship ever.'
The drillship order will increase debt for the combined Transocean and GlobalSantaFe once the merger is complete.
The deal is already expected to raise Transocean's debt-to-capital ratio from 29 to 65 per cent, according to a filing. Transocean has said the new company's US$33 billion backlog will maintain its investment-grade credit rating.
Tuesday's announcement also means more work for manufacturers like National Oilwell Varco Inc and Cameron International Corp, which build rigs and their components, Mr Jayaram said.
