The note about Chevron and BP having strong appetites for high spec drillships in the US Gulf is key for understanding Transocean's positioning power. Even if Noble's upgraded Voyager and Venturer displace some Shell contracts, Chevron could absorb Proteus capacity at solid rates given their Gulf operations. The 7G+ market isn't as constrained as it looked a few months ago with the upgrade path becoming more competitve.
Another interesting angle to explore is forget all the rigs for a second. We have a rate cut today followed by most likely a future fed president that will cut more. What does this mean for high yield debt? They will likely have even more opportunities to refinance debt/add more value or push the debt walls out even further into the future. These factors have more relevance in my eyes and Tom has alluded to this as well. Love this content. Thanks Tom!
Thanks, Tommy. I always appreciate your insight. I agree with RIG not leasing out incentive stacked contracts at lower rates. I still believe that RIG has the best fleet available and that demand for high spec drill ships will continue to grow through the next several years. We are still in the first or second inning of this game.
Thanks for reading, Joshua. Very curious to see the dayrates RIG will get on its 7G+ dayrates. I'd expect them to announce something ahead of their upcoming refinancing activities similar to what Odfjell did this week.
Thanks Tommy, always very insightful! Kosmos almost mentioned assets sales to manage the deleverahe process and I think GoM is the most likely source of assets.
Would you guess Wintershell-4 well failure was a drilling or a design issue? Maybe it's out of your area of expertise though.
Thanks for reading and the good question. On asset sales, the new loan with Shell is secured by the US Gulf assets -- there's very likely restrictions on selling those assets without paying back Shell with the proceeds so you can't sell those assets and pay back other debt. They could perhaps sell some of GTA to BP (operator), or maybe someone else. Equatorial Guinea is a possibility but not as high of a valuation on those and the operator, Trident, does not have deep pockets.
Regarding Winterfell, only guessing but sometimes operational issues can arise when using new floaters for various reasons. BlackRhino had previously been in West Africa and moved to the US Gulf for this work for Beacon. Kosmos said the reservoir is fine. Deepwater drilling is complex and its often helpful to have consistency with the rig, crew, operator, etc on development drilling
True, and selling the GoM assets would not be good for the credit facility.
Eq Guinea or GTA may be sold, but I think selling GTA would be the last resource. I'm also interested in Kosmos' assets in Guinea, as Panoro is a company I follow and it's a partner in most licenses.
The note about Chevron and BP having strong appetites for high spec drillships in the US Gulf is key for understanding Transocean's positioning power. Even if Noble's upgraded Voyager and Venturer displace some Shell contracts, Chevron could absorb Proteus capacity at solid rates given their Gulf operations. The 7G+ market isn't as constrained as it looked a few months ago with the upgrade path becoming more competitve.
Another interesting angle to explore is forget all the rigs for a second. We have a rate cut today followed by most likely a future fed president that will cut more. What does this mean for high yield debt? They will likely have even more opportunities to refinance debt/add more value or push the debt walls out even further into the future. These factors have more relevance in my eyes and Tom has alluded to this as well. Love this content. Thanks Tom!
Thanks, Tommy. I always appreciate your insight. I agree with RIG not leasing out incentive stacked contracts at lower rates. I still believe that RIG has the best fleet available and that demand for high spec drill ships will continue to grow through the next several years. We are still in the first or second inning of this game.
Thanks for reading, Joshua. Very curious to see the dayrates RIG will get on its 7G+ dayrates. I'd expect them to announce something ahead of their upcoming refinancing activities similar to what Odfjell did this week.
Thanks Tommy, always very insightful! Kosmos almost mentioned assets sales to manage the deleverahe process and I think GoM is the most likely source of assets.
Would you guess Wintershell-4 well failure was a drilling or a design issue? Maybe it's out of your area of expertise though.
Thanks for reading and the good question. On asset sales, the new loan with Shell is secured by the US Gulf assets -- there's very likely restrictions on selling those assets without paying back Shell with the proceeds so you can't sell those assets and pay back other debt. They could perhaps sell some of GTA to BP (operator), or maybe someone else. Equatorial Guinea is a possibility but not as high of a valuation on those and the operator, Trident, does not have deep pockets.
Regarding Winterfell, only guessing but sometimes operational issues can arise when using new floaters for various reasons. BlackRhino had previously been in West Africa and moved to the US Gulf for this work for Beacon. Kosmos said the reservoir is fine. Deepwater drilling is complex and its often helpful to have consistency with the rig, crew, operator, etc on development drilling
True, and selling the GoM assets would not be good for the credit facility.
Eq Guinea or GTA may be sold, but I think selling GTA would be the last resource. I'm also interested in Kosmos' assets in Guinea, as Panoro is a company I follow and it's a partner in most licenses.
Interesting times!!!
*also, not almost
Very informative as always Tommy
Thanks for continuing to read, Gp. More to follow. Hopefully this post does not make me look stupid in 6 months!
Well considering you are the smartest one I’ve found on the deepwater substack I highly doubt that!