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Samsung Heavy Finds a Buyer for Unwanted Ultradeepwater Drillship

Ocean rig
An Ocean Rig drillship in 2016, before the firm was acquired (File image courtesy FAR Limited)

Published Dec 3, 2021 12:06 AM by The Maritime Executive

Samsung Heavy Industries has found a buyer for an unwanted high-spec drillship that was canceled three years ago. 

Long-defunct driller Ocean Rig ordered the ultradeepwater drillship Ocean Rig Crete back in 2014, with delivery scheduled in three years. When oil prices plummeted in 2015, the company delayed the rig's delivery by another year, citing deteriorating market conditions. 

The market did not recover, and Ocean Rig was forced to file for a prepackaged bankruptcy in 2017. In September 2018, after the bankruptcy proceeding, competitor Transocean bought Ocean Rig for $2.7 billion and absorbed its fleet. Transocean also took over the rights to two drillships still under construction, Ocean Rig Crete and sister ship Ocean Rig Santorini.

In 2019, with the market still oversupplied and showing few signs of improvement, Transocean canceled both rig orders - saving Transocean about $1.1 billion and leaving Samsung Heavy Industries with two unfinished hulls. 

This week, SHI announced that it has found an unnamed European buyer who will pay $245 million for Ocean Rig Crete in finished form. The price is a steep markdown: in 2017, the vessel was valued at about $425 million, and the original order value was even higher. If all goes well and the buyer confirms the agreement, the vessel will be delivered in the first quarter of 2023.

SHI has already made the unusual decision to finish the Ocean Rig Santorini on its own, without a buyer. In a novel arrangement, the renamed Samsung Santorini will be bareboat-chartered to Saipem for a two-year period beginning in late 2021. The contract provides Saipem with an option to buy if it likes the rig and market conditions support a sale. 

"Santorini increases our production capacity and allows us to meet the demand for new contracts at a stage in which Saipem’s current offshore drilling fleet has almost full contractual coverage for the next few months," said Saipem's COO of Drilling Offshore, Marco Toninelli. 

With both of the unwanted Ocean Rig newbuilds headed off to work at last, SHI has whittled its backstock of canceled drillships down to three. In a statement, the firm said that it is looking to sell all of them as soon as possible.