Noble to buy Frontier Drilling for $2.16 billion
Drilling contractor Noble Corp. plans to buy privately owned Frontier Drilling for $2.16 billion even though no near-term new drilling is expected for the Gulf of Mexico during court battles over the US moratorium on deepwater drilling.
OGJ Senior Staff Writer
HOUSTON, June 29 -- Drilling contractor Noble Corp. plans to buy privately owned Frontier Drilling for $2.16 billion even though no near-term new drilling is expected for the Gulf of Mexico during court battles over the US moratorium on deepwater drilling.
In May, the Obama administration announced a 6-month moratorium on drilling in more than 500 ft of water, but a federal judge in New Orleans on June 22 granted a temporary injunction, blocking the moratorium.
US Interior Sec. Ken Salazar said he plans to announce new rules blocking deepwater drilling while government regulators and industry review operating procedures and safety regulations (OGJ, June 28, 2010, p. 22).
The moratorium followed the Apr. 20 blowout of BP PLC’s Macondo well, resulting in an explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible rig (OGJ, June 28, 2010, p. 20).
Despite an ongoing oil spill off Louisiana and widespread concerns about deepwater drilling, Noble Chief Executive Officer David Williams said Noble continues looking for more opportunities to expand its fleet.
“For us, no, I don't think it had a big impact,” Williams said during a June 28 conference call on the Frontier acquisition. “It may have for the other parties, but for us it was complicating noise.”
Noble expects closing of the transaction by Judy 31 for Frontier, formally doing business as FDR Holdings Ltd. The acquisition adds six floating drilling units and one floating production, storage, and offloading vessel to Noble's fleet.
Frontier has three dynamically positioned drillships (including two joint venture-owned rigs under construction), two conventionally moored drillships (including one that is Arctic-class), and a conventionally moored deepwater semisubmersible rig.
Day rates renegotiated
Separately, Noble modified its rig contracts with Royal Dutch Shell PLC in the gulf, allowing Shell to suspend contracts, if necessary, during imposed drilling restrictions. Upon the return of drilling in the gulf, those contracts will resume at their full terms and usual day rates, Noble said.
“In exchange, Shell will pay a reduced suspension rate designed to support Noble's highly skilled personnel as well as certain operational support costs, thus ensuring a safe and efficient restart of operations,” Noble said.
Noble’s agreements with Shell are subject to the closing of the Frontier transaction. Those agreements involve:
• A 10-year contract for the ultradeepwater drillship Noble Globetrotter, under construction. The contract calls for a $410,000 day rate for the first 5 years. During the second 5-year period, the day rate will be based on a market index.
• A 10-year contract for a second ultradeepwater drillship, to be constructed with anticipated delivery in second-half 2013. Contract terms and operational capabilities generally are the same as the Noble Globetrotter.
• A 3-year extension for the Noble Jim Thompson, a moored semi operating in the gulf. Under the agreement, Noble agreed to a reduced day rate of $336,200.
Contact Paula Dittrick at email@example.com.