Why would Songa Sell a relatively new UDW rig to Seadrill?

Offshore
1

Seadrill announced today that they have entered into a Heads of Agreement (HoA) with Songa Offshore SE for a potential purchase of the ultra deepwater semi-submersible rig [I]Songa Eclipse[/I]. The Songa Eclipse is currently on an 18 month contract with Total E&P Angola which comes with an option for three, one-year extensions. Its current 18-month contract expires at the end of 2013.

Considering Ultra-deepwater (UDW) rigs are being cranked out at record pace, and rig rates off W. Africa are at a premium, why would Songa want to give up an asset like that? Anyone have insight?

2

Well I would have to think that SeaDrill is offering a premium to Songa for the rig and contract. From Songa’s viewpoint, they have only the ECLIPSE in Angola so cost to operate there must be particularly high for them with just one rig. In addition they have the four semisubmersibles coming in the next two years from Daewoo which are all on longterm contracts to Statoil for the Norwegian sector of the North Sea which alone is going to be a huge bit of work for them. I would imagine that being so small and resource limited, to cut the focus to one region and put everything they have into it. For a client like a Statoil, the long term dividends would be well worth it.

Anyway, just my take on the announcement.

3

They can’t keep the rig crewed. They are having issues with the local crews and they can not keep expats on it because of the problems with locals. The management of the rig seems to be failing.

4

c.captain, thanks, that’s kinda what I was thinking too. Capt. Lee, that’s very interesting insight, much appreciated.

We’ll see what Songa has to say, I reached out to them this afternoon.

5

[QUOTE=rob;86318]c.captain, thanks, that’s kinda what I was thinking too. Capt. Lee, that’s very interesting insight, much appreciated.

We’ll see what Songa has to say, I reached out to them this afternoon.[/QUOTE]

I guess you guys haven’t heard what went on on that rig and the Axe man. More than likely its a crewing issue now, due to the turbulence caused by the locals onboard.

6

For your viewing. An email we received from the Bridge Team over there:

Hello Guys,

Just wanted to keep you guys up to speed with our current situation on the Eclipse. I am not sure what you know or if you have heard anything, so here it goes.

We had another mad axe man, this time he tried to attack Socky and wanted to hurt Bruce (STP). We had to do an emergency evacuation of Bruce by helicopter, while the axe man was still here, he is not coming back. Up until the Evac he had to be locked in various cabins and brought food. After Bruce was evacuated, Songa paid off the axe man’s wife with cash in Luanda as he had a 1 year contract, he is due the rest of the years money if he gets fired. So his wife got the money and he left, but he is now seen as a hero amongst the rest of the locals.

All the Expat’s are incredibly mad with Songa’s response (essentially nothing, Captain requested police on the first day and Songa didn’t even know the Phone number to call, police were never sent). After the first axe man they promised us to have a solid plan in place for the next time. So the expats’s went on strike after this and stopped working/drilling, except the Dpo’s of course!

Now the situation has become worse, we had a meeting with all the locals and expat’s. The locals accused basically all the expat’s of being “Racists”, in no uncertain terms. They also voiced that they thought what the axe man did was right and that some of the supervisors on board deserve to be hurt.

After this almost the entire drilling crew onboard quit or asked to be taken off immediately (today) and put on another rig, the only ones left are Craig (TP), Mark (rig super), Nicolas (AD), and Tony Cass (trainee driller). Also a large part of subsea dept appears to be quiting. And Ricky Pork even had to resign from Eclipse because the Locals made a direct threat to punch him in our last meeting. He is currently in hiding in cabins.

We have heard upper management is going to come out today and try to talk everyone into staying, so we will see what happens there.

We have shifted the remaining crew onboard to 1 shift and are sealing off the well, pulling riser and BOP to surface, standing by for good bye. The situation is too out of control to continue working right now, and we don’t have nearly enough people to do it anymore anyways. As you can imagine there is lots of speculation amongst all of what will happen next, nobody really knows though at this point. So anything you hear is probably just that, speculation.

There is supposed to be a locals crew change today and they don’t know it yet, but for the locals going off today, they will not have any replacements coming and will not be coming back. There is great fear in doing this amongst guys onboard that once we try to get rid of 50% of local crew today, there will be a massive uprising.

Enjoy the rest of your time off and we look forward to seeing you guys soon!

Cheers,

Bridge team
Alex and Adam

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[QUOTE=PDCMATE;86321]I guess you guys haven’t heard what went on on that rig and the Axe man. More than likely its a crewing issue now, due to the turbulence caused by the locals onboard.[/QUOTE]

Dude, everyone that works on drilling rig has seen that e-mail!

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We have an AD that came from the Eclipse, one week before this happened. Also was able to talk to the RM when it happened and confirm.

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[QUOTE=PDCMATE;86321]I guess you guys haven’t heard what went on on that rig and the Axe man. More than likely its a crewing issue now, due to the turbulence caused by the locals onboard.[/QUOTE]

Thanks for this news…sure makes me happy to stay right here in the good ol GoM even if the pay is less. Lord knows there’s enough people here who’d love to chase me around a rig with an axe…don’t need to have to face that horror half way across the globe.

Btw, did you see the tidbit in Noble’s explanation of why they aren’t making as much money as analyst’s hoped due to labor unrest on their rigs in Brazil? Gotta makes me wonder if that won’t be happening more and more down there with the American drilling contractors? They hate all of us Gingos (or whatever derogatory term they use for us down there) anyway and I am sure would love to stick the shiv in any chance they get. Of course, I don’t care much for any of them either so we’re even! Lazy and arrogant…what a combination!

.

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The only thing a rig can do by itself is rust. For everything else it takes people. Not just any people, but the right mix to create a crew that can drill the hole, keep the lights on and remain on location. From the laundry boy to the OIM, everyone has a part to play. Some never get that.

11

I heard back from Songa, and according to a statement by their CFO in an interview in on a Norwegian news website, they’ve been looking at this deal since May. They didn’t provide any further insight beyond that.