Offshore drilling firm Northern Drilling has exercised its previously held option for newbuild drillship Cobalt Explorer from South Korean yard Daewoo Shipbuilding & Marine Engineering (DSME).
Northern Drilling will pay $350m for the ultra-deepwater (UDW) drillship, delivery of which is flexible through the end of the first quarter of 2021.
The Cobalt Explorer is a high-spec Tier 1 UDW drilling ship and is claimed to be the only stranded UDW drillship from Korean yards featuring additional spare parts.
The additional parts include two blow out preventers which are conservatively estimated to have an additional value of $25m each, Northern Drilling said.
The firm said in a statement: “With back-end loaded payment terms and flexible delivery schedule, the Company can comfortably wait for further market improvements in the benign deep water market before electing to take delivery.
“The market for Tier 1 drillships continues to strengthen with several data-points of day rates approaching $300,000 per day for start-up in 2020 and beyond. The Company believes the fundamentals will continue to tighten and is ideally positioning itself with three high-spec drillships due for delivery in 2021.”
The 7th generation DP3 Cobalt Explorer drillship was originally ordered by Vantage Drilling but was terminated in 2015.
In May 2018, Northern Drilling agreed to acquire two drillships West Aquila and West Libra for $296m each from DSME.
At that time Northern Drilling also picked up the $350m option to acquire a third drillship.
Northern Drilling Scott McReaken CEO said: “With the Cobalt Explorer acquisition, Northern Drilling continues to execute on our strategy and adds to our premium fleet of Tier 1 drillships, all acquired at a substantial discount to replacement cost.
“The Company’s two harsh environment rigs were acquired on a similar forward delivery basis and we have successfully secured contracts with premium operators at leading day rates in the North Sea.
“The deepwater market is showing clear signs of a recovery providing increased confidence our drillships will continue to appreciate in value and secure attractive contracts by their delivery in 2021.”