$4.25 billion North Atlantic Drilling, Rosneft Delay Deal Agreed
— Published in Oil Industry News on Thursday, 23 April 2015
Norway-based North Atlantic Drilling (NADL) and Russia’s Rosneft recently agreed to extend the termination date of the 2014 framework agreement until May 31, 2017. The agreement states that either party can end the agreement, including any offshore drilling contracts, at any time prior to May 31, 2017 at no cost. Previously, the termination date was May 2015.
Also, both companies agreed to use “reasonable efforts” to renegotiate the terms and characteristics of the transactions included in the agreement and the terms of the related offshore drilling contracts.
In 2014, North Atlantic signed a US$4.25 billion deal with Rosneft for six rigs to operate in the Russian Arctic up to 2022. Part of the NADL-Rosneft deal allowed Rosneft to buy 30% of North Atlantic in exchange for land rigs and cash and is also not covered by the existing sanctions.
One of North Atlantic’s major projects is its West Alpha rig, which is working in the Kara Sea in Russia, under contract for Rosneft’s Arctic joint venture with ExxonMobil. The contract is for $552,000 per day and West Alpha is due to be working for Rosneft until 2022.
North Atlantic specializes in drilling in offshore harsh environments in the North Atlantic region. Its fleet includes a drillship, three jackup rigs and four semisubmersibles. According to the Financial Times, North Atlantic accounts for over 40% of Russian oil production.
In March, Rosneft sent NADL cancellation notices for the Energy Endeavor jackup and the West Navigator.
The Energy Endeavor agreement was part of a multi-rig contract to provide drilling services in the Russian Arctic, set to begin in the 2015 summer drilling season.
Rosneft dropped the contract for the West Navigator, which was also scheduled to begin work this summer. The cancellation reduced NADL’s contract backlog by $1 billion.
The West Alpha was pulled from the Arctic in September 2014 due to sanctions. The vessel was under contract with Rosneft and ExxonMobil to drill in the East-Prinovozemelskiy-1 license, at the Universitetskaya-1 well.
In December, ExxonMobil received consent from the Petroleum Safety Authority Norway to use the West Alpha on the Balder field, in the central North Sea.