Ensco - Complete Fleet Status Analysis As Of July 18, 2016 And Commentary

| About: Ensco PLC (ESV)

Summary

Ensco released its fleet status on July 18, 2016. It was a very busy period with terminations and new contracts. ESV sold six rigs at scrap value.

The backlog estimated remaining for Ensco as of July 18, 2016 is $4.22 billion.

The offshore drilling industry is still struggling. However, we start to see some "green shoots" which suggest a possible recovery late 2017.

Click to enlarge

Picture: Ensco 6003

Ensco PLC (NYSE:ESV)

This article is an update of my preceding article on the FSR April 11, 2016.

Fleet Status as of July 18, 2016.

1. Drillships

# Name

Year

Built

Water Depth Max

K feet

Contract

End

Day rate

K $

Location

Info

0-rate

1

Ensco DS-6

2011

10/12 2/18

548 363 - (to 8/16 standby)

485 +102 (8/16-2/18)

[BP]

Angola

2x1Y option

2

Ensco DS-7

2013

10/12

11/17

585 +19

[Total]

Angola

1Y option
3

Ensco DS-8

2014

10/12

11/20

From $618 +14

[Total]

Angola

1 Y option
4

Ensco DS-10

2015

10/12

under constr.

Deferred by 18 months

Q1' 17

Available

South Korea -
Click to enlarge

2. Semi-Submersibles

# Name

Year

Built

Upg.

Water

Depth

Max

K feet

Contract

End

Day rate

K $

Location

Info.

0-rate

1

Ensco 8504

2011

8.5/10

10/16

265

[Chevron]

[Kangean]

Indonesia

2

Ensco 8505

2012

8.5/10

1/18 8/16

155

[Marubani]

U.S. GOM

Customer exercised right to early terminate the contract effective 8/16
3

Ensco 8506

2012

8.5/10

9/16

9/16 - mid 1/17

Available

N/K

[Deep Gulf Energy]

US GoM

4

Ensco 6001

2000

5.7 6/18

278

+20 amort.

[Petrobras] Brazil
5

Ensco 6002

2001

5.7

7/18 12/19

245

+17 amort.

[Petrobras] Brazil

Bonus 15% possible

6

Ensco 5004

1982

1.5

1/17

1/17 -7/18

135 + 9

195 + 9

[Mellitha] Mediterranee
7

Ensco 5006

1998/1999

7.5

5/18 8/19

475 355 + 125

[Inpex] Australia
Click to enlarge

3. Jackups

# Name

Year

Built

Upg

Water Depth Max

K feet

Contract

End

Day rate Location Info.
1

Ensco 141

2016

Cap. 400' Under-construction 8/16 UAE -
2

Ensco 140

2016

Cap. 400' Under-construction 7/16 UAE -
3

Ensco 123

2016

Ultra-Premium Harsh Environment Water Depth Max: 400'

Under-construction

Delayed 19-month

1Q'18

Singapore -
4

Ensco 122

2014

Ultra-Premium Harsh Environment Water Depth Max: 400'

10/16

10/16-11/16

232+14

125+14

[NAM]

Nz

1-well option
5

Ensco 121

2013

Ultra-Premium Harsh Environment Water Depth Max: 400' 8/16

95

[Wintershall]

Nz

(14d) 2Q'16

+1Y unpriced option

6

Ensco 120

2013

Special Capabilities: High Specification, HPHT Capable Water Depth Max: 400'

8/16

182 +11

[Nexen]

U.K.

+ 2x1 well opt.

+ 5x 1 well unpriced opt.

7

Ensco 110

2015

Special Capabilities: High Specification, HPHT Capable Water Depth Max: 400'

10/16

83

[NDC]

UAE

2x1Y unpriced opt.
8

Ensco 109

2008

Special Capabilities: High Specification, HPHT Capable Water Depth Max: 400'

1/18

172

+13 for mob.

[Chevron]

Angola

(20d) 4Q'16
9

Ensco 108

2007

High Specification, HPHT Capable Water Depth Max: 400' 4/17 162

[PTTEP]

Thailand

1Y option
10

Ensco 107

2006

High Specification, HPHT Capable Water Depth Max: 400' 9/16 - 3/17 128

[Chevron]

Australia

1x6m Opt
11

Ensco 104

2002 2011

High Specification, HPHT Capable Water Depth Max: 400'

12/17

1/18-9/18

85

95

[NDC]

UAE

2-year unpriced option

(75d)3Q'16

12

Ensco 102

2002

High Specification, HPHT Capable Water Depth Max: 400' 8/16 55

[GDF]

UK

3x1 month option
13

Ensco 101

2000

Heavy Duty, HPHT Capable Water Depth Max: 400'

8/16

55

[BP]

U.K.

1x6 months unpriced option

14

Ensco 100

1987 2009

Heavy Duty, HPHT Capable Water Depth Max: 400'

11/18

185

[Premier oil]

U.K.

15

Ensco 97

1980

Water Depth Max: 250'

12/16

12/16-2/19

69

125

[Aramco]

Saudi Arabia

-
16

Ensco 96

1982 2011

Water Depth Max: 250'

12/16

12/16-2/19

65

125

[Aramco]

Saudi Arabia

-
17

Ensco 94

1981 2008

Water Depth Max: 250'

8/16

85

[Aramco]

Saudi Arabia

1Y priced option
18

Ensco 92

1982 1996

Water Depth Max: 225'

1/17

1/17-8/18

95

TBA

[Conoco

Phillips]

U.K.

19

Ensco 88

1982 2004

Water Depth Max: 250'

11/16

85

[Aramco]

Saudi Arabia

1Y priced option

(14d)4Q'16

20

Ensco 87

1982 2006

Water Depth Max: 250'

9/16

9/16 - 10/16

Avalaible

52

[Castex]

GoM

21

Ensco 80

1978 2011

Water Depth Max: 225' 4/17 145

[GDF]

U.K.

opt. +Cost adj. and option

(30d)3Q'16

22

Ensco 76

2000

Special Capabilities: HPHT Capable Water Depth Max: 350'

12/16

12/16-12/18

125

172

[Aramco]

Saudi Arabia

23

Ensco 75

1999

Special Capabilities: HPHT Capable Water Depth Max: 350'

7/16-9/19

9/16-11/16

11/16-12/16

42

-

42

[Talos/Rooster]

US GoM

24

Ensco 72

1981 2012

Water Depth Max: 225'

8/16

95

[Maersk] Denmark
25

Ensco 71

1982

Water Depth Max: 225'

7/18

95 [Maersk] Denmark
26

Ensco 68

1976 2004

Water Depth Max: 400' 7/16 68

[Chevron]

GOM

27

Ensco 67

1976 2005

Water Depth Max: 400'

12/16

12/16 - 10/17

Available

N/K?

[?]

28

Ensco 54

Water Depth Max: 300'

12/16

12/16-9/17

92/115

+39

[Aramco]

Saudi Arabia

1Y priced option

29

Ensco 52

1983 2013

Water Depth Max: 300'

8/16

8/16 - 9/16

9/16 - 8/17

85

98

85

[Murphy] Malaysia

(28d)2Q'16

1Y unpriced option

Click to enlarge

4. Under Management

# Name

Year

Built

Water Depth Max

K feet

Contract

End

Day rate Location
1 Thunder Horse DeepWater semi-sub 1/22

95+10

[BP]

GOM

2 Mad Dog DeepWater Spar Drilling Rig

1/17

1/17-1/22

62+10

55

[BP]

GOM

Click to enlarge

Rigs: Classified as Cold stacked, Ready stacked or available.

# Rig name Year Built Status End contract Location
Floaters
1

Ensco DS-1

1999 SOLD For scrapped value in line with net book value of rig Spain
2

Ensco DS-3

2010 Available GoM
3

Ensco DS-4

2010 Preservation Stacked Early termination - $148 million lump sum paid Spain
4 Ensco DS-5 2011 Preservation Stacked Dispute with Petrobras and Shipyard. Spain
5 Ensco DS-9 2015 Ready Stacked Under the terms of an agreement signed in May 2016, the customer made a lump sum payment in settlement and release of its ongoing early termination obligations.
This amount covers the period from May 2016 through the originally contracted expiration date of 15 July 2017. In connection with this agreement, Ensco expects to recognize revenue of $185 million in second quarter 2016.
Asia
6 Ensco 5005 1982/1997 Cold Stacked Singapore
7 Ensco 6003 2004 SOLD For scrapped value in line with net book value of rig
8 Ensco 6004 2004 SOLD For scrapped value in line with net book value of rig
9 Ensco 8500 2008 Preservation stacked US GoM
10 Ensco 8501 2008 Preservation stacked US GoM
11 Ensco 8502 2010 Preservation stacked US GoM
12 Ensco 8503 2010 Available US GoM
Jackups
1 Ensco 81 1979/2003 Cold Stacked US GoM
2 Ensco 82 1979/2003 Cold Stacked US GoM
3 Ensco 86 1981/2006 Cold Stacked US GoM
4 Ensco 99 1985/2005 Cold Stacked US GoM
5 Ensco 70 1981/1996 Cold Stacked UK
6 Ensco 102 2002 Ready Stacked UK
7 Ensco 56 1982/2006 Cold Stacked Malaysia
9 Ensco 105 2002/2010 Cold Stacked Singapore
10 Ensco 106 2005 Ready Stacked Malaysia
11 Ensco 84 1981/2013 Ready stacked 11/15 Bahrain
12 Ensco 107 2006 Ready Stacked Singapore
13 Ensco 53 1982/2008 cold stacked UAE
Click to enlarge

Rigs: Held for Sale/Discontinued operations.

Ensco DS-2 SOLD Spain
Ensco 7500 Cold stacked Spain
Ensco 90 Cold stacked GOM
Ensco 58 SOLD Bahrain
Ensco 91 SOLD
Click to enlarge

ESV sold six rig this month - 2 Drillships, 2 Semi-submersibles and 2 jackups. The Ensco 83 was delivered to the rig owner.

Fleet Analysis as of July 18, 2016:

Total Drillships Semi-subs Jackups Under management
Under-construction 4 1 0 3 -
Total working rigs 42 4 7 29 2
Cold-stacked/Warm-stacked/Available 22

4

5 13 -
Held for sale 2 0 1 1 -
Total 70 10 15 47 2
Click to enlarge

Note: The graph above represents the % of contract backlog

Click to enlarge

Commentary:

It was a really busy FSR again, and I am going to list all the changes:

1 - The Drillship DS-3 is now available after rolling off contract on 6/16.

2 - The Drillship DS-6 is on standby until mid 8/16 at $362k/d (+102K/d upgrade), then from 8/16 to 2/18 the rate will be $480K/d (+$102K) work location: Egypt.

3 - The Drillship DS-1 has been sold for scrap value.

4 - The Drillship DS-2 has been sold for scrap value.

5 - The Drillship DS-9 is now available. The company indicated:

Under the terms of an agreement signed in May 2016, the customer made a lump sum payment in settlement and release of its ongoing early termination obligations.
This amount covers the period from May 2016 through the originally contracted expiration date of 15 July 2017. In connection with this agreement, Ensco expects to recognize revenue of $185 million in second quarter 2016.

6 - The Semisub Ensco 8503 has been terminated by Stone Energy. I have comment on this issue recently.

7 - the SemiSub Ensco 8505 will be terminated next month. Marubeni exercised its right to early terminate the contract which should have ended on 9/18. The backlog loss is approximately $80 million is no compensation. However, Ensco did some upgrades (70-day) prior to the start of the contract and should be compensated for that. For the ones interested, here is an article about the contract.

8 - The SemiSub Ensco 8506 has been awarded a contract by Deep Gulf Energy from 9/16 to mid 1/17 at an unknown day rate. Assuming $115k/d and 125-day the backlog should be around $15 million.

9 - The Semisubs Ensco 6001 and Ensco 6002 are now set with Petrobras in Brazil. The Ensco 6001 has a day rate of $290k/d including upgrades and the Ensco 6002 has a day rate of $257k/d with a contract extension to 12/19.

10 - The Semisub 8504 has minor changes.

11 - The SemiSub Ensco 5006 has been awarded a 15- month contract in Australia with Inpex at $355/d plus $125k/d for upgrade. Backlog is $160 million ($216 million with upgrade).

12 - The JU Ensco 68 Awarded extension till 7/16 (2 months) at $68k/d.

13 - The JU Ensco 75 Awarded two small 1-month contracts with Talos and Rooster in the GoM at $42k/d. Backlog about $2.5 million.

14 - The JU Ensco 87 Awarded 1-month contract with Castex in the GoM at $52K/d. Backlog about $1.5 million.

15 - The JU Ensco 72 will end contract a month earlier on 8/16

16 - The JU Ensco 101 is contracted for accommodation by BP to 8/16 at $55k/d.

17 - The JU Ensco 102 is contracted for accommodation by GDF to 8/16 at $55k/d.

18 - The JU Ensco 121 Contract extended to 8/16 (2 months) at $125K/d and 95K/d. Backlog about $6 million.

19 - The JU Ensco 53 is now cold stacked.

20 - The JU Ensco 54 operating rate indicated by Saudi Aramco.

21 - The JU Ensco 94 extended to 8/16

22 - The JU Ensco 110 rate to 83K/d until 10/16

23 - The JU Ensco 109 Planned inspection 20-day on 4Q'16

24 - The JU Ensco 67 Awarded a contract (letter of award) from 12/16 to 10/17. Backlog ~$25 million.

25 - The JU Ensco 107 Awarded a contract until 3/17 at $128k/d with Chevron Australia. Backlog ~$27 million.

26 - The JU Ensco 140 will be delivered this month.

27 - The JU Ensco 141 will be delivered next month.

28 - The JU Ensco 83 end contract and delivered to rig owner.

29 - The JU Ensco 91 Sold for scrap value.

30 - The JU Ensco 58 Sold for scrap value.

This new July Fleet status has been the busiest I have ever experienced since I am writing on Seeking Alpha. The company sold six rigs (2 drillships, 2 semi-submersibles and 2 Jackups) at "scrap value" which will probably represent only 10's $ million.

Beside a significant amount of small jackup contracts and contract extensions, Ensco was able to get a 15-month contract in Australia with Inpex. I counted a total of 12 contracts or contract extensions.

However, the DS-9 has been terminated and ESV will get a lump sum of $185 million. The Semisubs Ensco 8503 and 8505 have also been terminated.

The backlog estimated remaining for Ensco as of July 18, 2016 is $4.22 billion.

Conclusion:

After looking at the July FSR it is evident that the offshore drilling industry is still suffering. However, despite some new terminations and slashed day rates, it seems that ESV was able to secure some contracts recently, which is encouraging.

The offshore drilling industry and the oil industry in general, need urgently a price of oil at or above $60/$65 a barrel. There is no way around this basic fact.

Without better oil prices, O&G operators will not commit any exploration CapEx and tendering activity will remain anemic. However, I am still hopeful that we will experience an oil price recovery around H2 2017, and tendering activity will resume slowly starting end of 2016 (2017-2019).

One issue is that the day rates will remain very low, until the industry has fixed definitely the actual rig oversupply, which will take another year, in my opinion.

Important Note: Do not forget to become one of my followers on ESV and the offshore drilling sector in general. Thank you.

Disclosure: I am/we are long ESV.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I trade the stock as well.