FAR (ASX) Stena DrillMAX rig rate could be about $185K/d to $220K/d

Originally posted by Roya Pandi ↑

From the below article Stena DrillMAX rig rate could be about $185K/d to $220K/d:
"Assuming a day rate similar to what has been agreed for the Stena IceMax in Ireland (Druid Well), the day rate could be around $185K/d to $220k/d."

Ocean Rig - Stena Is Really Setting The Tone For The Offshore Drilling Business And It Is Not Friendly
Nov.26.16 | About: Ocean Rig (ORIG)
Summary
Cairn Energy has decided to drill two appraisal wells on the SNE oil field off Senegal in 2017 with Stena Drilling's 2007-built Stena DrillMAX.
The prospect was initially drilled by the Ocean Rig Athena at a day rate of $663k/d.
This is not specially a good news for Ocean Rig and the Ocean Rig Athena.
Image: Drillship Stena DrillMax - Courtesy Stena drilling.
This article is an update of my preceding article published on November 25, 2016 about the Stena IceMax drilling the Druid well in Ireland.
Today, November 26, 2016, we learned from OffshoreEnergyToday the following:
Cairn Energy has decided to drill two appraisal wells on the SNE oil field off Senegal in 2017 with Stena Drilling's 2007-built drillship, Stena DrillMAX.
[...] The joint venture has completed a rig tender evaluation process and executed contracts for the use of the Stena DrillMAX drillship for the two well drilling program starting in 1Q 2017.
FAR managing director, Cath Norman, said:
We look forward to the results from the next phase of drilling and evaluation activity over our world class SNE oil field, offshore Senegal. The Stena Drillmax has completed an efficient drilling program elsewhere offshore West Africa and is currently located in Las Palmas. After a rigorous tender process, our joint venture has been able to secure the rig at a very attractive operating day rate, reflecting current market conditions and at a substantially lower cost than our two previous drilling campaigns.

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Drillship Stena DrillMAX (2007)
The Stena DrillMAX is a harsh environment dynamically positioned DP Class 3 drillship capable of drilling in water depths up to 10,000 ft. The Stena DrillMAX has on-board 2 x BOPs, each 18¾" x 15,000 psi Cameron "TL" BOP c/w ST Locks, and uses Cameron Load King riser.
On November 24, 2016, Stena Drilling and Providence Resources (OTCPKVRS) announced that the Drillship Stena IceMAX will drill the Druid well off Ireland, at a day rate of $185k/d for one firm well to start in Summer 2017.
The difference between the two drillships is that the Stena IceMax is actually drilling for Shell (NYSE:RDS.A) (NYSE:RDS.B) in Canada and will drill the Druid well in direct continuation of the Shell contract, whereas the Stena DrillMAX is actually ready stacked in Las Palmas. Below is the Stena fleet status that I have updated in red for the two recent firm contracts announced.
I believe it is very important to notice that Stena Drilling's entire fleet will roll off contract in 2017, even if we include the two small recent contracts, unless the company manages to negotiate a new extension or a new contract.
On January 19, 2016, OffshoreEnergyToday announced the following:
SNE-3 was previously drilled to a depth of 1,755 metres by the Ocean Rig Athena prior to the spud of SNE-2. FAR says it expects SNE-3 to reach TD after re-start of drilling and after the completion of coring in the latter part of next month. It is expected wireline logs will then be run followed by a drill stem testing (DST) program. A key aim of the SNE appraisal program is to progress towards proving a minimum economic field size for the SNE discovery, which FAR estimates to be approximately 200 million barrels of recoverable oil as well as determining flow rates for the planning of a future development.

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On May 19, 2016, Cairn completed the SNE-4 offshore Senegal and releasedthe Ocean Rig Athena.
According to Cairn, the Ocean Rig Athena drillship will now be de-mobilised and the JV will continue integrating the significant amount of data collected from the four wells, including two drill stem tests and more than 600m of core. This will enable the JV to determine the most effective way to further the appraisal of this significant oil accumulation and evaluate development options, said the company.
This is not a good news for Ocean Rig (NASDAQ:ORIG) and the Ocean Rig Athena, which is contracted until Q2'17 by ConocoPhillips (NYSE:COP) - ORIGindicates $706.026K/d in its 6-K filing - and is now "waiting on location" according to Rigzone in Las Palmas, which means that it is likely that the rig has been terminated earlier with compensation. I expect ORIG to announce the new status of the rig with the 3Q'16 results.
Assuming a day rate similar to what has been agreed for the Stena IceMax in Ireland (Druid Well), the day rate could be around $185K/d to $220k/d.
This shows again how desperate and extremely nervous the offshore drillers are becoming now; facing a tough fight in order to survive this terrible bear cycle. The situation is especially true when it comes to the deepwater and ultra-deepwater such as Ocean Rig and Pacific Drilling (NYSE:PACD).
On the one hand, it is quite encouraging and we can see that O&G operators are tendering again, albeit small contracts of 1 to 3 wells. The trigger is the prices of oil, which is showing some positive momentum recently and a possible price increase in 2017 to reach the "sweet spot" level around $55-$60 a barrel. Small contracts so far, of course, but contracts nonetheless.
On the other hand, the offshore drillers are facing a huge rig oversupply and a little time left to get back to a needed financial health due to a large indebtedness. If we look at the FSR of Ocean Rig and Stena Drilling as well, we can see easily how desperate for new contracts and fresh additional backlog these two companies are struggling right now.

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Ocean Rig is about to release its 3Q'16 very soon.
Important note: Do not forget to follow me on ORIG and other offshore drillers. Thank you for your support.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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 frequently ORIG.

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Boy! have we had some luck with management having signed contracts just in time.. expect prices to start rising now with the higher POO following the OPEC cut.

"The joint venture has completed a rig tender evaluation process and executed contracts for the use of the Stena DrillMAX drillship for the two well drilling program starting in 1Q 2017."

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