Back in February, I pondered whether deepwater drillers were just dandy, or faced a downturn ahead. Little did I know that there would be a tragedy aboard the Transocean
The Shell connection extends well beyond the pair of joint-venture-owned rigs, which have five- and 10-year contracts with the super major, respectively. Most of the rest of Frontier's fleet is also contracted to Shell, and the operator has agreed to pay suspension rates and cover the rigs' operating costs under the current Gulf of Mexico moratorium. Such an accommodative stance contrasts sharply to the contract with Anadarko Petroleum
In this time of massive uncertainty for everyone working or investing in the Gulf, having a supportive, long-term customer like Shell is a major plus. So is doubling your contract backlog overnight, which is exactly what the Frontier acquisition will achieve.
Noble's second-quarter results were nothing to write home about, and subsequent quarters will almost certainly be dim as well, but the long-term outlook remains exceptionally strong for this top-flight rig operator. If Noble had gone into this moratorium with a big pile of debt, the story would be different, so thank goodness for dry powder.