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Noble says Shell in talks to renew Arctic rig contract
April 18, 2013 / 3:02 PM / 5 years ago

Noble says Shell in talks to renew Arctic rig contract

April 18 (Reuters) - Noble Corp, owner of the world’s third-largest offshore drilling fleet, said on Thursday Royal Dutch Shell Plc was in talks to extend its contract to use the Noble Discoverer beyond February 2014, underlining its long-term plans for the offshore Arctic.

The Discoverer is undergoing repairs in South Korea after Shell postponed its 2013 drilling plans for offshore Alaska after a problematic foray there last year.

But Roger Hunt, Noble’s senior vice-president for marketing and contracts, said recent moves to push ahead with drilling in the Russian Arctic by Exxon Mobil Corp and Rosneft underlined the potential of the overall region.

Hunt did not see the decision last week by ConocoPhillips to defer its drilling off the coast of Alaska as indicative of the industry losing interest.

“I wouldn’t read that as a fundamental shift away from the Arctic,” Hunt said on a conference call.

Yet efforts to drill off Alaska are now under intense scrutiny. A total of four government investigations were launched into Shell’s 2012 drilling season off Alaska, which culminated in the grounding of its Kulluk drillship in a storm as it headed down to Seattle for the winter.

Noble also said on Thursday it had secured contracts for the final two of its ultra-deepwater drillships under construction, adding $1.3 billion to its backlog.

The two rigs, both expected to be delivered next year, will work in the Gulf of Mexico for Plains Exploration & Production Co - which is being bought by Freeport-McMoRan Copper & Gold Inc.

Plains had previously bought $5.5 billion worth of Gulf of Mexico assets from BP Plc last year.

Prior to the Plains contracts, Noble reported on Wednesday an end-March backlog of $14 billion, down from $14.3 billion three months before, along with higher-than-expected first-quarter profits.

Looking ahead to the second quarter, Noble expected a rise in contract drilling costs to between $515 million and $530 million, up from $484 million in the first quarter. The costs would rise between $15 million and $20 million per quarter after that, the company added.

But the effective tax rate for 2013 was now expected to be between 18 percent to 20 percent, down from the range of 20 percent to 21 percent given three months ago.

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