Dolphin Drilling announced the official transfer of two Transocean rigs bought last year as it looks to meet rising demand in the UK North Sea.
Dolphin (OSE: DDRIL) confirmed on Thursday that it had begun operating the pair of rigs following the final transfer of ownership.
The Aberdeen-headquartered firm announced a deal to take on the Transocean Leader and Paul B. Loyd Jr semisubmersibles from Transocean last June, as part of an acquisition it says will position the firm as “a leading offshore drilling contractor” aimed at the UK sector.
The rigs were acquired for net $50 million, of which $6.1m was paid in Q3 2023.
Dolphin had mooted a possible share placement to fund the deal but settled on a $65m loan facility with Maritime Asset Partners linked to the Paul B. Loyd Jr acquisition. As of late November 2023, it had also fully drawn on an existing shareholder loan facility of $15m.
However, it notes that the estimated EBITDA from the firm backlog cover more than three times the net acquisition price.
The Paul B. Loyd, Jr. has a firm revenue backlog of $280m working with Harbour Energy. The unit remains under contract with Harbour in the UK North Sea until February 2028, with another 5 x 1 year option periods thereafter.
In addition, Dolphin has also entered into a 5+5 year master service agreement (MSA) with Harbour.
Transocean Leader – now the Dolphin Leader – has been cold stacked since July 2020, with marine traffic data showing its last position in the Cromarty Firth. However last year Dolphin reported it was pleased with the condition of the rig, which it suggested was better than expected.
“To commence operations is an important milestone for Dolphin Drilling as we showcase our operational platform’s capacity to incorporate additional assets and generate immediate, robust cash flows for our shareholders. We see strong interest for our offshore floater rigs in the UK sector, providing safe and efficient operations for our clients,” said Dolphin CEO Bjørnar Iversen this week.
“The MSA with Harbour Energy allows Dolphin Drilling to work in close strategic cooperation with one of the largest North Sea E&P companies.”
The new additions will join Dolphin’s existing three-strong fleet consisting of the Borgland Dolphin, Blackford Dolphin and Bideford Dolphin.
“The UK drilling market is showing positive signs and the Dolphin Drilling fleet offers flexibility to take on all floating rig requirements in the years to come including exploration drilling, production drilling and plug and abandonment work across the UK sector.
“We hold a rich history as a drilling pioneer with a long track-record in the UK, where we now aim to build the position as the leading drilling contractor,” Mr Iversen added.
In the meantime, Dolphin has also vowed to appeal to the UK’s highest court, after a December ruling saw it lose a crucial battle with HMRC leaving it liable for nearly £13m in payments.
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