Saipem said Monday that it has strengthened its offshore drilling fleet with the new Santorini drillship. The company exercised a purchase option with Samsung Heavy Industries for the vessel with US$230 million available cash to be paid by the end of the year. The purchase option is part of a long-term charter agreement signed with Samsung Heavy in 2021, shortly after the vessel was constructed.
Saipem said the Santorini is a technologically advanced vessel, equipped with two seven-cavity Blow Out Preventers (BOP), the highest standard for ultra-deepwater drill ships, state-of-the-art operations automation systems, and the latest solutions to optimise environmental impact.
The vessel is currently in operation in the United States (Gulf of Mexico) for the execution of a contract with Eni expiring in the third quarter of 2023.
Saipem said its investment decision is based on an expected return on investment of over 15%, with a payback period of five years, estimated based on the existing contract (covering most of the next financial year) and the Santorini’s commercial prospects. Discussions are ongoing with major clients on areas of potential use for the Santorini.
Demand significantly exceeds supply in the global market environment for technologically advanced assets such as the Santorini drill ship, Saipem said.
There is a backlog of more than €1.5 billion in Saipem’s order book for offshore drilling, its highest value in six years. It has already committed about 80% of its fleet to 2023 under existing contracts (including options) and about 60% to 2024.
Saipem sees the offshore drilling demand as favourable, with interesting opportunities for the deployment of its fleet, both in it’s traditional markets (Africa and the Mediterranean), and in areas where the supply of deepwater rigs is close to saturation (like the Gulf of Mexico).
With this demand, the company noted a robust growth trend in daily market rates. It said an average of US$400,000 per day in 2022 is what it gathered from authoritative sources, with expectations of growth to levels above US$450,000 per day by 2025.
Saipem said the guidance of approximately €300 million net debt (post-IFRS 16) at the end of 2022 is confirmed.
Saipem is a key sub-contractor for ExxonMobil’s Guyana operations and was most recently charged with the delivery of a major subsea system for the Yellowtail project.