The contract amendments are for Noble Bully II, Noble Globetrotter I, and Noble Globetrotter II, which are operating under 10-year term contracts that commenced in April 2012, July 2012 and September 2013, respectively.
Under the agreements, day rates for each rig are now determined by taking the higher of a newly established minimum day rate, or the day rate adjustment mechanism, as originally included in the contract.
The contract amendments for the Noble Globetrotter I and Noble Globetrotter II provide for a day rate floor of $275,000, representing a minimum market rate if the day rate adjustment mechanisms for these two rig contracts stay below that level. The Noble Bully II contract contains a floor day rate of $200,000 plus daily operating expenses.
In addition, Shell was granted and has exercised the right to idle Noble Globetrotter II for a period of up to 730 days, which is expected to occur in January 2017. During the idle period, a negotiated rate of $185,000 per day will be paid. Shell was also granted and is expected to exercise the right to idle the Noble Bully II for a period of up to 365 days, commencing no later than May 2017.
Noble can also enter into contracts with third parties for the Noble Globetrotter II and the Noble Bully II during the idle periods. Noble would be responsible for operating expenses and would also retain any incremental revenue received from such third-party contracts.
“This mutually beneficial agreement provides Noble with clarity on day rates and subsequent operating cash flows through the duration of the contracts on each of the three rigs,” said David W. Williams, chairman, president and ceo of Noble Corporation.
“We also retain the future upside if the recent oil price recovery drives new market opportunities. These amendments will provide Noble with enhanced financial flexibility at a time when the offshore industry is experiencing a cyclical bottom and the timing of the inevitable recovery remains unknown,” added Williams.