Shell, Noble discussing Arctic contracts

Drilling company Noble Corp. is in discussions over extending its contracts with Shell for Shell’s Alaska Arctic offshore exploration drilling program, Roger Hunt, Noble senior vice president, marketing and contracts, said during Noble’s earnings conference call on April 18. Noble’s drillship Noble Discoverer drilled a top hole in Shell’s Chukchi Sea Burger prospect last year, while the drilling company also operated the Shell-owned Kulluk floating drilling platform in the Beaufort Sea.

The current contract for the Noble Discoverer continues through to February 2014, but discussions with Shell revolve around a contract extension that goes well beyond that date, Hunt said. Shell has cancelled its plans for drilling in the Alaska Arctic in 2013.

Both the Noble Discoverer and the Kulluk have been transported to Asian shipyards for repair following propulsion and other problems with the Noble Discoverer and the grounding of the Kulluk in the Gulf of Alaska.

“We have the drillship Discoverer in Korea. We’re doing a body of work,” Hunt said, adding that Shell has its own project team dealing with repairs to the Kulluk. Noble is discussing with Shell extending the operating contract for the Kulluk, once the Kulluk is back in service, he said.

Hunt also commented that ConocoPhillips has exercised a termination right for a contract to use a jack-up rig that Noble has under construction in Singapore, following ConocoPhillips’ decision to defer its Chukchi Sea drilling, originally planned for 2014. Under the contract termination agreement Noble will receive a settlement of $18 million plus any expenses related to planned rig winterization, Hunt said. Noble anticipates being able to secure an alternative customer for the rig when the rig is delivered from Singapore in the fourth quarter of 2013, he said.

—Alan Bailey