Setting the Standards in Drilling

Q: What specific competitive advantages allowed Seadrill to achieve 150% excess capacity?

A: Seadrill has the youngest and most modern fleet among all drilling contractors. We operate a versatile fleet of 68 rigs that comprises drillships, jack-ups, and semi-submersibles, and tender rigs for operations in shallow to ultra-deepwater areas in harsh and benign environments. Our headquarters are in London and we operate from six regional offices around the world. Ciudad del Carmen is our main base of operations in Mexico. We work with some of the largest oil and gas companies, and we have a clear goal when it comes to safety in the protection of our personnel. Our total injury frequency is the lowest among our competitors, and this can be attributed to our use of the most advanced safety tools in the market, and the most professional workforce in the country. As forecasted, we successfully achieved our goal of a 150% surplus, which translates into the management of up to 12 rigs in our new operational hub in Ciudad del Carmen. It is worth mentioning that we are currently managing seven others rigs from this hub, with six located in the Gulf of Mexico and one in Venezuela. Seadrill also strives to be part of the country’s development, and in line with this, we are pleased to say we have achieved a level of 80% nationalization as of Q3 2015, demonstrating our commitment to Mexico and the development of local content.

Q: What factors allowed the West Pegasus platform to achieve a 90% uptime, while being more reliable than your competition?

A: West Pegasus can achieve high performances and set the record for drilling here in Mexico. Thanks to its capabilities, we were able to drill the Maximino-1 well located in the Perdido area, the most challenging deepwater project in the country. It was located at a depth of 2,922m, and required the drilling of a delimiter well of 3,016m. This represents not only the deepest water well for PEMEX to date, but also for Seadrill. Maximino-1 is considered the crown jewel of deepwater projects for the Mexican state-owned oil company. In October 2015, the performance of West Pegasus was at 99%, practically 12 points above that of our local competitors. The maintenance of our equipment is carried out above the minimum requirements, and runs at the highest standards, allowing us to avoid downtime.

The rig has specific characteristics that allow it to reach impressive performance rates, such as its equipment with an NOV drilling package. The derrick and top drive are capable of lifting 1,000 short tons and utilize range 3 pipes, as well as having the ability to build stands of DP or casing offline without interrupting the main operations of the well center. This is due to the fact the drill floor is equipped with two iron roughnecks and has two powered mouse holes to build stands offline. This additional equipment also adds to the redundancy of the rig floor, reducing the risk of downtime for our clients, while at the same time increasing the efficiency of the operation. The rig floor is kept over the well thanks to eight Rolls Royce Aquamaster azimuth thrusters operating at a constant pitch and variable speed. These are designed to maintain the West Pegasus drilling operations in 70 knots wind conditions and waves up to 7m high. Should there be an issue with the well, it can be controlled with a 6 ram 2 annular NOV Schaffer BOP rated for 15k pressure. The BOP is connected to the subsea wellhead with a riser system capable of reaching water depths of 3,000m.

Q: How has your cooperation with PEMEX fared, and what future partnerships are you looking forward to?

A: Our cooperation with the parastatal is an ongoing commitment, as we are also seeking to provide continuous improvements to new PEMEX affiliate productive companies, focusing on exploration and drilling. Our cooperation can be seen through our work standard permit authorized by PEMEX in all joint operations in Mexico, as well as common drilling practices in terms of well control to optimize current operations. Just recently, our West Pegasus semi-submersible deepwater rig was awarded a provisional commitment for a 2+1 year contract extension with PEMEX, despite the delicate business environment. West Pegasus is also used as a school rig for Mexican deepwater exploration.

Seadrill is extremely interested in securing contracts with ExxonMobil, Chevron, BP, and all other major oil companies investing in Mexico, as we are currently doing in other parts of the world. Our goal is to approach foreign companies and accompany them into Mexico, providing a secure framework, as well as the same service quality standards we deliver worldwide. These companies may feel held back by their lack of knowledge of the Mexican environment, but we have been here since 2011 and understand the local market’s dynamics. As such, we expect our experience and safety operational standards to act as an advantage for securing contracts with these IOCs.

Q: How is Round One affecting your company, and how will you manage to improve your position in the industry?

A: We do not consider R1-L01 to be the disappointment it has been hailed as, but rather we believe it is to be viewed to a certain extent as a test. We were glad to see the results of this phase lead to adjustments in the bidding process of future rounds. Even with disappointing results, it is also reassuring to observe that global players have maintained their interest in the Energy Reform. Seadrill has special interest in the fourth phase, which we believe will be successful and provide tremendous opportunities for our company. Our target is to bring one of our new drill ships to Mexico in order to show companies how much money, space, and material this technology can save.

Our aim is to secure contracts with IOCs, to consistently be the region’s best deepwater performer, and sustain our vision of “Setting the Standard in Drilling”. We aim to achieve the latter objective thanks to Seadrill’s three main pillars. We focus on people, constantly training and developing a safety culture within fluctuating boundaries, the technology, providing the most modern fleet and components with top maintenance systems in place, and the processes, which respect a strict and systematic philosophy. We persistently assess opportunities, both traditional and non-traditional, from a technical and commercial point of view, evaluating partnership offers, expansion opportunities into new geographical and technological markets, and keeping abreast of changes in global regulatory regimes.