TotalEnergies and Vantage Enter Into a 75/25 Joint Venture Owning the Tungsten Explorer Drillship
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Insights
The creation of a joint venture (JV) between TotalEnergies and Vantage Drilling International represents a strategic move within the energy sector, particularly in the offshore drilling industry. The acquisition of the Tungsten Explorer drillship for $199 million allows TotalEnergies to secure a 75% stake and hedge against deep-offshore drilling costs. This is significant because deep-water exploration is known for its high capital expenditure. By owning a substantial share of the drillship, TotalEnergies can potentially reduce operational costs and gain more control over its exploration and development projects.
This JV also illustrates a trend where oil and gas companies are seeking partnerships to share the financial burden and risks associated with exploration and production. For investors, this could mean a more balanced risk profile for TotalEnergies, as the cost-sharing model may lead to improved capital efficiency and potentially steadier returns on investment in the long term.
The financial implications of this joint venture are multifaceted. Vantage Drilling International's CEO highlights the deal's impact on their balance sheet, indicating a complete deleverage. For Vantage, this transaction not only infuses capital but also secures a long-term revenue stream through the operational contract for the Tungsten Explorer. This could improve Vantage's financial stability and investor confidence.
For TotalEnergies, the investment of $199 million represents a commitment to secure resources for future drilling operations. The implication for stakeholders is that TotalEnergies is positioning itself to maintain a robust portfolio in exploration and development, which is crucial for long-term growth in the energy sector. However, the capital allocation must be scrutinized against other potential investment opportunities to ensure it yields the best return on capital employed (ROCE).
From an environmental perspective, the Tungsten Explorer's use of Excellium additives is noteworthy. These premium fuels are designed to optimize consumption and reduce emissions, aligning with the broader industry trend towards sustainability and reduced environmental impact. This aspect of the JV may appeal to environmentally conscious investors and could potentially provide TotalEnergies with a competitive edge in markets where environmental regulations are becoming increasingly stringent.
The emphasis on Managed Pressure Drilling (MPD) equipment also reflects the industry's focus on safety and efficiency. MPD technology allows for better control of the drilling process, which can minimize the risks of blowouts and other drilling-related hazards. This commitment to safety and environmental stewardship is essential for maintaining the social license to operate, particularly in the high-scrutiny offshore drilling sector.
TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) and Vantage Drilling International have signed a binding agreement to create a new joint venture (JV) that will acquire from Vantage the Tungsten Explorer drillship. Pursuant to the terms of the agreement, TotalEnergies will pay
“TotalEnergies is pleased to enter into this agreement with Vantage to take shared ownership of a drillship, the Tungsten Explorer, which we already used in exploration and development activities in
Commenting on the joint venture, Ihab Toma. Chief Executive Officer of Vantage Drilling International stated, “This is a transformative event for the Company. This joint venture underscores TotalEnergies' confidence in Vantage, and our client's belief in the value of collaborating with a flexible and efficient drilling contractor. We very much look forward to strengthening our longstanding and mutually beneficial relationship with our esteemed client, TotalEnergies.
Mr. Toma continued, “The proceeds from the sale of the Tungsten Explorer will completely deleverage our balance sheet while putting in place a meaningful, long-term revenue stream leveraging our strong management expertise.”
The Tungsten Explorer, a renowned offshore drillship
Built in 2013, the Tungsten Explorer is designed for deep offshore drilling. With a power capacity of 42MW, thrust capacity of 33MW, the rig can operate in a wide range of meteorological conditions and has a proven track record of safe drilling operations worldwide. Currently operating in
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About TotalEnergies
TotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to energy that is ever more affordable, more sustainable, more reliable and accessible to as many people as possible. Active in nearly 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.
About Vantage Drilling
Vantage Drilling International is an offshore drilling contractor, with a fleet of two ultra-deepwater drillships, and two premium jackup drilling rigs. Vantage's primary business is to contract drilling units, related equipment and work crews primarily on a dayrate basis to drill oil and natural gas wells globally for major, national and independent oil and gas companies. Vantage also markets, operates and provides management services in respect of, drilling units owned by others. www.vantagedrilling.com
@TotalEnergies l TotalEnergies l TotalEnergies l TotalEnergies
Cautionary Note TotalEnergies
The terms “TotalEnergies”, “TotalEnergies company” or “Company” in this document are used to designate TotalEnergies SE and the consolidated entities that are directly or indirectly controlled by TotalEnergies SE. Likewise, the words “we”, “us” and “our” may also be used to refer to these entities or to their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate legal entities. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. Information concerning risk factors, that may affect TotalEnergies’ financial results or activities is provided in the most recent Universal Registration Document, the French-language version of which is filed by TotalEnergies SE with the French securities regulator Autorité des Marchés Financiers (AMF), and in the Form 20-F filed with the United States Securities and Exchange Commission (SEC).
Cautionary Note Vantage
The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the company's filings that it may be required to make, or may otherwise voluntarily make, with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements. Vantage disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.
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TotalEnergies Contacts
Media Relations: +33 (0)1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR
Investor Relations: +33 (0)1 47 44 46 46 l ir@totalenergies.com
Source: TotalEnergies SE
FAQ
What is the total amount TotalEnergies will pay for a 75% interest in the JV owning the Tungsten Explorer?
How long will the JV contract Vantage to operate the Tungsten Explorer?
Where is the Tungsten Explorer currently operating?
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