Pioneered by subsidiary Applied Drilling Technology Inc. (ADTI), Transocean offers its customers the most comprehensive turnkey drilling services in the world. In our turnkey drilling business, we will drill a well for a client on a guaranteed fixed-price basis while assuming the risks of getting the well drilled to its objective depth.

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ADTI was formed in 1979 in Houston and drilled the first offshore turnkey well the next year. ADTI has since drilled more than 1,200 wells using virtually every type of offshore rig, and is consistently one of the most active drillers in the Gulf of Mexico and North Sea. Transocean operations also offer turnkey services to international customers.

Turnkey drilling is a proven method of drilling wells whereby we provide a drilled and logged or logable wellbore to a specified depth for a fixed price. We accept the risks of getting the well drilled to the target depth and charge a premium to the operator for taking those risks. Thorough planning, outstanding execution and years of experience are the key attributes of a successful turnkey drilling contractor.

Size also is an important element in a thriving turnkey business. At the proper scale, risk of loss to the drilling company can be minimized by having a diversified portfolio of drilling projects over which to spread that risk.

Additionally, Transocean has been successful in the turnkey business because we have a different business model than our competitors. We manage the turnkey division as a stand-alone business. Transocean rigs generally enjoy extremely high utilization and premium dayrates. As they are generally unavailable to our turnkey unit, we primarily engage competitors’ rigs for turnkey projects. Profitability, not rig utilization, is the goal of our turnkey business.

Some of our clients use our turnkey services as an integral part of their drilling program, taking turnkey bids on every well they anticipate drilling. The turnkey option is used primarily as a risk management tool. If the turnkey price is considered too high for the drilling risk inherent to the well, customers may drill the well themselves under a dayrate contract.

Factors Considered When Operators Make the Turnkey Decision

• Marginal well economics often demand a known drilling cost in order to justify project approval. It is not unusual for our clients to request a turnkey bid when they are running their economics on a drilling project.
• Increasingly, co-venturers want the operating partner to fix or guarantee the well cost, which often requires that it be drilled under an acceptable turnkey contract structure.
• Clients use our turnkey services when their drilling staffs lack sufficient personnel or expertise.
• Some independent operators use turnkey as a primary method of drilling their wells, maintaining a minimal staff to prepare tenders and evaluate proposals.
• Clients may consider using turnkey bids as a way of benchmarking the drilling performance of their drilling staff. In most oil companies, there exists no way to properly validate a drilling Authorization for Expenditure (AFE). By taking turnkey bids, an oil company has a verifiable commercial method of validating the AFE as well as evaluating the drilling performance of its staff.
• Internationally, turnkey drilling allows an operator to minimize start-up costs when drilling the initial well in a program or meeting a single well obligation. Turnkey contractors can get started more quickly with less infrastructure, which can help minimize total project costs.