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Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion: Update

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Screen Shot 2015-11-20 at 08.55.47By John Donovan

In June 2015, we published an article by a regular contributor under the headline: Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion

I was contacted recently by a gentleman who carried out work on the infamous Noble Discoverer drillship, which may currently be up for sale in Singapore.

He recently read the article and based on his insider knowledge, says that it would explain a lot.

He claims that a colleague working on the rig speculated, even before the publication of our article, that the Discoverer was part of a giant money laundering scheme. 

Mystery and calamity seem to surround the ancient ill-fated vessel. 

Further comments by the author of the first article:

It is clear that “Frontier Drilling” was a scam.

(1) The “Frontier Drilling” company was set up by spending about $100 million on rigs that were otherwise destined for the scrapyard (1970’s vintage Pelican Class Drillships and Aker H3 semisubmersibles, 1960’s vintage Discoverer drillship)

(2) Frontier Drilling obtained long-term leasing contracts for the rigs with Shell (whose engineers would have been aware that the rigs were completely unsuited to the “deep water” role for which they were leased)

(3) Frontier Drilling was sold to Noble Drilling (whose engineers should have been aware of the limitations of the rigs) for $2.16 billion on the basis of the Shell contracts. Why did Noble pay $2.16 billion for rigs whose value was no more than $100 million?

(4) After the sale of Frontier Drilling to Noble, the Shell contracts were terminated when the rigs were unable to fulfil their contractual requirements as deep water rigs 

Shell’s pivotal role in the scam should not be underestimated, even if their involvement consisted primarily of providing the technology for the rig modifications to Frontier, and providing contracts as “proof” of the value of the modified rigs.

It would be interesting to know where the profit of $2 billion went….

COMMENT AND SPECULATION FROM AN INFORMED SOURCE: ADDED 5 FEB 2016

There is more to the Shell – Noble Discoverer story. It became painfully evident that the Discoverer was not ready to drill for the 2014 season at the STX yard in Korea in the fall/winter of 2013-14. There was a huge uptick in environmental protests and court action almost on cue after Shell and Noble came to that realization.

There were several uncorroborated rumors that there was back door money through third parties from Shell to turn up the volume on the war drums so that there would be a successful court injunction to prevent them from drilling in the 2014 season.

Was this indeed the fact? Was it a time delaying tactic so that they did not loose the drilling rights and to allow the Discoverer to continue its posh dayrate for not drilling while Shell reimbursed Noble for the bulk of the repairs and upgrades? Was this because the total cancellation of the drilling either by being unable to field a rig that was capable of drilling or subsequently having the rig unceremoniously escorted from Alaskan waters by the US Coast Guard as it had been in a previous season would have permanently severed the money laundering chain through the Discoverer and required a new scheme?

When nothing substantively changed is it not miraculous that when the 20015 drilling season came around and the Discoverer was ready to drill, that the injunction against drilling was miraculously lifted?  Again was this because more money was circulated to the war drums to get the legal lapdogs to heel, tone down the barking? Instead there was a huge show of Kayaktivists in their boats made from petroleum putting on a huge media event, when the drilling moratorium was lifted, like a drunk bloke in a bar room brawl that he has already lost, screaming to be free from the several who are restraining him. “Set me free, I’ll tear him up”! 

There are too many strange circumstances around the whole affair to not suspect that things were not above board in the Frontier/Noble/Shell financial dealings from the beginning. Even the story of the ill fated Kulluk has many unanswered questions as to why she as put under tow at the last minute in marginal weather with limited support vessels allegedly to beat a deadline with taxation implications when that tax window was well known months in advance?

http://www.uscg.mil/hq/cg5/cg545/docs/documents/Kulluk.pdf

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RELATED

Noble retires ex-Shell drillship

Written by  Audrey Leon: Thursday, 04 February 2016

Noble Corp. will retire two offshore drilling units, jackup Noble Charles Copeland and former Shell Arctic drillship, Noble Discoverer, the company announced this week. The retirements bring Noble’s full fleet to 30 units.

The Noble Discoverer contract was terminated by Shell in December 2015 following the supermajor’s announcement that it would abandon its Arctic exploration plans offshore Alaska. At the time, Noble said it would stack the drillship in Singapore. Noble reported in its Q4/full year 2015 results on Wednesday that the company received a net gain of US$140 million after-tax following the termination.

The Noble Discoverer drillship was rated for water depths of 2500ft and drilling depths of 20,000ft. According to Infield Rigs data, the Noble Discoverer was built in 1976 in Japan at Imari Shipyard & Works. It was later upgraded in 2007.

The Noble Charles Copeland, a LeTourneau 82-SD-C model jackup, was built in 1979 in Vicksburg, Mississippi, according to Infield Rigs. The jackup was rated for a maximum water depth of 280ft and a maximum drill depth of 20,000ft.

Noble also reported on Wednesday a net loss of $152 million on revenues of $858 million. Contract drilling services revenues in Q4 were $837 million, or $693 million after excluding approximately $145 million relating to the contract termination on the Noble Discoverer.

Noble said that while fleet utilization improved in Q4 to 83% compared to 82% in the previous quarter, average daily revenues declined 6% to $304,400 in Q4 compared to $325,500 in the Q3. Noble attributed the decline to unfavorable contractual dayrate changes across the fleet and an increase in fleet downtime, primarily on rigs in the Gulf of Mexico.

“We face a challenging offshore fundamental outlook in 2016,” said David Williams, chairman, president and CEO, Noble. “But, Noble has successfully adapted to difficult cycles over its 95-year history and 2016 will be no different.

“Our focus in 2016 will continue to center around operating our fleet in a safe and efficient manner, while capitalizing on contract opportunities that develop across our regions of operation,” Williams continued. “We have already registered success in this area, with over 1800 days of contract time awarded to our jackup fleet from the beginning Q4 2015. Although we are focused on maintaining utilization across the fleet, we plan to manage periods of inactivity, especially as it pertains to our premium rigs, efficiently, with cost management in mind, and strategically, to allow each rig the benefit of a quick response to emerging opportunities.” 

Image: Noble Discoverer

Read more

Shell drops Noble Discoverer

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1 Comment on “Curious coincidence involving Shell, Iran, Noble Corp and $2.16 billion: Update”

  1. #1 Matt
    on Feb 5th, 2016 at 18:21

    Thank you for publishing this John. This goes deep… well beyond the level that most “journalists” would ever dig. Whatever the truth is we can be sure that there is more corruption here than will ever be known. Sadly this is the way that the world’s wealthy and connected go about accumulating more wealth for themselves… at the expense of shareholders, pensioners, and employees. These executives have little to fear because most are too distracted to ever find out what has been done to them.

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