This week Borr Drilling JV Performex was awarded new contracts for its five jackups in Mexico, while ultra-deepwater drillship Vela commenced its charter in the US Gulf of Mexico. Meanwhile, Seadrill finalised the sale of the seven jackups to ADES.
Fourteen discoveries across seven offshore regions were announced in the third quarter of this year, according to Esgian’s Well Results dataset. By region, South America was the leader with about one-third of the discoveries announced or confirmed during the quarter. Read more here.
Borr Drilling joint venture Performex has entered into new contracts for five jackups with OPEX Perforadora and Perforadora Profesional Akal I, who provide integrated well services to Mexican state oil company PEMEX. The 400-ft jackups Galar, Gersemi, Grid, Njord and 350-ft Odin begin the new contracts effective 20 October 2022, keeping them contracted until 31 December 2025 for a combined contract value of USD 715 million, including upfront cash payments of USD 33 million. Borr Drilling provides the five rigs on a bareboat basis to the joint ventures with bareboat earnings equivalent to residual cash from the dayrate earning less payments of operating expenses and other fees to the joint ventures. The jackups had all previously been working for Pemex in Mexico with options to extend. Diamond Offshore-managed drillship Vela has commenced its charter with Woodside in the US Gulf. The Aquadrill-owned unit is contracted for one well plus a one-well option. The contract is valued at USD 30 million. The rig is on location in East Breaks Block 699, where it will be working in 3,086ft of water to drill the Hoodoo prospect.
Trillion Energy has encountered natural gas at its South Akçakoca 2 well, drilled in the Black Sea offshore Turkiye with jackup GSP Saturn. South Akçakoca 2 is the first well of a multi-well campaign at the South Akcakoca Sub-Basin (SASB) gas field in the Black Sea. Trillion stated that the logging while drilling results suggested 32 metres of potential natural gas pay withing 5 sands in the production zone. The company will carry out completion, perforation and testing to determine natural gas production rates. The company plans to drill and complete seven initial wells during this campaign, followed by another estimated 10 wells prior to further exploration occurring.
CNOOC announced that it has made a discovery at the exploration well Baodao 21-1-1 and the well tested to produce an average of 587,000 cubic metres of natural gas per day. The exploration well was drilled in the Baodao 21-1 gas field, located in Baodao Sag in the Qiongdongnan Basin, and the water depth ranges from 1,980ft (660m) to 5,710ft (1,570m). The Chinese government has reviewed the discovery and confirmed that there are natural gas and condensate oil at over 50 billion cubic metres and 3 million cubic metres proven in-place.
Rig Transactions and Management
Seadrill has completed the sale of entities that own and operate seven jackups to subsidiaries of ADES for a total consideration of USD 628 million in cash via a share purchase agreement announced in September 2022. ADES now owns jackups AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida and West Leda. The drilling contracts and crews related to these units have also been transferred to ADES. AOD I, AOD II, AOD III and West Callisto are all working for Saudi Aramco in Saudi Arabia. West Ariel is undergoing reactivation in the UAE and West Cressida and West Leda are being reactivated in Malaysia ahead of a three-year contract with Saudi Aramco. The total consideration of USD 628 million is subject to adjustment for working capital and other items, and reimbursement to Seadrill for any project costs spent in relation to the reactivation of the three stacked jackups West Ariel, West Cressida and West Leda. According to Seadrill, the consideration translates into around USD 100 million per rig on a ready-to-drill basis.
SFL Corporation-owned jackup West Linus is now being managed by Odfjell Drilling subsidiary Odfjell Platform Drilling, following the receipt of a new Acknowledgment of Compliance from the Petroleum Safety Authority Norway. The 2014-built, 450-ft rig was previously managed by Seadrill. SFL signed the new management agreement with Odfjell Drilling in February 2022. West Linus is working under a long-term drilling contract with ConocoPhillips Scandinavia AS in the Norwegian North Sea until the fourth quarter of 2028. Under the contract, the rig is earning a market adjusted rate based on market developments for similar jackups in the North Sea.Mobilisation/Reactivation Dolphin Drilling semisub Blackford Dolphin has departed Mexico and is en-route to West Africa for its next campaign. The rig will arrive in the Canary Islands in mid-November, where it will undergo a short recertification and maintenance work scope. It will then mobilise to Nigeria for its upcoming assignment with General Hydrocarbons.
The US Bureau of Ocean Energy Management (BOEM) has announced the next steps for oil and gas leasing on the Outer Continental Shelf in compliance with provisions in the Inflation Reduction Act of 2022 (IRA). The steps include a proposed sale for the Gulf of Mexico region and completion of an environmental review for Alaska’s Cook Inlet. A Proposed Notice of Sale for Gulf of Mexico Lease Sale 259 has been published on the agency’s website and will be followed by publication in the Federal Register in the coming days. This will provide an opportunity to submit comments and recommendations regarding the size, timing, and location of the sale. The IRA directed the BOEM to hold Lease Sale 259 by 31 March 2023. For the Cook Inlet, a Final Environmental Impact Statement (EIS) for Lease Sale 258 has been published. A Notice of Availability of the Final EIS will be published in the Federal Register in the coming days. The IRA directed the BOEM to hold Lease Sale 258 by the end of the year. The Final EIS indicates the preferred alternative is to offer 193 blocks, while deferring 17 blocks that wholly or partially overlap beluga whale and northern sea otter critical habitats. It also applies additional mitigation measures to reduce potential impacts to beluga whales, sea otters, and the gillnet fishery.
Seadrill has entered into a Share Purchase Agreements (SPA) and will sell all of its 35% shareholding interest in Paratus Energy Services Limited (Paratus), formely known as Seadrill New Finance Limited, and certain other interests. Paratus is the holding company that holds the investments in SeaMex Group, Seabras Sapura and Archer Ltd. The completion of the sale is subject to customary closing conditions, including approval of competition authorities in relevant jurisdictions, and is anticipated to occur within Q4 2022 – Q1 2023.
Woodside has initiated its withdrawal from Canada’s Orphan Basin. The operator is exiting Exploration Licences 1157 and 1158, both of which were held with 100% interest. This is in line with the company’s exploration focus on projects with clear pathways to commercialisation. The cost of this exit affects the 2022 net profit after tax by approximately $140 million.