This week, Saipem confirmed that the Deep Value Driller drillship would be working for Eni offshore Cote D'Ivoire, CNOOC made a discovery in the Bohai Sea, Petronas is experiencing continued permitting delays off Mexico, and Equinor decided to buy Suncor's UK business.
In case you missed it, you can access our previous Rig Market Roundup here.
Via recently exercised options, Noble’s 12,000-ft drillship Noble Stanley Lafosse is expected to remain working with Murphy Oil in the US GOM into June 2023. Noble Stanley Lafosse has been working for Murphy Oil since the second quarter of 2021 and has recently been working at the Samurai field. Noble Stanley Lafosse has an upcoming new six-well contract with an undisclosed operator in the US GOM. Announced in January 2023, this work is expected to commence in June 2023 and keep the rig working for a minimum of 340 days. The contract also includes five, one-well operations options at mutually agreed day rates. The firm backlog associated with the contract is around $148 million.
Saipem-managed 350-ft jackup Jindal Pioneer will remain working with Eni offshore Mexico into the second half of 2023, with further options available for the rig until the end of 2024. Jindal Pioneer is being leased from Jindal Drilling & Industries by Saipem and has been contracted to Eni offshore Mexico since the first quarter of 2019, with a five-month standby period in 2020 due to COVID-19. The rig’s latest term with Eni began in January 2023.
Saipem has confirmed that the 12,000-ft drillship Deep Value Driller, which the company recently signed an agreement to bareboat charter, will go to work for Eni offshore Cote D’Ivoire later this year. Eni and its partner Petroci have contracted the Saipem-managed rig for a drilling campaign offshore Cote D’Ivoire, beginning around the third quarter of 2023 and continuing until the end of 2024. Saipem has valued the contract at $400 million, which is to be considered gross of the leasing costs of Deep Value Driller. Saipem’s bareboat charter of the rig from Deep Value Driller AS covers around three years with an additional one-year extension available. The unit is currently being reactivated and will be delivered to Saipem in the summer of 2023. Deep Value Driller is understood to be used for further drilling at the Baleine field on Blocks CI-101 and CI-102. Eni made a discovery at the Baleine East 1X on CI-102 in July 2022, confirming the extension of the field. Saipem 12,000-ft drillship Saipem 12000 is currently working for Eni offshore Cote D’Ivoire but will move to Angola for work with Eni joint venture Azule Energy later this year.
Eni has exercised options for the 10,000-ft drillship Saipem 10000, keeping the rig under contract through the end of 2023 with further options available through the first half of 2024. Eni is using the rig for work in the Mediterranean, including activity offshore Egypt and Italy.
Drilling Activity and Discoveries
Eco Atlantic, a partner in the Tullow-operated Orinduik block off Guyana, stated that the partners are working towards identifying the optimal drilling target and plans are underway to drill at least one well into a light oil Cretaceous target in the next 12-18 months. Previously, the partners had been targeting at least two wells starting in late 2023. The Orinduik block contains the 2019 Jethro and Joe discoveries. Both were drilled by the 10,000-ft drillship Stena Forth.
Trident Energy’s infill drilling campaign at Ceiba field and Okume complex offshore Equatorial Guinea is expected to begin in the fourth quarter of 2023. Island Drilling 4,000-ft semi Island Innovator secured a contract for this work in September 2022. Partner Kosmos Energy stated that up to five wells are planned for this campaign, with the first well expected to come online by the end of 2023 and the rest in early 2024. Island Innovator was hired for two firm wells, plus options for another five wells, estimated at 250 days if all options are exercised.
Vår Energi has confirmed the discovery of oil in the operated Countach well in production licence PL229 (Goliat) in the Barents Sea off Norway, including updated volume estimates. The 7122/8-1S Countach well was drilled about 13 kilometres northeast of the Goliat field in the southern part of the Barents Sea and 91 km from Hammerfest. The well was spud in November 2022, using the 1,640-ft Transocean Enabler semisub rig, and the discovery was announced in February 2023. At that point, extensive data was being collected for further assessment and volume estimates were not released. Now, Vår Energi has said that preliminary estimates place the size of the discovery in the tested segment between 0,5 – 2,1 million Sm3 (3-13 million bbls) of total recoverable oil equivalents. The potential of the Countach prospect, in the undrilled segments, is estimated at up to 3,7 million Sm3 (23 million bbls) of total recoverable oil equivalents. The well will now be permanently plugged and abandoned, and the licensees will evaluate drilling an appraisal well in the future. Vår will consider potential commercial development options and tie-in of the discovery to Goliat FPSO. Due to the late arrival of the drilling rig on the field this winter, the company has not been able to carry out the planned sidetrack before the environmental drilling restrictions start on 1 March. Therefore, the plan is to continue to explore the area around Goliat at a later point in time.
Aker BP has concluded the drilling of an exploration well located in the North Sea offshore Norway but the well is dry. The 16/1-35 S well, targeting the Styggehøe prospect, is located in production licence 1141 operated by Aker BP with Equinor as a partner. It was spud in January 2023, using the 10,000-ft Scarabeo 8 semisubmersible rig, and drilled about 6.5 kilometres west of the Edvard Grieg field in the central part of the North Sea. The water depth at the site is 109 metres. The primary exploration target for the well was to prove petroleum in Upper Jurassic reservoir rocks in the Draupne Formation. The secondary exploration target for the well was to prove petroleum in Middle Jurassic reservoir rocks from the Vestland Group. The well encountered the Draupne Formation at about 520 metres, including a total of 298 metres of sandstone layers with good reservoir quality. In the secondary exploration target, the well encountered the Vestland Group at 174 metres, 114 metres of which was a sandstone reservoir with moderate to good reservoir quality. Data acquisition has been carried out and the well is dry. The Scarabeo 8 will now drill wildcat well 25/4-15 in production licence 919 in the North Sea, where Aker BP is also the operator. The drilling permit for this well was secured in February 2023.
CNOOC announced that it has made a discovery at Bozhong 26-6 in the south of the Bohai Sea. The discovery is located in shallow water with an average water depth of 22 meters. The discovery well BZ26-6-2 was drilled and completed at a depth of 4,480 meters and encountered a total of 321.3 meters oil pay zones. The well was tested to produce an average of approximately 2,040 bbls of crude oil and 11.45 million cubic feet of natural gas per day. The Deputy Chief Exploration Engineer of CNOOC, Mr. Xu Changgui, said that this marks the third oilfield discovery with a hundred million tons of reserve in the area, after Kenli 6-1 and Kenli 10-2.
The joint venture partners in the PL 939 licence, which contains the Egyptian Vulture oil discovery located in the Norwegian Sea, are relinquishing the licence. However, one of the partners is looking to form a new group to take the asset forward and will re-apply for the offshore acreage. Equinor is the operator of the PL 939 licence with a 55% interest, PGNiG has 30% and Longboat has the remaining 15% interest. The Egyptian Vulture oil discovery was announced in October 2021 after being drilled using the 10,000-ft Hercules semisubmersible rig. Technical studies have been undertaken to de-risk the discovery. As part of this work, ERCE provided an independent assessment of the discovery in a Competent Person Report commissioned by Longboat, which has confirmed the 1C-3C size of the discovery at gross 4-68 mmboe. For an appraisal well on Egyptian Vulture to be successful, it would need to encounter better reservoir quality than that penetrated by the discovery well. The Joint Venture participants, following extensive technical work, have been unable to form an aligned view regarding an appraisal well and will not be committing to a licence extension as required on 2 March 2023. Therefore the licence is being relinquished. However, Longboat is looking to form a new group to take the asset forward and rather than take over the existing licence, which would involve escalating license fees, will seek to re-apply for the acreage in the forthcoming licence round with awards due in January 2024.
The US Bureau of Ocean Energy Management (BOEM) has published the Final Notice of Sale for Gulf of Mexico Lease Sale 259, which will be held on 29 March 2023. Approximately 13,600 blocks are available. In January, the BOEM published a final supplemental Environmental Impact Statement for the sale. The agency also notes that this sale is specific for oil and gas exploration and development, not other uses. All bids must be received by 28 March 2023.
Suncor is requesting expressions of interest (EOIs) for a light well intervention vessel and related services for operations at the Terra Nova field in the Grand Banks region off eastern Canada. The field is located in about 95 m (312 ft) of water. If the project moves forward, the scope could cover one or multiple wells consisting of different well types and configurations. The Grand Banks region has a harsh environment with wind and wave activity similar to the Northern North Sea. A specific timeline for the project has not yet been disclosed, although Suncor is requesting interested parties provide vessel availability for 2023-2025. Responses to the request for EOIs are due by 6 March 2023.
Northern Ocean expects rig demand in the harsh environment segment to continue to be weak throughout this year amid limited visibility of new drilling programmes in Norway over the next 12 months. In general, Northern Ocean has a positive outlook for 2023. The company says that, in response to the growing demand and limitations of supply in offshore rigs, the offshore drilling markets have materially tightened resulting in higher utilisations of the offshore global fleet and significant improvements in day rates. However, in the harsh environment segment, demand for drilling rigs has been somewhat anaemic or bearish last year and is expected to continue relatively similar through 2023. New activities on the Norwegian Continental Shelf (NCS) have either been downsized, delayed or eliminated and there is now limited visibility of new drilling programs over the next 12 months. More here…
Following the closing of the Independence Well Raise (IWR), Crogga Limited is now turning its attention towards rig contractors with the aim of securing a jackup rig for the drilling of the Independence appraisal well located off the Isle of Man. Isle of Man residents had a six-week period to purchase shares in the company. The IWR is now closed and the entirety of the fund raise will go toward the costs of drilling the Crogga Independence 112/25a-2 appraisal well planned for 4Q 2023. The purpose of the well is to determine whether the Manx Crogga gas field is capable of delivering commercial flow rates of natural gas. If successful, the company will move forward to full field development with first gas production planned to begin by the end of 2026. The company will now turn attention to finalising institutional deals to bring the total IWR fund raise to the planned GBP 32.5 million ($39.3 million) level. In the interim, well permitting is continuing with the Department of Infrastructure and THREE60 Energy, formerly Fraser Well Management, who are progressing the well design and operational planning. THREE60 Energy was announced as the operator of the well in January 2023. Furthermore, Crogga will begin approaching drilling rig contractors to secure a suitable jackup drilling rig for the three-month Independence well drilling operation planned to spud during October 2023.
Woodside Energy has entered into an agreement with Pancontinental Energy that could see the company acquiring an interest in deepwater block PEL 87 offshore Namibia following a minimum 5,000 square kilometre 3D seismic survey funded by Woodside. Woodside has the option to acquire a 56% participating interest in PEL 87 in consideration for paying for a 3D seismic survey in the area at a cost of $35 million and also paying Pancontinental $1.5 million. 3D seismic acquisition over the Saturn complex on PEL 87 is to begin this year, with Woodside advising Pancontinental. The current participants in the PEL 87 joint venture are Pancontinental with 75%, Custos Investments with 15% and NAMCOR with 10%. Woodside will have a period of at least 180 days after the delivery of the seismic survey data to exercise the option for a 56% interest. If exercised, Woodside will enter into a farmout agreement where it will carry the existing joint venture during the drilling of the first exploration well on the block following the seismic survey. Upon Woodside’s election to exercise its option, Woodside will pay Pancontinental around $ 2.5 million. Pancontinental will retain at least a 20% interest in the project via an agreement to acquire a 1% interest from Custos Investments. If the joint venture decides to drill a second well then Pancontinental may retain its 20% interest but pay its share of the well, reduce its interest to a 10% participating interest with Woodside carrying it through the cost of the second well, or convert its interest to a 1.5% gross overriding revenue royalty interest.
Petronas is experiencing continued permitting delays off Mexico that have resulted in a delayed start date for the 10,000-ft drillship Noble Globetrotter I. Operations under the two-well charter had initially been expected to begin in December 2022. Noble currently expects the campaign to begin in March 2023, while noting that the situation remains fluid. Noble Globetrotter I continues to have a follow-up assignment with Shell for P&A work in the US Gulf. Operations are scheduled to run from July to September.
Reactivation continues on Diamond Offshore’s 10,000-ft semisubmersible Ocean GreatWhite, with the rig now undergoing acceptance testing. The rig is expected to start work with BP offshore the UK in March 2023. Ocean GreatWhite began reactivation in the Canary in August 2022 then moved to the UK in the fourth quarter of 2022. In August 2022, the rig was awarded a five-well contract with BP which is expected to run for around 300 days. BP also has priced options for up to eight additional wells. The rig’s work with BP will start with drilling at the Ben Lawers field in the West of Shetland area.
Sval Energi, along with partners Storegga and Neptune, have applied for a CO2 storage licence in the Norwegian North Sea. Sval says the Trudvang project has the potential to store up to 225 million tonnes of CO2. The carbon capture and storage (CCS) project location is east of the Sleipner field and about 165 km from the coast. The storage reservoir is in the Utsira formation. Sval, which will operate the proposed project, expects CO2 injection to begin in 2029. Some work has already been undertaken, including subsurface evaluation of the storage complex, and technical and economic assessment of the CCS value chain.
APA Corporation stated that it is evaluating reallocating capital to other areas as recent tax changes in the UK had made returns in the North Sea less attractive than other opportunities in its portfolio. Accordingly, the company is releasing Diamond Offshore’s semisubmersible Ocean Patriot in mid-2023. Introduced in 2022, the Energy Profits Levy is an additional 25% tax on UK oil and gas profits on top of the existing 40% headline rate of tax, taking the combined rate of tax on profits to 65%. Diamond Offshore announced the early termination in February 2023. The 3,000-ft semi was originally expected to remain with APA until September 2024. APA Corporation plans to bring two subsea wells and one platform well in its UK fields online in the second quarter of 2023.
Noble Corporation reported a net income of $135 million and revenues of $623 million for the fourth quarter of 2022, its first quarter following its combination with Maersk Drilling in early October 2022. Results for the previous quarter were net income of $34 million and revenues of $306 million. The company’s net income for 2022 as a whole was $168 million, with revenues of $1,414 million. Noble’s contract drilling services revenue for the fourth quarter of 2022 totalled $586 million compared to $289 million in the third quarter of 2022. Noble attributed the increase primarily to its business combination with Maersk Drilling. Noble’s backlog at December 31, 2022 stood at $3.9 billion, with $2.7 billion for floaters and $1 billion for jackups. Noble stated that the average day rate across its floater backlog is around $400,000 with over half of its 2024 floater days uncommitted, with an upward trajectory for repricing the fleet visible based on current market dynamics.
Diamond Offshore reported a net loss for the fourth quarter of $52.4 million compared to a net income of $5.5 million in the third quarter of 2022. The decrease in net income was largely a result of a swing in discrete, non-cash tax adjustments of approximately $49 million quarter to quarter. Diamond’s contract drilling revenue for the fourth quarter, excluding reimbursable revenue, totalled $208 million compared to $190 million in the third quarter of 2022. The increase in revenue was due to a full quarter of operation in Senegal for the 12,000-ft Ocean BlackHawk drillship, the 12,000-ft Ocean BlackLion drillship operating for a full quarter at its higher dayrate, and the managed 12,000-ft Vela drillship going on contract in the fourth quarter. The increased revenue was partially offset by reduced revenues from the 6,000-ft Ocean Onyx semisub, which was cold stacked during the quarter, and the 10,000-ft Ocean Endeavor semisub which was in the shipyard for repairs, regulatory surveys, and steel renewals. Diamond finished the year with approximately $1.8 billion, or 17.6 rig years of backlog, including $482 million added during the fourth quarter. The company will have repricing opportunities for two high-specification drillships and two semisubmersibles in the next 12 months.
Scana-owned PSW Technology has signed an agreement with Deep Value Driller AS for deepwater BOP stack services. The agreement involves services for the classification and testing of two deepwater BOP stacks for the 12,000-ft Deep Value Driller drillship ahead of its mobilisation later this year. The Deep Value Driller drillship is currently warm stacked in Norway and the agreement with PSW comes following Saipem’s charter of the 7th generation drillship announced last week. Deep Value Driller has started reactivation activities for the drillship, which are expected to be completed during the summer of 2023 upon which the drillship will be delivered to the charterer. Activation will take place at Westcon Yard in Ølensvåg, Norway. According to the company’s 4Q 2022 report, the drillship’s stacking cost inception to date were $20,341/day. PSW’s work starts in the first quarter of 2023 and benefits from the company’s facilities at Mongstad. This is a sizable contract for the company, which means it’s worth between NOK 10 million (about $968,175) and NOK 50 million (about $4.8 million). Svend Anton Maier, CEO in Deep Value Driller, said that one of the most critical tasks in the mobilisation of the drillship is the recertification of the well control equipment.
OMV announced that it has decided to explore the possibility to sell its E&P assets in Asia-Pacific as it aims to optimize its E&P portfolio with the OMV Strategy 2030, which includes to reduce fossil and develop sustainable energy solutions. The divestment includes the potential sale of its 50% stake in the issued share capital of SapuraOMV Upstream in Malaysia, which is the operator of Blocks SK310 and joint-operator of Block SK408 (with Sarawak Shell), and holds several other exploration interests. OMV will also sell 100% of the shares in OMV New Zealand Ltd, which has interest in three offshore production licenses and produce 37,500boe per day (72% gas, 28% condensate and oil).
Equinor has signed an agreement to acquire an equity interest in five discoveries in the Troll, Fram, and Kvitebjørn area in the Norwegian sector of the North Sea from Wellesley Petroleum. Since 2019, Equinor has made seven discoveries in this area. The transaction adds to Equinor’s equity share in the following discoveries: an additional 18.8% in Grosbeak, 45% in Toppand, 40% in Atlantis, and 20% in Røver Nord and Røver Sør. Although a mature part of the Norwegian continental shelf, the Troll and Fram area has emerged as an exploration hotspot over the last years, and Equinor has made a number of discoveries in this area, including Swisher, Toppand and Røver Nord and Sør. Equinor has started field developments projects to coordinate the development of these discoveries in collaboration with partners. The closing of the transaction is subject to customary government and licence approvals and is expected to be completed during the first half of 2023.
Singaporean offshore engineering and shipbuilding company Sembcorp Marine has closed its business combination with Keppel Offshore & Marine (KOM), with KOM now a wholly-owned subsidiary of Sembcorp Marine. The combination was approved on 28 February 2023, following shareholder approval earlier in the month. In conjunction with the acquisition, Sembcorp Marine allotted and issued 36,848,072,918 KOM Consideration Shares at the issue price of S$0.122 per share. Sembcorp Marine owns shipyards in Singapore and Indonesia. KOM has facilities in Singapore, Brazil, the United States, the Philippines, China and Qatar.
TotalEnergies has signed an agreement with Spanish oil and gas company CEPSA to acquire CEPSA’s upstream assets offshore Abu Dhabi in the United Arab Emirates The assets to be acquired include a 20% participating interest in the Satah Al Razboot (SARB), Umm Lulu, Bin Nasher and Al Bateel (SARB and Umm Lulu) offshore concession. ADNOC operates this concession with a 60% interest while OMV has a 20% interest. TotalEnergies will also acquire a 12.88% indirect interest in the Mubarraz concession held by Abu Dhabi Oil Company Ltd (ADOC), through the acquisition of 20% of Cosmo Abu Dhabi Energy Exploration & Production Co. Ltd (CEPAD), a company holding a 64.4% interest in ADOC. The Mubarraz concession includes four producing offshore fields. The SARB and Umm Lulu transaction and the Mubarraz transaction are subject to satisfaction of customary conditions precedent, including formalization of documentation and final approvals. The acquisition is to have an effective date of 1 January 2023.
Norway’s Equinor through its UK subsidiary has signed an agreement to acquire the UK business of Canada’s Suncor Energy for a total consideration of $850 million. The transaction includes a non-operated interest in the producing Buzzard oil field (29.89%), an additional operated interest in the Rosebank development (40%), and Suncor employees based in the UK who work with these assets. The transaction will double Equinor’s operated share of the Rosebank development. Rosebank is being developed in line with the UK Government North Sea Transition deal and the Rosebank partners are targeting a final investment decision in 2023, subject to the UK Government’s and partners’ approval. About $250 million of the consideration is contingent upon a final investment decision for Rosebank. The transaction will add approximately 15,000 barrels of oil equivalent per day in equity share in 2023 and create synergies with Equinor’s existing operations. It is expected to close in mid-2023.
Image credit: Deep value Driller AS