This week it was reported that Dolphin Drilling's Blackford Dolphin semisub started its first contract in Nigeria while Stena Drilling's Stena Don returned to port to prepare for its next North Sea campaign. Meanwhile, Aker BP acceded to all the Plans for Development and Operation (PDOs) submitted in December 2022, except for one, and Pemex submitted the Zama Unit Development Plan (UDP) to Mexican authorities.
SeaMex confirmed that it is in dialogue with Pemex concerning a possible extension of the contract for the 400-ft jackup West Titania, as well as other parties with potential opportunities for the rig. In July 2022, Pemex issued an early termination notice for West Titania with an effective date of 16 March 2023. West Titania was delivered in 2014 and has been working for Pemex off Mexico since 2015.
Drilling Activity and Discoveries
Diamond Offshore’s 10,000-ft semisubmersible rig Ocean Endeavor has completed its special periodic survey (SPS) and repairs in Norway and returned to its contract with Shell in the UK North Sea. After working for Shell over the last several years, the Ocean Endeavor in December 2022 paused the operations and moved to Semco Maritime’s yard in Hanøytangen for repairs, regulatory surveys, and steel renewals. Following the completion of yard operations, the rig was towed to Shell’s Gannet F location, where it will be drilling a development well, and returned to day rate last week. It will be busy with Shell into the second quarter of 2024. Diamond has another semisub working in the North Sea region. After arriving from the Canary Islands to the UK in October 2022, the 10,000-ft Ocean GreatWhite semisub was reactivated and started its contract with BP on the Ben Lawers location in the West of Shetland area last week. The firm part of the contract is scheduled to end in early 2024 after which the operator has eight 60-day options. If exercised, the options would see the rig work for BP into 2Q 2025. As recently reported, APA Corp. has shortened its contract for Diamond’s 3,000-ft Ocean Patriot by nearly a year due to the windfall tax in the UK. As a result, the contract is now expected to end in mid-2023. Diamond also has one idle rig in the region, the 6,000-ft Ocean Valiant, which is cold stacked in the UK.
Equinor has concluded the drilling of a wildcat well located near the Visund field in the North Sea offshore Norway and the well is dry. The wildcat well 34/6-6 S on prospect Angulata Brent is located in production licence 554, about 10 kilometres north of the Visund field, and about 190 kilometres northwest of Bergen. Equinor is the operator of the licence and Aker BP and Vår Energi are partners. This is the seventh exploration well in the production licence, which was awarded in APA 2009. The water depth at the site is 374 metres. The well was spud in early February, using the 10,000-ft Transocean Spitsbergen semisubmersible rig, with the objective of proving petroleum in reservoir rocks in the Brent Group from the Middle Jurassic. It encountered the Tarbert, Etive and Rannoch Formation totalling 140 metres, of which about 90 metres were sandstone layers with poor to good reservoir quality. In addition, 14 metres of sandstone layers with poor to moderate reservoir quality were proven in the Cook Formation with a total thickness of approx. 75 metres. The well is dry and it has been permanently plugged and abandoned. Earlier this year, the Transocean Spitsbergen drilled at the Røver Sør prospect, which resulted in a discovery. The rig will now drill a development well on the Vigdis field in production licence 089 in the North Sea, where Equinor is also the operator. The semisub is under contract with Equinor into 2025.
Aker BP has notified the Norwegian Ministry of Petroleum and Energy (MPE) that the company has acceded to all the Plans for Development and Operation (PDOs) submitted in December 2022, except for one. When an offshore field development decision is made in Norway, the licensees are required to submit a PDO to the MPE for approval. After this, each licensee must notify the MPE within three months whether they accede to the field development plan or not. On 16 December 2022, Aker BP and its partners submitted PDOs to the MPE for the following field development projects: Yggdrasil (Hugin, Munin and Fulla); Valhall PWP-Fenris; Skarv Satellites (Alve Nord, Idun Nord, and Ørn); Utsira High (Symra and Troldhaugen – in addition to a Development Report for Solveig Phase 2). The total recoverable resources from these development projects were estimated to be 730 million barrels of oil equivalent (mmboe) net for Aker BP, with net investments of approximately $19 billion in nominal terms and an average breakeven price of $35-40 per barrel. Aker BP has notified the MPE that it accedes to all but one of these PDOs, and the development projects are progressing according to plan. The Troldhaugen project in the Edvard Grieg area, which represents around four percent of the net estimated resources in these projects, has been discontinued. Troldhaugen represents approximately 30 mmboe and $0.5 billion in resource and investment figures. The execution of the Troldhaugen project was subject to the performance of an extended well test (EWT) which has been producing since August 2021. The experience from the EWT has resulted in a reduction in the expected recoverable volume. The project is no longer considered to have sufficient financial robustness, and Aker BP has decided not to accede to the PDO. Aker BP’s rig alliances with Noble Corporation and Odfjell Drilling will be essential in delivering this project portfolio. Noble’s jackup rigs, Noble Integrator and Noble Invincible, and Odfjell Drilling’s semisubs, Deepsea Nordkapp and Deepsea Stavanger, are planned to be deployed on the PDO projects.
Eco Atlantic and its partners are applying for environment authorisation to undertake exploration activities in Block 3B/4B in the Orange Basin, offshore South Africa. The Joint Venture (JV) partners have contracted Environmental Impact management Services for a permit to drill one well and one contingent well, with potentially up to five wells, within an area of interest in the north of the Block. The Block 3B/4B is located in waters west of South Africa in average water depths of 1,000m. Last year, the JV partners contracted the harsh environment semisubmersible Island Innovator to drill the exploration well Gazania-1 in block 2B.
Pemex, on behalf of partners Talos, Wintershall, and Harbour, has submitted the Zama Unit Development Plan (UDP) to Mexico’s National Hydrocarbons Commission. The UDP covers two fixed platforms, 46 dry tree wells, and oil and gas transportation to new facilities in Terminal Maritima Dos Bocas. Front-end engineering and design work is expected to continue while waiting for approval of the plan from authorities, which is expected within the next six months. A final investment decision would be made after all regulatory approvals have been obtained. The partners have formed an integrated project team (IPT) to manage project delivery and operations during the construction phase. The IPT will report to the Zama Unit Operating Committee, which includes representatives from each of the partners. Talos and Pemex will co-lead the planning, drilling, and completion of all wells, as well as co-lead the planning, execution, and delivery of Zama’s offshore infrastructure. Talos, Pemex, and Wintershall will co-lead the project management office.
Following a special periodic survey (SPS) in Scotland, one of the Valaris-owned jackup drilling rigs left the Port of Dundee on Saturday, 18 March 2023, to conduct a drilling campaign in the UK North Sea. The 400-ft jackup Valaris 247, formerly known as Rowan Gorilla V, underwent its SPS during the first quarter of the year in advance of its contract with Perenco. The rig was hired for a three-well drilling campaign with a duration of 180 days around Perenco’s Ravenspurn gas field in the Southern North Sea. The contract also includes one priced option with an estimated duration of 60 days. Several other Valaris-owned rigs, Valaris Stavanger, Valaris 121, and Valaris Viking, are also at Dundee with the first two undergoing SPS while the third one is preservation stacked to reduce costs while the rig is idle.
Dolphin Drilling has announced that its Blackford Dolphin semisubmersible rig has started its 12-month drilling contract with General Hydrocarbons Limited (GHL) in Nigeria. The 7,000-ft Blackford Dolphin arrived in Las Palmas in November 2022 where it completed its recertification for a new five-year period after which it was towed to Port Harcourt in Nigeria in February 2023. Now, the rig has started its 12-month drilling contract with GHL in Nigeria. In direct continuation of the GHL contract, the Blackford Dolphin will start a contract with Peak Petroleum, also in Nigeria, for a minimum of 120 days and up to 485 days. The effective dayrate for the minimum firm period is $325,000, which includes the mobilization fee. Dolphin Drilling owns two more semisubmersible rigs, the 1,500-ft Bideford Dolphin and the 1,500-ft Borgland Dolphin, both of which are in Norway and available for new work.
Following a campaign in the UK North Sea, Stena Drilling’s harsh environment semisubmersible rig Stena Don has returned to a port in Scotland to prepare for its next campaign. The 1,640-ft Stena Don has recently drilled the Shaw producer well under a short-term contract with Repsol Sinopec. The well 22/22a-SHC is located approximately 190 km from the Scottish coastline and 50 km west of the UK/ Norwegian median line. The water depth at the drilling location is 95.4 metres. Following the completion of drilling operations, the rig headed to Scapa Flow, Scotland where it will prepare for its next campaign. The contract with Shell is due to begin in 2Q 2023 for a firm scope of 365 days with an option to extend for up to an additional one-year period. The activities will include a combination of plugging & abandonment work and drilling development wells. Stena Don is joining Stena Drilling’s other semisub, the 5,000-ft Stena Spey, which is also at Scapa Flow until the beginning of its one-well contract with Ithaca, expected between June and September 2023.
Jackup-focused offshore drilling contractor Shelf Drilling reported a net loss attributable to controlling interest of $1.4 million for the fourth quarter of 2022, while the company’s adjusted revenues were $214.6 million in Q4 2022 compared to $166.3 million in Q3 2022. Shelf Drilling attributed the 29% increase in adjusted revenues due to the acquisition of the Shelf Drilling North Sea rigs in October 2022, higher effective utilization and strengthening day rates. Shelf Drilling CEO David Mullen stated, “After several challenging years, the industry has reached an inflection point. With a constructive backdrop for oil and gas and a shortage of rig capacity, I expect to see a multi-year upcycle in the jackup market.” The company reported Q4 2022 adjusted EBITDA of $75.5 million for the quarter with full year 2022 adjusted revenues of $687.6 million and adjusted EBITDA of $248.6 million. Shelf Drilling’s contract backlog was $2.7 billion across 35 contracted jackups at December 31, 2022.
OKEA has signed an agreement with Equinor to acquire a 28% working interest in PL037, the Statfjord Area, offshore Norway for an initial fixed consideration of $220 million. The acquisition is expected to close in Q4 2023 with an effective date of 1 January 2023. In addition to the fixed consideration, the agreement contains a contingent consideration structure based on profit sharing on crude oil volumes sold. Okea’s acquisition in PL037 will include a 23.93123% working interest in the Statfjord Unit, 28% in Statfjord Nord, 14% in the Statfjord Øst Unit and 15.4% in the Sygna Unit. Equinor will retain responsibility for 100% of OKEA’s share of total decommissioning costs related to Statfjord A platform in Statfjord Unit, while OKEA will be liable for its share of decommissioning costs related to the Statfjord B and C platforms in the same unit. Equinor will retain responsibility for any decommissioning costs relating to a full or partial removal of the gravity-based structures, should it be required.
North Sea operator Serica Energy has completed the acquisition of Tailwind Energy. The acquisition agreement was announced in December 2022, the shareholder approval was secured in January 2023, and the conditions precedent were satisfied earlier this week. As a result of this transaction, Serica has a broader asset spread with interests in two North Sea hubs, one of which it operates, and better exposure to an oil/gas mix. Following the acquisition, the attributes of Serica include a balance of gas and oil production focused around the Bruce and Triton hubs in the UK North Sea, more than 80% of its production from operated fields, and potential ‘near infrastructure’ field developments. Also included is an ongoing programme of sanctioned short cycle organic investments in 2023 and 2024 including a second Light Well Intervention Vessel campaign on the Bruce field and infill wells on the Bittern, Gannet E, Guillemot North West, and Evelyn fields. The acquisition is expected to be immediately accretive to Serica’s reserves, production, cash flow and earnings per share. Supported by the results of the Gannet GE-04 well announced on 20 February 2023, Serica’s estimated pro-forma production of the combined portfolio is expected to be between 40,000 and 47,000 boe/d in 2023, putting the company in the top 10 UKCS producers and top 3 UKCS listed independent producers.
Following a strategic business review, the UK-based operator Capricorn Energy has decided to focus on assets in Egypt. As a result, the company will reduce its headcount in the UK. The company’s new board has now started its comprehensive strategic review of business and the several potential directions for the future of the company. Ahead of announcing the initial results of this strategic review on 27 April, Capricorn provided an update on decisions which have been made about its exploration portfolio and cost base. The board concluded Capricorn’s near-term strategic focus should be primarily on Egypt, and to farm down, monetise or exit exploration concessions outside Egypt. As a result, Capricorn will need a substantially reduced headcount in the UK and will therefore shortly enter a redundancy consultation process which is expected to result in an organisation of less than 40 people in the UK. Capricorn expects to make the majority of these changes in the next two months. As a result of the reduced headcount, the company will be reviewing its UK office space requirements to align to the expected size of the renewed organisation. In the UK Southern North Sea, Capricorn is the operator of five licences alongside its joint venture partner, Deltic Energy. Capricorn holds interests in licences: P2428 and P2567 (60% WI) and P2560, P2561 and P2562 (70% WI). It is worth noting that this comes as several other UK operators are also looking to scale down their operations in the country and focus on other opportunities in their portfolios following the increase in petroleum taxes.
Image credit: Shelf Drilling
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