Esgian Rig Analytics Market Roundup (Week 19)

In case you missed it, you can access our previous Rig Market Roundup here.

Contracts

Ocean Oilfield secured a short-term contract for the Aras Driller jackup for operations offshore United Arab Emirates (UAE) with Atlantis (UAQ) Limited. The term of the contract has an estimated duration of 3-4 months and it is scheduled to start in July 2023. The rig last worked for Kaylong Holding and BOTAS in Turkiye. It is now in transit to Abu Dhabi Port, UAE. The value of the contract remains undisclosed.

Diamond Offshore has announced $212 million in contract awards, in addition to the $1.6 billion in backlog the company reported as of 1 April 2023. These contract awards are for floating rigs in the US GOM and UK North Sea. The 12,000-ft drillship Ocean BlackHawk has been awarded a one-year contract with a one-year priced option with Occidental subsidiary Anadarko Petroleum in the US GOM. This contract is expected to commence in the fourth quarter of 2023. Ocean BlackHawk is currently working for Woodside Energy offshore Senegal. The 3,000-ft harsh environment semisub Ocean Patriot has secured a two-well contract with Repsol in the UK North Sea, expected to commence in the second half of the third quarter of 2023. A potential second new contract for the rig is currently under negotiation. If secured, this would fill out the rig’s remaining availability in 2023 and keep it contracted through the winter season. Ocean Patriot is currently working for APA Corp., which has exercised an option to terminate the contract early. The 10,000-ft Ocean Endeavor semisub returned to work for Shell in the UK North Sea in March 2023 following a yard stay for surveys and structural upgrades. Diamond Offshore has confirmed that the rig has been awarded a two-well extension with Shell with an estimated duration of 120 days, to commence in early November 2023. The reactivation of the 10,000-ft harsh environment semisub Ocean GreatWhite was completed in March 2023 and the rig began a 300-day contract with bp in the UK North Sea in March 2023. The operator has exercised its first option well for the rig, to commence in mid-January 2024 after the initial five-well firm period is completed. Priced options for up to seven additional wells remain.

Velesto announced three jackup contract awards for an estimated combined value of $128 million. The contracts were awarded by Petronas for the provision of jackups Naga 3, Naga 4 and Naga 6 for work offshore Malaysia. The 350-ft jackup Naga 3 contract includes an estimated eight firm wells, 400-ft jackup Naga 4 contract includes an estimated four firm wells plus two 1-well options, while 375-ft jackup Naga 6 contract includes an estimated six firm wells. The commencement date for each jackup is in Q3 2023.

Transocean has secured a five-well contract from a major, undisclosed operator for the 1,640-ft semisubmersible Transocean Equinox in Australia. The rig has been warm stacked in Norway since October 2022 when it concluded its contract with Equinor following an early termination. The new contract, with an estimated duration of 300 days, represents approximately $137 million in firm backlog, excluding full payment for mobilisation and a demobilisation fee. This gives a dayrate of about $456,000. The contract is expected to begin in the first quarter of 2024 and it also provides for a one-well option, potentially keeping the harsh environment semisubmersible in Australia through the first quarter of 2025. This is the second Transocean Cat D rig to win a contract in Australia in less than two months. Namely, the 1,640-ft Transocean Endurance in late March secured a new contract with an undisclosed operator in Australia for plug and abandonment operations. The contract has an estimated duration of 240 days, plus a series of options, and it is expected to begin in January 2024. The contract value is about $91 million, giving the dayrate of about $379,000. The Transocean Endurance has also recently been awarded a two-well contract in Norway expected to begin in July 2023. At the same time, the rig has also had the first of five available options exercised on the contract in Australia.

Drilling Activity and Discoveries

CGX Energy will begin an open hole sidetrack at the Wei-1 well on the Corentyne Block offshore Guyana after drilling operations were interrupted by a wireline fluid sampling tool becoming stuck in the well. Wei-1 has been drilled to a depth of 19,142 ft out of a planned total depth of 20,500 ft, which will now be reached via the open hole sidetrack. CGX Energy and its partner Frontera Energy still expect the well to be completed within the original four-to-five-month timeframe announced after the well was spud in late January 2023. The partners have revised total cost estimates to successfully reach the target total depth, complete the anticipated logging runs and complete the well to around $175 to $185 million. CGX Energy stated that the well has already encountered multiple oil-bearing intervals, but it is not yet certain that the hydrocarbons encountered to date in sufficient to underpin commercial development on the Northern portion of the Corentyne block. The well is being drilled with Noble 10,000-ft drillship Noble Discoverer (Maersk Discoverer), which recently secured a one-well contract with Ecopetrol offshore Colombia. This is expected to begin around the fourth quarter of 2023.

TPAO’s 10,000-ft drillship Fatih has begun drilling the Amasra-3 well in the Sakarya gas field off Turkiye. Production from the Sakarya field began earlier this year. Fatih has been working for TPAO since early 2018.

The Canada Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) has issued a regulatory authorisation to bp Canada to conduct exploration drilling using the 10,000-ft drillship Stena IceMAX in the Orphan Basin. The rig will drill the Ephesus well over about 90 days in a water depth of about 1,300 m (4,265 ft). Following this campaign, Stena IceMAX will next mobilise to the US Gulf for a two-year assignment with bp.

Brazilian oil and gas company PetroRio (Prio) has found oil at the Maracanã prospect (3-PRIO-1-RJS) at the Frade field offshore Brazil. The primary target encountered a column of 36 meters of oil, while evidence of oil was found in the secondary target. The company has been drilling at the field with Ocyan semisubmersible Norbe VI. PetroRio stated that it will carry out further technical studies on both targets and may decide to drill another extension well to outline the area and determine the volume of oil in place. PetroRio indicated that if the find is economically viable, this could lead to another development front at Frade.

Talos Energy encountered non-commercial hydrocarbons in its Rigolets prospect in Mississippi Canyon Block 162. The well was spudded on 15 March by Seadrill’s 12,000-ft semisub Sevan Louisiana in 3,323 ft of water. The rig is contracted to Talos for work in the US Gulf through the end of 2023.

Occidental has commenced drilling the Pancheron prospect in the US Gulf. The 12,000-ft drillship Valaris DS-16 is drilling the well in 5,385 ft of water from Walker Ridge Block 24 into Green Canyon Block 992. Results are expected around mid-year. Oxy holds 37% working interest; bp holds 33% interest, and Talos Energy holds 30%. Valaris DS-16 is contracted to Oxy into May 2024 with an option to extend for one more year.

Following completion of a farm-in transaction with Red Willow Offshore and Houston Energy covering approximately 23,000 gross acres in the Walker Ridge area of the US Gulf, Talos Energy will operate the Daenerys prospect. Talos advises that it intends to drill the well in the second half of next year. The operator says the high-impact, subsalt project will evaluate the Miocene section with a gross unrisked recoverable resource potential of 100-300 MMboe.

Kosmos Energy plans to spud the Akeng Deep ILX exploration well on Block S offshore Equatorial Guinea late in the first quarter of 2024. The well is targeting a pre-drill gross resource of around 180 million barrels of oil in the deeper Albian trend. Kosmos is the operator of Block S with a 34% interest, partnered with Trident Energy with a 34% interest, Panoro Energy with a 34% interest and GEPetrol with a 20% interest. Kosmos stated that the Akeng Deep well would begin following the conclusion of a three-well infill drilling campaign at the Trident Energy-operated Ceibu field and Okume Complex on Block G offshore Equatorial Guinea. Trident Energy expects to commence this campaign in the fourth quarter of 2023, with the first of the three wells expected to be online before the end of 2023. Trident Energy has a 40.375% interest in Block G. Other partners are Kosmos Energy with a 40.375% interest, Panoro Energy with a 14.25% interest and GEPetrol with a 5% interest. Trident Energy has contracted Island Drilling 4,000-ft semisubmersible Island Innovator to drill offshore Equatorial Guinea towards the end of this year, with the rig relocating from the North Sea to West Africa for this work.

Indian state company Oil and Natural Gas Corporation Limited (ONGC) has reported new oil and gas discoveries in the Mumbai Offshore Area. The MBS171HAA-1 (MBS171HAA-A) discovery has been named Amrit while MBS182HDA-1(MBS182HDA-A) has been named Moonga. Amrit is on the Open Acreage Licensing Policy (OALP) block MV-OSHP-2017/1 in Mumbai Offshore (SW) in the Arabian Sea. Moonga is also on an OALP exploration block in Mumbai Offshore. ONGC stated that detailed assessment of the discoveries is in progress. India’s OALP mechanism allows operators to carve out blocks by assessing E&P data and submitting an expression of interest without waiting for a formal bid round from the government. These blocks are then offered through a biannual formal bidding process. ONGC said that it has made discoveries in blocks awarded in the OALP I and OALP III rounds.

Equinor has made a gas/condensate discovery near the Kristin field in the Norwegian Sea after concluding the drilling of wildcat well 6406/5-2 S. The well 6406/5-2 S is located in production licence 255 B, which is operated by Equinor with TotalEnergies and Petoro as partners. The water depth at the site is 304 meters. The well, targeting the Tott West, was spud on 10 March 2023, using Odfjell Drilling’s 10,000-ft Deepsea Stavanger semisub. It was drilled about 25 km south of the Kristin field. The primary exploration target for the well was to prove petroleum in Middle and Lower Jurassic reservoir rocks (the Garn, Ile and Tofte formations). It encountered a gas/condensate column of about 24 metres in the Garn Formation, 46 m of which was a sandstone reservoir with poor to moderate reservoir properties. The Garn Formation had a total thickness of 60 metres. The well also encountered 102 metres and 140 metres of sandstone reservoirs in the Ile and Tofte Formations, respectively, with moderate to good reservoir quality. The reservoir was water-filled. Preliminary estimates place the size of the discovery in the Garn Formation between 0.2 and 1.1 million Sm3 of recoverable oil equivalent. The licensees will assess the discovery alongside other nearby discoveries/prospects, as regards further follow-up. The well has been permanently plugged and abandoned and the Deepsea Stavanger is now drilling a pilot hole in production licence 1058, where Equinor is the operator.

Demand

TotalEnergies and APA Corp. are progressing towards a decision on an oil hub development scenario for Block 58 off Suriname. Appraisal work is ongoing at the Krabdagu field in this block, with the second Krabdagu appraisal well, known as Krabdagu-3, currently being drilled by Transocean semisub Development Driller III. Other fields in the block are Maka, Sapakara, Kwaskwasi, and Keskesi.

Norway’s Equinor and its partners Repsol Sinopec Brasil and Petrobras have taken the final investment decision (FID) to develop the BM-C-33 project in Brazil for about $9 billion. Located in the pre-salt Campos Basin, BM-C-33 comprises three different pre-salt discoveries – Pão de Açúcar, Gávea and Seat – containing natural gas and oil/condensate recoverable reserves above one billion barrels of oil equivalent. The concept selected for BM-C-33 is based on an FPSO capable of processing gas and oil/condensate and specifying these for sale without a need for further onshore processing. The FPSO’s production capacity is of 16 million cubic meters of gas per day with average exports expected of 14 million cubic meters of gas per day. The start-up is planned for 2028.

Suriname state-owned oil company Staatsolie has signed new 30-year production sharing contracts (PSCs) with TotalEnergies and QatarEnergy. The contracts were signed on 8 May 2023 and cover shallow-water blocks 6 and 8. Staatsolie holds a 40% interest through its subsidiary Paradise Oil Company. Under the Joint Operating Agreement costs during the exploration phase, which will last six years, will be carried by TotalEnergies and QatarEnergy. A first exploration well is to be drilled during the third or fourth year. Blocks 6 and 8 are located to the south of Block 58, a deepwater area with multiple discoveries. Block 58 is operated by TotalEnergies with partner APA Corp. Additionally, blocks 6 and 8 are located to the north of onshore producing fields.

The Indonesian Ministry of Energy and Mineral Resources has extended the deadline for access and submission of bids for the ongoing auction for three blocks. The new deadline for submission is now the 23rd of May from the original date 9th of May. The three blocks being offered are the Akia CA located offshore North Kalimantan, Beluga CA located off the West Natuna Coast and Bengara I CA located onshore on the North Kalimantan Plain.

Petrobras opened bids for its pool tender for up to four rigs on 28 April 2023. For Lot 1, which was for up to two units, a total of 15 rigs were offered by eight contractors. The two rigs with the two lowest offers were drillship Deepwater Aquila, offered by Transocean, and drillship Pacific Zonda, offered by Ventura, which is the local arm of Petroserv. For Lot 2 for one unit, 18 rigs were offered by eight contractors. The lowest offer came from Ocyan with drillship Norbe VIII. And for Lot 3 for one rig, the lowest bid was from Constellation with semisub Alpha Star. A total of 13 rigs were offered by six contracts for Lot 3. Following the required comment period, Petrobras is expected to open the contract signing process, which may take several weeks before awards are finalised. Dayrates are expected to be in the mid-$400,000s for Lot 1, the low-$400,000s for Lot 2, and low-to-mid $300,000s for Lot 3.

The Norwegian Ministry of Petroleum and Energy has announced Awards in Predefined Areas (APA) 2023, encompassing the areas with blocks in the North Sea, Norwegian Sea, and Barents Sea. After more than 50 years of exploration activities, the APA scheme covers the majority of the area that has been opened and is available on the Norwegian continental shelf. In this round, the APA area is expanded by a further 92 blocks or parts of blocks, including 78 blocks in the Barents Sea and 14 blocks in the Norwegian Sea. The deadline to apply for APA 2023 is 23 August 2023. Applicants are encouraged to submit in good time before the deadline. Awards are expected during the first quarter of 2024.

Hartshead Resources has completed the farm-out agreement (FOA) with the UK North Sea independent RockRose Energy for divestment of a 60% equity interest in its UK Southern Gas Basin License P2607. The two entered into the farm-out agreement in April 2023. The FOA will provide Hartshead with a total gross consideration of approximately A$196.3 million, which includes reimbursement of past costs, a partial carry on its share of development costs, bonus milestone payments, and $48.4 million of UK government Investment & Capital Allowance. The completion is a major milestone for Hartshead, as it materially de-risks the project and provides a clear pathway to the full financing and subsequent development. The completion of FEED and field development plan (FDP) are imminent. A Final Investment Decision (FID) for Phase 1, which includes the redevelopment and drilling of the Anning and Somerville fields, will be taken in Q3 2023. Six production wells are planned and are forecast to come on stream in 2025 at gross peak production rates of 140 mmcfd.

Mobilisation/Rig Moves

Reactivation of the 12,000-ft drillship Deep Value Driller is ongoing at the Westcon Yard in Ølensvåg, Norway. Owners Deep Value Driller expect the reactivation to be complete early in the third quarter of 2023, after which the rig will be delivered to Saipem under a bareboat charter. Saipem signed a bareboat charter for the rig in January 2023 and will use the unit for a drilling contract offshore Côte d’Ivoire with Eni. This contract is for a firm 11 wells with an estimated period of 985 days, working at Eni’s Baleine project, and may be extended by up to six additional wells. Reactivation of Deep Value Driller, which was cold stacked for over five years, will include vessel recertification, upgrades, testing, sea trials and acceptance testing at the end of the project. Both of the unit’s BOPs will be upgraded. Deep Value Driller expects the reactivation to cost $43.6 million.

Seadrill-owned 10,000-ft harsh environment semisubmersible West Aquarius has left Hidramar Shipyards in the Canary Islands after undergoing repairs, maintenance, and reactivation work over the past several months. West Aquarius last worked in 2020 on a contract with ExxonMobil offshore Canada. The rig, which has been managed by Vantage Drilling recently, was acquired by Seadrill earlier this year as part of its acquisition of Aquadrill. Seadrill stated in April that it would take over management of West Aquarius and other former Aquadrill units at an appropriate time and that it would be observing financial prudence in regards to opportunities for the warm stacked West Aquarius.

Other News

Diamond Offshore has engaged a broker to assist in evaluating the potential sale of cold-stacked semisubmersible Ocean Monarch and is now reporting the unit as an asset held for sale on its balance sheet. Ocean Monarch is an ODECO Victory design semisub, originally delivered in 1974, and has a design water depth of 10,000 ft. The unit has been cold stacked since the second quarter of 2022 and is currently in Malaysia.

Diamond Offshore has reported a net income of $7.23 million, adjusted EBITDA of $21.7 million and revenues of $232 million for the first quarter of 2023, up from a loss of $52.4 million, EBITDA of $12.5 million and revenues of $223 million in the fourth quarter of 2022. Diamond said that the increase in revenue quarter-over-quarter was primarily driven by 12,000-ft drillship Ocean BlackHornet commencing its second option period with bp at a higher dayrate. Results were also affected by the completion of the reactivation of semisub Ocean GreatWhite and the commencement of its contract with bp in the North Sea in March 2023. Diamond has announced $212 million in new contract awards. President and CEO Bernie Wolford stated, “The market exhibits the characteristics underpinning the continuation of the broad based upcycle, as demonstrated by our recent fixtures for both drillships and semisubmersibles across multiple regions and tendering activity for longer term prospects.”

Dolphin Drilling has reported an increase in revenues in the first quarter of the year driven by a contract commencement of one of its semisubmersibles. Dolphin Drilling reported total revenues of $1.8 million in the first quarter of 2023, compared to $0.4 million in the fourth quarter of 2022, reflecting the beginning of operations of the 6,000-ft Blackford Dolphin in Nigeria on 25 March 2023. Revenues achieved were at a standby rate being 95% of the maximum charter rate based on awaiting client ready to drill. Other revenues of $0.2 million are fuel costs recharged to GHL from contract commencement. The reported net loss for the current quarter was $19.8 million compared to $21.1 million in Q4 2022. Total operating expenses for the quarter were $15.4 million, $3.2 million higher than the previous quarter, also reflecting the commencement of operations in Nigeria. Lay-up expenses remain consistent for the 1,500-ft Borgland Dolphin and Bideford Dolphin while both remain in stacked mode. As of March 31, 2023, the estimated contractual backlog value was $122 million, excluding options. The backlog consists of two contracts for the Blackford Dolphin. The Borgland Dolphin and Bideford Dolphin are currently available for new work and are actively bidding on ongoing rig tenders. The two semisubmersible CS60 Eco Aker MH rigs are marketed and active in commercial discussions for future contract awards in the North Sea and internationally.

Africa Energy and Crown Energy are withdrawing from the joint venture for Block 2B offshore South Africa. Operator Eco Atlantic has a 50% interest in the block, while Africa Energy holds a 27.5% interest, Panoro Energy holds a 12.5% interest, and Crown Energy holds a 10% interest. Crown Energy stated that it is changing its strategy from oil and gas to sustainable businesses such as medical technology. The withdrawal from Block 2B follows Eco Atlantic drilling the Gazania-1 well on the block with semisubmersible Island Innovator in late 2022. The well did not encounter commercial quantities of hydrocarbons and was plugged and abandoned.

Image credit: Diamond Offshore