Esgian Rig Analytics Market Roundup (Week 21)

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

Contracts

Due to an updated well schedule, Seadrill’s harsh-environment semisubmersible West Phoenix is now expected to complete operations with Vår Energi in Norway later than previously expected. The West Phoenix has been working for Vår Energi on the Balder project from August 2021 and the contract was previously supposed to end in March 2024. Now, the semisub is expected to complete operations under its current contract in August 2024 due to an updated well schedule. This has added an additional $59 million to the backlog.

Seadrill-owned 400-ft jackup West Castor has secured an extension to its current operations with QatarGas in Qatar, keeping the rig operating offshore Qatar into April 2026. West Castor and sister jackups West Tucana and West Telesto are on a bareboat charter with Gulfdrill, a 50:50 JV between Seadrill and Gulf Drilling International. A dayrate is received by Gulfdrill and a bareboat charter rate is received by Seadrill from Gulfdrill. West Castor and West Telesto are both working for QatarGas. West Tucana’s current contract with QatarGas has been novated to Shell, with work continuing into June 2024. QatarGas also has options for West Tucana available from June 2024 to August 2025.

BW Energy has exercised an option for Borr Drilling’s 400-ft jackup Norve, keeping the rig working for BW Energy offshore Gabon into September 2023. Norve has been working for BW Energy since December 2022 and recently completed a production well at the Hibiscus / Ruche development. BW Energy has further options for the rig available, which could potentially keep it working until early 2024.

Borr Drilling has confirmed upcoming work in Mexico for 400-ft jackups Hild and Ran, with the Ran also securing a new contract in the Americas. Following on from an announcement in April 2023, the KFELS Super B Class Hild’s upcoming 725-day contract is now confirmed to be with Fieldwood Energy offshore Mexico, beginning in September 2023 and running until August 2025. Hild is currently undergoing contract preparations in Singapore ahead of mobilization to Mexico later this year. The KFELS Super A Class Ran is currently drilling for Wintershall offshore Mexico on a contract that began in October 2022. In August, the rig is to begin a two-well contract with Fieldwood Energy that was fixed in February 2023. With a contract awarded following a letter of award in January 2023, Ran is now confirmed to have an upcoming contract with TotalEnergies offshore Mexico, scheduled to run from October 2023 to April 2024. Ran has also secured a new contract with an undisclosed operator in the Americas, at what Borr has called “leading edge dayrates.” This new contract is currently firm from May to July 2024, with an option to extend that could keep it working until the end of 2024.

Carigali-PTTEPI Operating Company (CPOC) has exercised another option for Borr Drilling 400-ft jackup Thor, keeping it working in the Malaysia-Thailand joint development area in the Gulf of Thailand into January 2024. Thor has been working for CPOC since mid-2022. The latest option exercised is from October 2023 to January 2024 and follows a previous option from July to October 2023 exercised in late 2022.

Northern Ocean has secured an extension of the contract with Shell for continued work in Namibia using the 7,500-ft Deepsea Bollsta semisub. The firm term of the contract is extended from December 2023 for six months into June 2024 and provides an additional option for six months. The extension from December provides revenue backlog of about $88.6 million with the option to extend for an additional six-month period potentially adding a further $81 million to the backlog. The rig, managed by Odfjell Drilling, has been working for Shell in Namibia since December 2022 under a 12-month contract. It made a light oil discovery in the Jonker-1X deepwater exploration well drilled in licence PEL 0039 in the Orange Basin in March 2023. As previously reported, Shell plans to drill additional wells offshore Namibia and has recently applied to amend its Environmental Clearance Certificate (ECC) with Namibia’s Ministry of Environment, Forestry and Tourism to allow for the drilling of up to 10 additional exploration and appraisal wells on licence PEL 0039.

Drilling Activity and Discoveries

Aker BP is nearing the completion of drilling the Øst Frigg Beta/Epsilon exploration well, situated in the Yggdrasil area of the Norwegian North Sea. The well has resulted in a significant oil discovery. The well was drilled using Saipem’s 10,000-ft Scarabeo 8 semisub, which has also recently made another oil discovery for Aker BP after drilling the 25/4-15 well, targeting Ve prospect, in the North Sea off Norway. Preliminary estimates for this latest discovery indicate a gross recoverable volume of 40-90 million barrels of oil equivalent (mmboe), surpassing the previously communicated pre-drill estimate of 18-45 mmboe. The discovery enhances the resource base for the Yggdrasil development, which was previously stated at 650 mmboe (gross). The discovery will be evaluated as a potential addition to the Yggdrasil development for which the Plan for Development and Operations (PDO) was submitted to Norwegian authorities in December 2022, with production scheduled to begin in 2027. The discovery is located within production licences 873 and 442. In licence 873, the partnership consists of Aker BP (operator, 47.7% interest), Equinor (40%) and PGNiG Upstream Norway (12.3%). In licence 442, the partnership comprises Aker BP (operator, 87.7%) and PGNiG Upstream Norway (12.3%).

Odfjell Drilling-managed 10,000-ft semisub Deepsea Mira is expected to begin its contract with TotalEnergies offshore Namibia at the end of the second quarter, following some delays in loading equipment and performing required maintenance during its transit from Norway to Namibia. The Northern Ocean-owned Deepsea Mira departed from Bergen, Norway in early April 2023 and is currently anchored off Walvis Bay, Namibia. The rig secured a contract with TotalEnergies in December 2022 for a multi-country drilling program with a firm duration of 300 days plus a 180-day option and a 90-day option. This was originally scheduled to begin in mid-second quarter of 2023. When work begins, TotalEnergies plans to use Deepsea Mira to carry out drill stem tests at Venus-1A and Venus-1 on Block 2913B in the Orange Basin.

Enauta has confirmed a new oil accumulation in the Atlanta field development area. The new reservoir section has been named Atlanta NE. Drilling and logging of the 9-ATL-8DP well has been completed and has identified oil with excellent petrophysical properties at a 57 m (187 ft) section (measured depth). The accumulation is located at a 2,644 m (8,675 ft) depth, which is shallower than the reservoir under development. The oil was originally identified in the 9-SHEL-19D-RJS well drilled in 2006. The latest well was drilled to collect more data from the accumulation simultaneously to the drilling of production well 7-ATL-7HA-RJS, which was spudded on 3 May 2023 by Constellation’s 9,000-ft semisub Alpha Star. This well is part of the six production-well campaign of Phase 1. Enauta estimates resources-in-place exceed 230 million barrels of oil. Additional studies will be undertaken. Phase 1 of the Atlanta development targets first oil by mid-2024.

The Norwegian Environment Agency (Miljødirektoratet) has received an application from Equinor to include drilling and well operations at Kristin Sør and Tyrihans in the existing permit for the fields located in the Norwegian Sea. The application takes into account that up to five wells per year will be drilled and completed. Equinor is also applying for the inclusion of an exploration segment and an exploration well from Lavrans and Tyrihans B, respectively. The operations will take place with the 10,000-ft Transocean Spitsbergen and the 1,640-ft Cat D rig Transocean Encourage. The planned start-up is September 2023 at the earliest, and the campaign is planned to last until the third quarter of 2025. The drilling rigs will use dynamic positioning (DP) regardless of the season for drilling, and not anchors. The campaign includes a total of seven wells and Equinor’s provisional plan for rig activities is for the Transocean Spitsbergen to drill one well in Q4 2023, one in Q1 2024, and one in Q2 2024. In 2025, the rig will drill one well in Q2 and another in Q3. The Transocean Encourage will drill one well in Q1 2024 and another in Q2 2024. As reported in late March 2023, Equinor awarded a contract to Transocean Encourage consisting of nine wells to be drilled on the Tyrihans, Verdande, Andvare and Vigdis fields with the start date in December 2023. Transocean Spitsbergen has been working for Equinor for years and its current firm scope ends in January 2025.

Demand

Market sources indicate Petronas is considering establishing a multi-country Master Service Agreement (MSA) to supply floating rigs on a call-out basis. It is understood the operator has proposed a drillship for work off Brazil, Mexico, and Gabon, a semisub for Suriname, and work for both a drillship and a semisub for Malaysia. The scope covers about three years plus a two-year option starting around Q1/Q2 2024. The arrangement is non-committal and would be based on the required drilling window, rig availability, and commercial terms. Responses to the market survey are due by 26 May 2023.

QuarterNorth Energy has a tender out for a drillship to work in the US Gulf in 2024. Sources advise that the tender covers three potential scenarios, with the first having about 270 firm days and the other two with 180 firm days and various options attached to the scenarios. QuarterNorth is finishing its multi-well campaign with drillship Noble Faye Kozack, which began in May 2022. Next the rig is scheduled to drill one well for LLOG before transiting to Brazil for a 910-day contract with Petrobras.

Saudi Aramco (Aramco) has revised the scope of work of the Lump Sum Turnkey (LSTK) tender from up to 10 to 5 jackup rigs of 2000HP each. In Q2 2022, Aramco launched an invitation to service companies for its LSTK tender for the provision of up to 10 jackup rigs and associated services as part of the integrated scope of work to drill and complete up to 216 wells within 3 years and up to 144 optional wells within 2 years in the Zuluf, Rubyan, and Safaniyah offshore fields in Saudi Arabia. Market sources now indicate Aramco has reverted with additional changes. Aramco has assigned & allocated 5 specific rigs from its working fleet for the LSTK tender, which will be contracted through the service companies for the execution of the project. Accordingly, the scope of work has been revised to 5 jackups rigs and associated services to drill and complete 108 wells for the initial term of 3 years plus a total of 72 wells for the optional extension of 2 years. The anticipated award date is Q3 2023 and the spud date Q1 2024. Due date to submit the revised commercial proposal is set for 5 June 2023.

A Woodside Energy-funded 3D seismic survey over and around the Petroleum Exploration Licence (PEL) 87 in the Orange Basin offshore Namibia has been completed, with early processed results of 6,593 sq km program expected in August 2023. In March 2023, Woodside entered into an agreement where it has the option to acquire a 56% interest in PEL 87 in consideration for paying for the 3D seismic survey. The current participants in the PEL 87 joint venture are Pancontinental with 75%, Custos Investments with 15% and NAMCOR with 10%. Woodside has 180 days after the delivery of the survey to exercise this option. If it does so, the company will enter a farmout agreement whereby it will carry the current joint venture partners during the drilling of the first exploration well on the licence.

Mobilisation/Rig Moves

Noble’s 12,000-ft drillship Noble Valiant has departed Suriname after finishing its charter with TotalEnergies and is en route to the US Gulf. The rig is due to arrive on or about 24 May. Noble Valiant has two jobs lined up, the first of which will be a one-well assignment with Kosmos Energy. The operator will be drilling the Tiberius prospect in Keathley Canyon Block 964. Noble Valiant is next available for charter in November 2023.

Stena Drilling’s semisubmersible rig Stena Don has started moving from a port in Scotland to the UK North Sea to carry out its one-year firm contract with Shell. Following the completion of a contract with Repsol Sinopec, the Stena Don semisub arrived in Scapa Flow, Scotland on 20 March 2023 to prepare for its next campaign. After a couple of months of preparations, the rig on Tuesday started moving from the port towards the Gannet field in the UK North Sea. According to the latest AIS data, it is expected to arrive at the Gannet 21/30-C5 (GC204) well location on Wednesday 24 May 2023. The one-year contract with Shell also includes a one-year option and the rig’s activities will include a combination of plugging & abandonment work and drilling development wells. Stena Drilling’s other semisub, Stena Spey, is currently at Scapa Flow until the beginning of its one-well contract with Ithaca, expected between June and September 2023.

Following an extended period in the Canary Islands, Seadrill’s harsh-environment semisubmersible West Aquarius is coming to Norway where it will be cold stacked. The semisub unit, which has been managed by Vantage Drilling, was acquired by Seadrill in April this year as part of its acquisition of Aquadrill. Seadrill said at the time that it would take over the management of West Aquarius and other former Aquadrill units at an appropriate time and that it would be observing financial prudence in regard to opportunities for the warm stacked West Aquarius. The 10,000-ft West Aquarius last worked in Canada for ExxonMobil under a contract which ended in May 2020. It moved from Canada to the Canary Islands in the second half of 2022 where it underwent repairs, maintenance, and reactivation work and left earlier this month. The expected arrival of this HE unit to Norway will come at a time when the country’s rig count is shrinking due to departures of these types of rigs from the country amid increasing demand in the international market with Deepsea Mira, Deepsea Bollsta, and Hercules being only some of the examples of this current trend. On the other hand, Norway’s Equinor and Vår Energi are seeking to find out if the market could supply two semisubs to each of these operators for operations in late 2024 and 2025. Vår Energi already has Seadrill’s West Phoenix under contract.

Ocean Oilfield’s 280-ft jackup Aras Driller has arrived at Hamriyah Shipyard in Sharjah. Aras Driller last worked in Turkiye for Kaylong Holding and BOTAS. It departed Turkiye in Q1 2023 and arrived in the United Arab Emirates on 22 May 2023 at the Hamriyah Shipyard in Sharjah, where it will undergo its Underwater Inspection in Lieu of Drydocking (UWILD) Class Survey ahead of its next contract with Atlantis (UAQ) Limited.

Noble’s 350-ft jackup Noble Resolute has arrived at the Port of Esbjerg in Denmark where it will undergo a special periodic survey (SPS). The rig left the Dutch sector of the North Sea on Wednesday 17 May 2023 after a P&A campaign for Petrogas at its oil wells in the P/Q blocks. NorSea Denmark welcomed the Noble Resolute at its base in Port of Esbjerg this Saturday 20 May 2023 where it will stay for about 40 days. NorSea is servicing Noble Drilling with its one-stop-shop concept, including multiple departments and colleagues. NorSea oversees all access & security control for the rig and will handle crew change for all subcontractors getting hotel and transport to around 70 people, and logistics for all equipment including stevedoring and waste management.

Noble’s 492-ft jackup Noble Innovator is getting ready to leave the Port of Aberdeen at the end of this week after over three months of maintenance operations as part of its five-year special periodic survey (SPS). The rig arrived at the Port of Aberdeen in February 2023, becoming the largest ever vessel to visit the port. Semco Maritime and a host of local supply chain companies carried out maintenance works while the rig was berthed at Port of Aberdeen’s South Harbour. The Noble Innovator is expected to start moving from Aberdeen on Friday 26 May 2023, heading toward the Kate 22/23b-6 well in the ETAP field, where it is expected in about a week. Once there, it will carry out P&A operations for oil major bp under a one-year firm contract with a one-year option thereafter. The jackup will carry out the decommissioning of two suspended wells in bp’s Kate field and Well-Safe Solutions will support the campaign by carrying out well engineering support services.

Other News

Shell has commenced the process to early terminate two licences off Mexico in the Salina Basin. The licences being returned are CNH-R02-L04-AP-CS-G02/2018 and CNH-R02-L04-AP-CS-G04/2018. Chevron is also a partner in the licenses. The operator informed the National Hydrocarbons Commission (CNH) of its intent to return the licences in April. The effective date for the termination will be 19 July 2023.

Petrobras has been issued the operational licence from IBAMA for the Ubarana, Ubarana Oeste, and Cioba fields in the Potiguar Basin in favour of 3R Potiguar. These fields form part of the Potiguar Cluster and were a precedent condition for the closing of the sale to 3R. The Potiguar Cluster comprises three subclusters – Canto do Amaro, Alto do Rodrigues, and Ubarana. It totals 22 fields, with three offshore concessions and 19 onshore concessions. The Ubarana subcluster concessions are located in shallow waters. The other two subclusters are onshore. The transaction was originally announced in January 2022.

Barryroe Offshore Energy on 19 May 2023 received a letter from Ireland’s Department of the Environment, Climate and Communications (DECC) in relation to its application for Lease Undertaking and appraisal drilling for the SEL1/11 license located offshore Ireland. Barryroe holds an 80% working interest and is the operator of SEL1/11, which contains the Barryroe oil and gas accumulation, and Lansdowne Oil & Gas is its partner. The licence is located in the North Celtic Sea basin in 100 m of water depth. When a discovery is made in a licensed area and the licensee is not in a position to declare the discovery commercial during the period of the licence, but expects to be able to do so in the foreseeable future, the licensee may apply for a Lease Undertaking. The correspondence confirms that Eamon Ryan, Minister for the Environment, Climate and Communications, not being satisfied with the financial capability of the applicants cannot grant the Lease Undertaking as sought. Consequently, the SEL1/11 licensees have no rights over the acreage held under SEL1/11 as SEL1/11 expired on 13 July 2021. DECC also confirmed in the letter that the application was satisfactory from a technical perspective. The company is considering its response to the contents of the letter. On the other hand, Lansdowne has been engaging with external legal counsel to assess its legal rights and the potential options available, including pursuing legal proceedings, for the purposes of protecting its investment in the Barryroe project in which it invested c. $20 million.

Seadrill has reported a profit for the first quarter of 2023 compared to a loss in the last quarter of 2022 on the back of higher revenues. Seadrill’s total operating revenues increased by 17% from $228 million in Q4 2022 to $266 million in Q1 2023. The company’s operating profit in Q1 2023 was $51 million compared to a loss of $7 million in Q4 2022. Seadrill added approximately $39 million of order backlog during the quarter, bringing the total as of 31 March 2023 to about $2.2 billion. The addition is related to the West Neptune drillship securing a three-month extension with LLOG in the U.S. Gulf of Mexico in direct continuation of the existing term. Seadrill said it remains constructive about this developing upcycle in the offshore drilling market.

Borr Drilling reported a net loss of $7.4 million for the first quarter of 2023, a decrease in loss of $13.9 million compared to the $21.3 million net loss reported in the fourth quarter of 2022. Borr’s total operating revenues for the first quarter of 2023 were $172.0 million, up from $148.6 million in the fourth quarter of 2022. Borr attributed this improvement to an increase in operating days for the jackups Mist, Prospector 5, Saga, Arabia I, Arabia II and Norve as they commenced contracts mid-way through the prior quarter. The company’s total contract revenue backlog as of 31 March 2023 was $1.64 billion. Borr noted that in 2023 to date, it has been awarded eight new contracts, extensions, exercised options, and letters of awards representing 1,797 days and $253 million of potential revenue. CEO Patrick Schorn commented that the first quarter of the year had continued the positive trend experienced over the last several quarters. Schorn said that Borr expects “a similar performance in the second quarter of 2023 to the first quarter of 2023, we expect further increases in the third and fourth quarters of 2023, as our two remaining stacked rigs are being activated and will commence their respective contracts in the Middle East and Mexico.”

Jersey Oil and Gas and NEO Energy plan to sanction the Greater Buchan Area (GBA) re-development project, located in the UK Central North Sea, next year. Jersey entered into a farm-out agreement with NEO for the GBA licences in April 2023. Following the completion of the transaction, which is expected around the end of Q2 2023, NEO will take over the operatorship of the licences. With the introduction of NEO to the GBA, the partnership will work together to finalise the selection of the preferred development solution from a short list of attractive options, with first production targeted for 2026. Upon selection of the preferred development solution, the project will move into FEED activities along with the preparation of the required field development plan (FDP) that is planned for submission to the North Sea Transition Authority (NSTA) in the first half of 2024. Project sanction is expected in 2024.

Zamajal, a wholly owned subsidiary of Grupo Carso, has agreed to acquire a 49.9% stake in Talos Energy’s Mexican subsidiary, which holds Talos’s 17.4% stake in the Zama project. Talos Energy will remain the controlling shareholder of Talos Mexico. This transaction is expected to close in Q3 2023, and remains subject to approval by Mexico’s Federal Economic Competition Commission. The purchase price is $124.75 million, implying a minimum valuation of approximately $250.0 million for the full 17.4% stake in Zama. This could potentially be increased to $262.50 million, if certain milestones are reached. A total of $74.85 million will be paid upon the closing of the transaction, and the remaining $49.90 million is due at first production.

Image credit: Seadrill