Esgian Rig Analytics Market Roundup (Week 22)

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

Contracts

Stena Drilling has signed a new contract with Shell for operations in the U.S. Gulf of Mexico with its 12,000-ft newbuild drillship Stena Evolution. The operations for Stena Evolution are due to commence in Q2 2024 for a primary term of five years, with an option to extend the contract upon completion of primary term. The drillship was initially ordered by Ocean Rig from Samsung Heavy Industries back in 2014 under the name Ocean Rig Crete. However, Ocean Rig was bought by Transocean in 2018 and Transocean cancelled the drillship order in 2019. In December 2021, Stena Drilling entered into a purchase option agreement with Samsung Heavy Industries to buy the drillship subject to securing a suitable contract, which the rig has now secured.

Odfjell Drilling, on behalf of CIMC Offshore, has agreed on a contract with ConocoPhillips Skandinavia for the use of the 3,900-ft drilling rig Deepsea Yantai in Norway. The contract includes the drilling of one firm well, in PL 891 in the Norwegian Sea, with the option to drill two further wells. The licence is operated by ConocoPhillips with Pandion Energy as a partner. The firm scope of work is estimated to take 72 days and will begin in Q3 2024. As a result of the signing of this contract, the firm backlog for the Deepsea Yantai is now expected to extend into Q4 2024.

The 425-ft jackup Hakuryu-11 has been awarded a contract with PetroVietnam Drilling & Well Services for work offshore Vung Tau, Vietnam. The contract is expected to commence between mid-March-April 2024 and the scope includes 2 firm wells (120 – 160 days) plus an additional 2 wells (25 – 30 days). The jackup is currently undergoing its five-year Special Periodic Survey (SPS).

The 350-ft jackup Enterprise 351 has finalised a one-well commitment with Peregrine Oil & Gas. The contract scope covers one well in the US Gulf commencing in direct continuation with the rig’s current charter with Arena Offshore. The estimated start date is in early July.

The Odfjell Drilling-managed semisub Deepsea Yantai has been awarded a contract for the drilling of the Lotus (Kjøttkake) exploration well for DNO in Norway. The well is located in licence PL1182S, which lies in the Northern North Sea, 4km southeast of the significant Equinor-operated Kveikje discovery made in 2022. The licence partnership includes DNO Norge (40%, operator), Aker BP (30%), and Longboat Energy (30%). The contract includes the drilling of one firm well, in PL1182S in the North Sea. The firm scope of work is estimated to take 35 days and will start in early Q3 2024. The Lotus prospect has been named Kjøttkake by the licence operator. It comprises Paleocene injectite sandstones, characterised by excellent reservoir properties, and is supported by seismic amplitudes. Based on Longboat’s estimates, Lotus contains gross mean prospective resources of 27 mmboe with further potential upside estimated at 44 mmboe. The chance of success is 56% with the key risk being hydrocarbon retention. If successful, Lotus is likely to form part of an area cluster development together with Kveikje and several other recent discoveries in the area, through infrastructure associated with the nearby giant Troll field.

Medco Energy Thailand has exercised an option for the use of 425-ft jackup Hakuryu-11 for work on the Bualuang field, offshore Thailand. The work scope includes 4 infill wells, which are expected to commence in Q4 2023 after the jackup’s SPS has been completed. Medco still has options for 2 workover wells.

Drilling Activity and Discoveries

The Norwegian Petroleum Directorate (NPD) has granted Aker BP a drilling permit for a wildcat well located in the North Sea offshore Norway. The wildcat well 30/11-15, named Krafla Midt Statfjord, is located in production licence 035, which is operated by Aker BP with Equinor as a partner. It is located about 133 km west of Øygarden in Vestland and 25 km southwest of Oseberg Sør. The well will be drilled with Odfjell Drilling’s 10,000-ft Deepsea Stavanger semisub in June 2023 at the earliest. Drilling is expected to last about 80 days in the event of discovery and with an option for a further 25 days in the event of a well test.

bp has completed the drilling of the Ben Lawers exploration well in the West Of Shetland area, with no discovery made. The well was spud in March 2023 with Diamond Offshore semisub Ocean GreatWhite. With the Ben Lawers well completed, Ocean GreatWhite has moved on to the next phase of its campaign with bp, during which the rig will drill four development wells in the Schiehallion area. The 10,000-ft Ocean Greatwhite is currently contracted to bp into the first quarter of 2024 following the recent exercise of a one-well option, with additional options available that could keep the rig working into 2025.

Equinor has concluded the drilling of a wildcat well in the North Sea offshore Norway but the well is dry. The well 31/2-23 S is located in production licence 923 where Equinor is the operator and DNO Norge, Petoro, and Wellesley are its partners. Equinor secured a drilling permit for the well in March 2023. The water depth at the site is 343 metres. The well, targeting the Eggen prospect, was drilled using Odfjell Drilling’s 10,000-ft semisub Deepsea Stavanger, about 3 kilometres west of the Troll field in the North Sea and about 120 kilometres northwest of Bergen. The objective of the well was to prove petroleum in Middle Jurassic reservoir rocks in the Brent Group. The well encountered the Brent Group with a thickness of around 135 metres, including sandstone layers of around 80 metres with good reservoir quality. The well is dry and data acquisition has been carried out. It was drilled to a vertical depth of 2333 metres below sea level and was terminated in the Drake Formation in the Lower Jurassic. The Deepsea Stavanger is now drilling wildcat well 31/2-24 in the same production licence as 31/2-23 S.

Norway’s Petroleum Safety Authority (PSA) has given Equinor consent to use the 10,000-ft Transocean Spitsbergen semisub for production drilling in block 35/11 in the North Sea off Norway. The rig will be used to drill well 35/11-A-13 H on the Fram field. It is located in the production license 090 operated by Equinor with Vår Energi, INPEX Idemitsu Norge, and Neptune Energy participating as partners. The rig has been under contract with Equinor in Norway for years and it has firm work with the Norwegian operator into early 2025 with an option thereafter.

bp has completed the first phase of its “small pools” drilling campaign off Trinidad, which began in October 2022. Three wells were drilled in the Mango field, one in the Savonette field, and three in the Angelin field. All three Mango wells have already been put into production. Jackup Valaris 118, also known as Joe Douglas, has been carrying out the campaign and is now at the Savonette platform to begin the next well. The “small pools” programme includes sidetracks of existing wells, as well as accessing new exploration segments that have not previously produced. It targets smaller accumulations of gas resources near bp’s existing infrastructure and allows these resources to be accessed more efficiently and brought into production faster. Valaris 118 is chartered to bp until January 2024.

Demand

Oil India Limited (OIL) has two tenders for jackup rigs to work in India in 2024. The two tenders have been out since Q1 2023; however, OIL has extended the due dates. The first tender is for a jackup for drilling, testing, and abandonment of an exploratory well in water depths up to 80 meters with drilling depth capability up to a minimum of 6,000 meters on the West Coast of India for seven months or until the well is completed. The approximate duration is 180 days + 30 days for well testing if carried out, giving a total of 210 days, with estimated commencement of drilling activities by April 2024. The well to be drilled and tested is named OKKA, located in the KK-OSHP-2018/1 block offshore Kerala. The second tender is for drilling, testing, and completion of development wells in water depths of 9 meters with a drilling depth capability of up to a minimum of 4,000 meters on the East Coast of India for ten months or until the completion of four wells. The approximate duration is 75 days, including well completions, with estimated commencement of drilling activities by Q2 2024. Two wells, Loc_1 (GS-48-1) and Loc_2 (GS-68-1), are located offshore Kakinada’s East Coast. Another two wells, Loc_3 & Loc_4 (GS-KW6), are located offshore Kakinada’s West Coast.

Kistos is ready to sanction the TotalEnergies-operated Edradour West and Glendronach developments in the Greater Laggan Area (GLA) in the West of Shetland, subject to joint venture (JV) partner approval. Kistos acquired a 20% interest from TotalEnergies in the GLA fields – comprising the Laggan, Tormore, Glenlivet, Edradour, and Glendronach – in 2022. The Glendronach field was discovered in 2018 and it will be developed with a single well tied back to existing infrastructure. It is expected to extend the life of the GLA, but FID was deferred by the JV partner in the second half of 2022. Kistos’ board is now ready to sanction the developments in the GLA with a decision by the JV partners as to the order and timing of developments expected to be taken later in 2023 to allow further technical reviews to be undertaken with the aim of reducing costs. Kistos anticipates FID will be taken in the second half of 2023. Kistos says it will be utilising investment allowance under the terms of the UK Energy Profits Levy. If approved, the Edradour West development programme is anticipated to begin by year-end 2023. In addition, drilling of the Benriach exploration prospect, also operated by TotalEnergies, started at the end of Q1 2023 and is targeting an operator-estimated P50 gross recoverable resources of 638 Bcf (110 Mmboe). The well is being drilled using the 10,000-ft Transocean Barents semisub. Following the completion of the well, the rig will move to Lebanon under a contract which is also with the French operator.

Petrobras and partners TotalEnergies, QatarEnergy, and Petronas have signed the Production Sharing Contract (PSC) for the Agua Marinha block, which was awarded in the Open Acreage under Production Sharing Regime – 1st Cycle in December 2022. The 1,300 sq km block is located in the pre-salt Campos Basin south of the Marlim Sul field and about 140 km from shore. The work programme includes drilling one firm exploration well during the exploration period. The block contains the Touro prospect. Petrobras operates the block with 30% interest. TotalEnergies also holds 30% interest, while QatarEnergy and Petronas each hold 20%.

At the Energy NL Conference in St. John’s, Newfoundland this week, Equinor announced that it is postponing the Bay du Nord development project by up to three years. Tore Løseth, Country Manager for Equinor Canada, said Equinor and partner bp would use the time to continue to mature the project towards a successful development. Recent volatile market conditions have contributed to the project experiencing significant cost increases in several areas. The partners will look for additional optimisations related to the development concept and strategies. The Bay du Nord development project is comprised of five discoveries, and Equinor says there is significant near-field prospectivity. The operator confirms it continues to assess exploration drilling around the Bay du Nord field in 2024. In April 2022, the Canadian government approved the project with 137 legally-binding conditions, including a requirement for net-zero emissions by 2050. At the time, Equinor stated it expected a final investment decision (FID) within the next couple of years and noted that first oil was possible by late 2028.

Mobilisation/Rig Moves

The 350-ft jackup Valaris 118 has completed the move from bp’s Mango platform to the Savonette platform off Trinidad and Tobago. The rig has been working for bp since October 2022 and is firmly committed to bp until January 2024. Valaris 118 was delivered in 2012 and built to the LeTourneau 240-C class design.

Stena Drilling’s 5,000-ft semisubmersible Stena Spey is preparing to head out to the North Sea to start a one-well contract with Ithaca Energy on the K2 field located off the UK. Ithaca Energy awarded the contract with an estimated duration of 45-75 days to Stena Spey in February 2023. The contract also includes a 60-day option. The K2 field lies within the UKCS block 22/14c, approximately 235km northwest of Aberdeen. The rig has been warm stacked in Scapa Flow since the summer of 2022. Drilling operations for Ithaca are now expected to start around 5 June 2023 and last about 41 days with the anchors pre-layed prior to rig arrival. Stena Drilling’s other semisub, the Stena Don, has also recently moved from Scapa Flow to the North Sea to start its one-year contract with Shell, which is a combination of P&A work and drilling development wells. The rig’s first location was at the Gannet field.

Seadrill’s 10,000-ft harsh-environment semisub West Aquarius has arrived in Norway where it is now cold stacked. The semisub had been in the Canary Islands since the second half of 2022 where it underwent repairs, maintenance, and reactivation work. The rig left the Canary Islands, heading to Norway, in May 2023. It arrived in Norway’s Skipavik-Gulen port on 30 May. 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 West Aquarius.

Other News

Offshore drilling contractor Northern Ocean recorded a smaller loss in the first quarter of the year when compared to the previous quarter on the back of higher revenues driven by Deepsea Bollsta’s contract with Shell in Namibia. In the first quarter, contract revenue was $30.6 million (technical utilisation of the Deepsea Bollsta was 97%) compared to $10.6 million in the previous quarter. Revenue was earned from the drilling contract of Deepsea Bollsta with Shell, of which $25.8 million was dayrate drilling revenue, $4.4 million was mobilization and demobilization revenue and $0.4 million was add-on revenue. The contract has recently been extended by six months. Total operating expenses were $40 million compared to $27.1 million in the previous quarter. Rig operating expenses increased to $26.5 million compared to $14.8 million in the previous quarter due to the increased number of operating days of the Deepsea Bollsta in the quarter, as the rig started operations on 10 December 2023. Prior to this date costs related to the reactivation and mobilization activities of the rig were being deferred in order to amortize over the firm contract period. The Deepsea Mira costs in relation to the reactivation and mobilisation activities continued to be deferred during the quarter, and will be amortized over the firm contract period after the beginning of the drilling contract with TotalEnergies, which is now expected in late Q2 2023 following delays in loading equipment and performing required maintenance. The net loss from continuing operations before taxes in the first quarter was $16.8 million compared to a loss of $21.9 million in the previous quarter. More here…

Chevron and its partners have submitted an updated plan of development for the Aphrodite reservoir on Block 12 offshore Cyprus. Submitted to the Cypriot government for approval, the updated development and production plan calls for the production and processing of natural gas to be carried out through a new subsea pipeline connected to existing offshore and onshore infrastructure in Egypt. Chevron and its partners estimate that the updated plan would reduce development costs and bring forward the commencement of natural gas production. The previous plan approved in November 2019 included the construction of a floating production and processing facility connected to five production wells, with a subsea system for transmission to the Egyptian market. Chevron is the operator of Aphrodite with a 35% interest. Shell subsidiary BG Cyprus holds a 35% interest and the partnership NewMed Energy has a 30% interest. Chevron began drilling the appraisal / development well Aphrodite-3 (A-3) on Block 12 in May 2023 with Stena Drilling 10,000-ft drillship Stena Forth.

TotalEnergies has renewed its production licence for block OML 130 offshore Nigeria for 20 years, which the company stated would allow it to move forward with FEED studies on the Preowei tieback project. OML130 contains the Akpo and Egina fields, which came into production in 2009 and 2018. Production from the Akpo West project is expected to start up by the end of 2023. The Preowei discovery on the block is to be developed by tieback to the Egina FPSO. TotalEnergies is currently conducting infill drilling on OML 130 with Noble 12,000-ft drillship Noble Gerry De Souza. The rig is under contract into the fourth quarter of 2023, with options available that could keep the rig working into the third quarter of 2024. TotalEnergies Upstream Nigeria Limited operates OML 130 with a 24% interest, in partnership with CNOOC with a 45% interest, Sapetro with a 15% interest, Prime 130 with a 16% interest and the Nigerian National Petroleum Company Ltd as the concessionaire of the production sharing contract.

Image: DS Stena Evolution; Credit: Stena Drilling