A new discovery announced in Norway this week could be the largest one made in the country since 2013. Meanwhile, ExxonMobil received permission to begin drilling off Canada and Shell confirmed the presence of hydrocarbons at its fourth exploration well off Namibia.
In case you missed it, you can access our previous Rig Market Roundup here.
Esgian Rig Analytics Story
In the first half of 2023, 24 new discoveries were confirmed across 7 offshore regions. The North Sea/Barents proved to be the most successful region in the period, with the highest number of announced discoveries. Read more about discoveries made in 1H 2023 here.
Contracts
Shell subsidiaries Sarawak Shell Berhad and Sabah Shell Petroleum have exercised three one-well options for the 12,000-ft drillship Noble Viking that will keep it working off Malaysia into Q2 2025. One of the options has been novated to PTTEP to drill the Rotan NFE appraisal well off Sabah. Operations are set to begin in December 2023 and run for about 21 days. The rig will then undertake the previously announced six-well campaign with Shell, followed by two newly exercised one-well options covering about 90 days. This is for the Marjoram deepwater field off Sarawak. The combined 111 days from the three exercised options has a contract value of approximately $49 million, including fees for MPD equipment on certain wells but excluding integrated services. This summer, the 400-ft jackup Noble Tom Prosser will join Noble Viking for contracts with Shell and PTTEP, which Noble says will enable additional efficiencies.
Drilling Activity and Discoveries
Wellesley Petroleum has made a significant gas and condensate discovery on the Carmen prospect in the Norwegian North Sea. The discovery is said to be the largest one made on the Norwegian Continental Shelf since 2013. The Carmen well (35/10-10 S) is located in PL1148, which is operated by Wellesley with DNO, Equinor, and Aker BP participating as partners. Carmen is located close to existing infrastructure with clear routes towards commercialisation. Other recent discoveries in the area are Røver Nord, Kveikje, Ofelia, Røver Sør, and Heisenberg. Carmen is Wellesley’s first operated HPHT well. It was spud in early April and finished in June 2023 with the Odfjell Drilling-managed Deepsea Yantai semisub. Wellesley’s partner DNO said on Monday that preliminary evaluation of comprehensive data, including cores and fluid samples, acquired from the discovery well and a follow-on extended sidetrack indicates gross recoverable resources in the range of 120-230 million barrels of oil equivalent (MMboe) on a P90-P10 basis. At 175 MMboe, the mid-point of this range, Carmen ranks as the largest discovery on the Norwegian Continental Shelf since 2013, DNO said. The two wells have established a deeper hydrocarbon-water contact, tripling the mid-point of DNO’s pre-drill expected range. The 3,900-ft Deepsea Yantai also drilled the Eirik HPHT well this year for OMV, making an oil discovery with a preliminary estimate between 0.95 – 5.55 million standard cubic metres (Sm3) of recoverable oil equivalent.
As it prepares for the Jubilee South East development offshore Ghana to come onstream, Tullow Oil and its partners plan to maintain an increased level of production at the Jubilee field over the next few years through an ongoing infill drilling programme. Three producing wells and one water injection well at Jubilee South East are expected to come onstream in 2023 to sustain gross production at the Jubilee field at over 100,000 bopd. Future drilling locations have been identified to further extend this plateau in production. Tullow Oil is the operator of the Jubilee field, which was discovered in 2007 and came onstream in late 2010. Net production from the Jubilee field was 31,900 bopd in 2022 and is expected to average around 37,000 bopd in 2023. Tullow has Noble 12,000-ft drillship Noble Venturer contracted for work offshore Ghana into early 2025. Tullow also operates the TEN field offshore Ghana. A planned TEN shutdown is underway, seeking to improve gas handling and support reduced flaring. An amended TEN plan of development is also being finalised.
The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) has granted ExxonMobil permission to begin exploratory drilling using Odfjell-managed semisub Hercules. The rig arrived off Canada on 3 July. It has been contracted for one firm well and one optional well in the Jeanne d’Arc Basin. Following this assignment, Hercules will mobilise to Namibia for its next charter with Galp Energia.
Shell has concluded drilling Lesedi-1X, its fourth exploration well offshore Namibia and stated that the data gathered so far “confirms the presence of hydrocarbons and further evaluation is required to determine development potential.” The well was drilled with Odfjell Drilling-managed 7,500-ft semisubmersible Deepsea Bollsta, which is understood to have moved on to drill the Cullinan exploration well. The rig is contracted to Shell into mid-2024 with further options available. Shell confirmed a successful flow test offshore Namiba in June 2023. Lesedi-1 follows the previous Graff, La Rona and Jonker wells drilling on by Shell on licence PEL 0039 in Namibia’s Orange Basin. The company applied earlier this year to allow for the drilling up to 10 exploration and appraisal wells on the licence.
Wintershall Dea has spudded an appraisal well at the Bergknapp discovery in the Norwegian Sea using the 10,000-ft semisub Transocean Norge. The discovery has estimated resources of 38-72 million boe in the Garn and Tilje formations. Bergknapp is also close to other assets owned by Wintershall, which it says provides the potential for efficient development, should they decide to develop this field.
Demand
Hibiscus Petroleum has received environmental consent from the UK regulator for its Teal West project in the North Sea. Hibiscus Petroleum’s indirect wholly-owned subsidiary, Anasuria Hibiscus UK Limited, has received the grant of consent for the Environmental Statement (ES) for the Teal West Development from the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), on behalf of the United Kingdom’s Secretary of State for the Department for Energy Security and Net Zero. The consent was received on 7 July 2023. There were no conditions attached to the agreement to the grant of consent received. It is expected that the decision on the Field Development Plan (FDP) will be received in due course following the grant of consent for the ES. The project is located in UK Licence P.2535 Block 21/24d in the Central North Sea. Phase 1 will consist of drilling one production well and, depending on the success of this phase, Phase 2 will involve the drilling of a water injection well at the west of the same structure. If both of these indicate the potential for high oil volumes, a second production well will be drilled in Phase 3. The wells will be tied back to the existing Anasuria FPSO.
A Final Environmental and Social Impact Assessment (ESIA) Report has been submitted to the Petroleum Agency of South Africa (PASA) on behalf of TotalEnergies for potential exploration drilling on Block Deep Water Orange Basin (DWOB) off the west coast of South Africa. TotalEnergies is the operator of the DWOB license and is planning to drill an exploration well on the block, with up to nine additional wells dependent on the success of the first well. Commencement of the drilling campaign is not confirmed, but drilling of the first well could begin between the first to fourth quarter of 2024. TotalEnergies will use a semisubmersible or drillship with dynamic positioning for this drilling, which would likely take place in around 1,000 to 3,000 meters (3,280 to 9,843 ft) of water. The company estimates up to three months to drill the exploration well and up to four months for each additional appraisal well, with additional time for mobilization, P&A and demobilization. The ESIA report was prepared by SLR Consulting. PASA will make a recommendation on the granting or refusal of the environmental authorization (EA) application to the Department of Mineral Resources and Energy, which will make the final decision. TotalEnergies has requested that the EA, should it be granted, be linked to the renewal of its exploration right for DWOB and be valid for a period of five years from the date of the renewal.
Mobilisation/Rig Moves
The 12,000-ft drillship Deep Value Driller has left Westcon yard in Ølensvåg, Norway to start sea trials, equipment and system testing. The 2014-built drillship was previously owned by Dolphin Drilling and known as Bolette Dolphin. It was warm stacked in the Canary Islands in 2017 and moved to Norway in mid-2020 where it has been ever since. Deep Value Driller AS acquired it in 2021. The sea trials are in preparation for the rig’s upcoming three-year bareboat charter with Saipem and an 11-well contract with Eni announced in late February 2023.
Diamond Offshore 12,000-ft drillship Ocean BlackHawk has completed work for Woodside offshore Senegal and is now moving to Las Palmas in the Canary Islands where it will undergo its five-year special periodic survey (SPS) and contract preparations ahead of upcoming work in the US GOM. Ocean BlackHawk secured a one-year contract with a one-year priced option with Occidental subsidiary Anadarko Petroleum in the US GOM in May 2023; this term is expected to commence in the fourth quarter of 2023. The rig was working at Woodside’s Sangomar development from around August 2022 to the first week of July 2023. Sister rig Ocean BlackRhino is continuing work with Woodside off Senegal into the first half of 2024.
Borr Drilling jackup Hild has departed Singapore and commenced its journey to Mexico, where it will commence its maiden charter with Fieldwood Energy. The charter is for a firm term of 725 days, with a target start date in Q3 2023. Hild is a KFELS Super B Class unit capable of working in up to 400 ft of water.
Other News
Vantage Drilling was scheduled to hand over management of the 10,000-ft semisub West Aquarius to new owner Seadrill on 8 July. Vantage had been managing the unit for the previous owner Aquadrill since early 2022. Following Seadrill’s acquisition of Aquadrill, Seadrill sent a notice of termination of the marketing agreements for West Aquarius, West Polaris, and West Capella; however, the latter two units will continue to be managed by Vantage during the contracts that had already been secured by Vantage. West Aquarius arrived in Norway in late May and is now cold stacked.
Africa Oil Corp. has entered an agreement to increase its operated working interest in Block 3B/4B in the Orange Basin offshore South Africa by an additional 6.25%, acquired from Eco Atlantic subsidiary Azinam Limited for a total cash consideration of $10.5 million. The company’s letter of intent with Azinam has the cash to be paid in tranches; $2.5 million within 30 days after the signing of the LOI; $2.5 million upon the government’s approval for the transfer of the 6.25% to Africa Oil; $4.0 million upon the completion of a farm-out deal to a third party; and $1.5 million upon spudding of the first exploration well on the block. Africa Oil will hold an operated working interest of 26.25% subject to and on the receipt of the government’s approval for the transfer, with Azinam holding a 20.00% interest and Ricocure (Proprietary) Limited holding the remaining 53.75% interest. Africa Oil and its partners are progressing plans to conduct a two-well campaign on the block and are in discussions with various potential partners to farm out up to a 55% gross working interest in the block. They have also selected an environmental consulting firm to conduct a comprehensive environmental and social impact assessment process in preparation for permitting and drilling activity on the block. Block 3B/4B covers an area of 17,581 km2 within the Orange Basin offshore South Africa.
The board of directors of Noble Corporation declared a quarterly interim dividend on its A ordinary shares of $0.30 per share, payable on 14 September 2023, to shareholders of record at close of business on 17 August 17 2023. Going forward, the company intends to pay dividends on a quarterly basis. Future quarterly dividends and other shareholder returns will be subject to, amongst other things, approval by the board of directors, and may be modified as market conditions dictate. Noble President and Chief Executive Officer Robert W. Eifler commented: “Going forward, we will remain committed to returning the significant majority of free cash flow to shareholders over time via dividends and share repurchases, with an intention to scale both of these instruments higher as cash flow generation continues to grow.” Noble eliminated its quarterly cash dividend of $0.02 per share in late October 2016, citing “the continuation of challenging fundamentals in the offshore drilling industry.” At the time, Noble stated that the elimination of the dividend would support its continued focus on liquidity preservation. Since then, Noble Corp. filed for Chapter 11 bankruptcy protection in August 2020, emerging in February 2021. The company also completed the acquisition of Pacific Drilling in April 2021 and a merger with Maersk Drilling in October 2022.
Deltic Energy has announced a significant increase in its estimate of oil and gas resources for the Pensacola discovery on the Shell-operated Licence P2252 in the UK North Sea where Deltic has a 30% working interest. This increase, based on Deltic’s post well analysis, is nearly double initial expectations. The Pensacola exploration well 41/05a-2 is located in the UK Southern North Sea. The well was spud on 21 November 2022 using the 350-ft Noble Resilient jackup rig. In February 2023, the discovery was described as one of the largest natural gas discoveries in the Southern North Sea in over a decade with an estimate of approximately 300 Bcf. Following post well analysis, Deltic now estimates the Pensacola structure to contain gross P50 initially in place volumes of gas and oil of 342 million barrels of oil equivalent. This analysis indicates Pensacola may contain almost double the volume of recoverable gas and oil than originally thought, with Deltic now estimating total gross P50 Estimated Ultimate Recovery (EUR) of c.99 mmboe, up from 50 mmboe immediately after well completion. Significantly, Deltic now estimates Pensacola contains material volumes of oil, representing c. 30% of the combined recoverable hydrocarbons. Work is progressing with partners to develop the appraisal and development programme for Pensacola with an appraisal well continued to be targeted for late 2024. In parallel, the JV will undertake various studies to define optimal development plans for the Pensacola discovery.
Reabold Resources has conducted a high-grading exercise of its North Sea licences due to its ongoing disciplined approach to capital allocation, which has led to the prioritisation of the highest potential return assets. The Northern North Sea basket of licences was acquired for £0.25 million, effective May 2022, and the Southern North Sea basket of licences was acquired for c.£1 million in January 2023, as part of the company’s acquisition of Simwell Resources. In the Northern North Sea, Reabold has been granted an extension until July 2025 for licence P2478 (Dunrobin and Golspie, 36% working interest), which has aggregate gross unrisked Pmean prospective resources of 201 mmboe (197 Mbbls + 24bcfg). A ‘Drill or Drop’ decision is now required on or before 14 July 2025. In addition, licences P2605 (Laxford and Scourie) P2504 (Oulton and Oulton West) (both 100% working interest) have been retained as the company continues the farm-out process, prior to a drill or drop decision by November 2024. These licences have aggregate gross unrisked Pmean prospective oil resources of 38 Mbbls and aggregate gross unrisked Pmean prospective gas resources of 148 Bscf, in addition to 11Mbbls of oil and 15 bcfg 2C contingent resources (11.1 Mbbls + 3.6 bcfg in Oulton and 11bcfg on block in Laxford). Licences P2396 (Curlew-A), P2464 (Quoys and Unst), P2493 (Sandvoe) (all 100% working interest) have been or are due to be relinquished shortly. In the Southern North Sea, licence P2486 has been retained as the operator continues the farm-out process, prior to a drill or drop decision by July 2024. Shell, the operator of licence P2332, which is adjacent to the licence containing the Pensacola well, made a decision to relinquish the licence. Licences P2329 and P2427 have been or are due to be relinquished shortly.
Ithaca Energy has decided to acquire the 40% stake in the Fotla discovery it doesn’t already own and three exploration licences (P.213 Area C, P.345 Area A, and P.2536) in the UK North Sea from Spirit Energy. The Fotla discovery, operated by Ithaca Energy, is located in Block 22/1b of the UK North Sea in 431 ft of water, approximately 10 km southwest of the Ithaca Energy-operated Alba field. The acquisition, which is subject to the satisfaction of certain conditions precedent including regulatory approval, will bring Ithaca’s working interest in the Fotla discovery to 100% at completion, providing the company with full control over pre-final investment decision work and timing. The field was discovered in August 2021 by drilling of the 22/1b-12 well with WilPhoenix (now Well-Safe Defender) and subsequently appraised by two sidetracks. Development plans are currently being evaluated, with first production from the discovery targeted in 2026. The conceptual field development plan consists of a subsea tieback to existing infrastructure.
Image credit: Deep Value Driller AS
