Esgian's last roundup of the year includes updates about a new letter of intent for a Dolphin Drilling semisub and two new contracts for Seadrill drillships. Meanwhile, Shell is preparing for drilling operations in Australia and ONGC is seeking four jackups in India.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
Dolphin Drilling has signed a Letter of Intent (LOI) with an undisclosed operator for the 1,500-ft semisubmersible Borgland Dolphin to undertake a 500-day drilling campaign in the UK. The drilling campaign is planned to begin directly after the firm part of the contract period with EnQuest, which was announced in late November 2023. It includes a 137-day drilling programme, with EnQuest having a further option – supposed to be confirmed within 90 days of contract signing – to extend for a significant additional work scope as part of a strategic alliance over the five-year period. Borgland Dolphin is scheduled to begin the contract with EnQuest in April 2025. The contract value under the LOI includes an upfront cash payment and a fixed dayrate. With this announcement, Borgland Dolphin has backlog throughout 2025 and 2026, plus further options with schedule flexibility.
Following a bidding process for rigs to work at the Buzios field offshore Brazil, Petrobras has awarded 1,064-day contracts to Seadrill’s 12,000-ft drillship West Auriga and the 10,000-ft drillship West Polaris. The contracts are expected to commence in November 2024 and have a total contract value of around $1.1 billion, including additional services and mobilisation fees. The 6th generation drillship West Polaris is currently working for ONGC in India on a contract to end in January 2024 and is being managed by Vantage Drilling. The rig will transition to management with its owner Seadrill before beginning the Petrobras contract, which is valued at $518 million including the mobilisation fee and additional services. The 7th generation drillship West Auriga is working for BP in the US GOM under the management of Diamond Offshore. The BP contract is expected to end in May 2024. West Auriga will transition to Seadrill management before work with Petrobras. The contract for West Auriga is valued at $577 million including the mobilisation fee and additional services. Seadrill has been planning to take over the management of these units since it completed its acquisition of Aquadrill in April 2023.
Nigerian operator Peak Petroleum is taking legal action against Dolphin Drilling disputing the termination of a contract for the hire of the 6,000-ft Blackford Dolphin semisubmersible in Nigeria. Dolphin Drilling signed the contract with Peak Petroleum back in March 2023. The contract was for a minimum of 120 days and it was supposed to start in late March 2024, in direct continuation of the rig’s current contract with GHL, also in Nigeria. However, in late November 2023, Dolphin removed the contract with Peak Petroleum from the rig’s backlog. Days later, Dolphin also confirmed the termination of the contract, citing continued breach of contract conditions, which included a failure to pay the rig’s mobilisation fee in the amount of $6 million. As a result, the Blackford Dolphin became available after March 2024 and Dolphin enetered discussions with Oil India to use the rig for a 14-month firm contract in India, which was previously supposed to be carried out by the 1,500-ft Borgland Dolphin. Dolphin Drilling has now received formal notice of legal action from Peak Petroleum disputing the termination of the contract. Dolphin Drilling disputes this position and together with its legal advisors will take the appropriate measures.
Drilling Activity and Discoveries
Brazil’s Petrobras spudded the Pitu Oeste well, marking the resumption of its oil and gas exploration work in Brazil’s Equatorial Margin. The well is located in the BM-POT-17 concession, in the Potiguar Basin, 53 kilometres off the coast of Rio Grande do Norte. Pitu Oeste is the third well in the BM-POT-17 concession and will test the size of the discovery made by the Pitu well in 2014. The last well in this concession was drilled in 2015. Petrobras said that the drilling of the Pitu Oeste well would take 3 to 5 months. The well is being drilled with Foresea 10,000-ft drillship ODN II. The rig is contracted to Petrobras until late 2026. In October 2023, Petrobras obtained a licence from the Brazilian Institute of the Environment and Renewable Natural Resources to drill two offshore exploration wells on the Brazil Equatorial Margin, the Pitu Oeste and the Anhangá well, in the POT-M-762 concession, located 79 km off the coast of the state of Rio Grande do Norte, close to the Pitu Oeste well. In the 2024–2028 period, Petrobras plans to invest $3.1 billion in offshore oil and gas exploration in the Equatorial Margin, with 16 wells expected to be drilled.
Australian offshore energy regulator NOPSEMA has accepted Shell’s Environment Plan for development drilling at the Crux field offshore Australia. Shell submitted the plan on 29 July 2022, and the plan was accepted on 22 December 2023. The Shell-operated gas field is located in the northern Browse Basin, 190 km offshore northwest Australia and 620 km north-east of Broome, in approximately 541 ft (165 m) of water depth. It has been identified as a source of backfill gas to the existing Prelude Floating Liquefied Natural Gas (FLNG) facility. The proposed Crux development project consists of a platform with five production wells. The platform will be connected to the Prelude FLNG facility via a 160-kilometre pipeline and will be operated remotely from the Prelude FLNG facility. Shell plans to drill five development wells using a moored semisubmersible. Before the rig’s arrival at the drill site, Shell will install a drilling template, which will act as a guide for the drill bit during drilling operations, in the first quarter of 2024. The drilling template installation campaign is nominally scheduled to take place over a one-month period. Following the rig’s arrival, drilling activities will start for a planned duration of approximately 10 months, with an additional 10-month contingency drilling period. To allow for rig availability options, the campaign may use two separate drilling rigs to drill different sections of the wells. While the name of the rig to be used for Crux development drilling has yet to be officially confirmed, Shell’s EP included a “representative image” of a drilling rig that might be used for Crux drilling, and the image shows the Transocean semisubmersible Transocean Equinox. Transocean stated in May it had secured a five-well contract from an undisclosed operator for Transocean Equinox in Australia. The rig left Norway in late November aboard the Blue Marlin heavy-lift vessel, which is currently sailing past the coast of Guinea, en route to Singapore. According to the vessel’s AIS, it should reach Singapore on 8 February, 2024.
Demand
Azule Energy, Equinor, and Sonangol have signed risk service contracts (RSCs) with Angola’s National Agency for Oil, Gas, and Biofuels for offshore blocks in Angola. The contracts were signed after direct negotiations. Azule Energy signed the RSCs for offshore Blocks 46 and 47 in partnership with Equinor and Sonangol Pesquisa e Produção, S.A. (Sonangol P&P), and for Block 18/15 in partnership with Sonangol P&P, on December 20. Azule Energy is the operator of the three blocks, with a 40% participating interest in Blocks 46 and 47 and 80% in Block 18/15. Sonangol P&P holds 20% of the participating interest in each block and Equinor holds a 40% participating interest in Blocks 46 and 47. The three licences cover an area of approximately 8700 square kilometres in the deep and ultra-deep waters of the Angolan offshore. Blocks 46 and 47 have never been explored before and, according to Adriano Mognini, CEO of Azule Energy, represent a new frontier exploration area “that can be a game changer for our company and the country’s energy industry.” He said that exploration in Block 18/15 could potentially open a new play and take advantage of the synergies with the production facilities already existing in Block 18.
Indian state operator ONGC has launched a new tender to contract four jackups for three years with an estimated starting date in Q4 2024. ONGC is seeking the units under two categories. Under Category I it seeks three units of the MLT-116 C/BMC-300 design or equivalent, and under Category II it seeks one F&GL-786 Mod-II design or equivalent, both categories for 300 ft of water depth, for operations off the West Coast of India. Bids are due on 6 February 2024. A pre-bid conference will take place on 9 January 2024. Furthermore, ONGC also has an open tender for three HPHT jackups for three years with an estimated starting date in Q3 2024.
Mobilisation/Rig Moves
COSL 4,921-ft semisubmersible COSLProspector arrived in the Canary Islands in late December 2023, where it will stop for around 20 days at the Zamakona shipyard for maintenance and crew change before it resumes its journey to Norway. COSLProspector left China in October 2023 and has made various stops since then. The unit’s final destination is Norway, where it will begin preparations for a two-year contract with Vår Energi to begin in 2024.
Other News
Equinor and SOCAR (State Oil Company of Azerbaijan Republic) have reached an agreement for Equinor to sell off all of its remaining assets in Azerbaijan to SOCAR. Equinor has been present in Azerbaijan since 1992. The company has sold its 7.27% non-operated stake in the Azeri Chirag Gunashli (ACG) oil fields in the Azerbaijan sector of the Caspian Sea, its 8.71% interest in the Baku-Tbilisi-Ceyhan (BTC) pipeline and also its 50% in the Karabagh field. ACG, operated by bp, is the largest oilfield in the Azerbaijan sector of the Caspian basin and the BTC pipeline is used to transfer crude oil to the Turkish Mediterranean coast. SOCAR already holds a 25.0% stake in ACG, a 25.0% stake in BTC via Azerbaijan BTC Limited, and 50% in Karabagh. The completion of the transaction is contingent upon meeting specific conditions, encompassing regulatory and contractual approvals.
Brazilian operator Enauta has signed a contract with Petrobras to acquire 100% of the Uruguá and Tambaú oil and gas fields in the Santos Basin offshore Brazil and natural gas pipeline infrastructure connecting the production platform at the fields to the Mexilhão field infrastructure. The transaction totals $10 million, $3 million upon signing and $7 million upon closing, and up to $25 million contingent on events related to the fields’ development and future oil price. The transaction closing is subject to conditions, including approval from Brazilian regulatory authorities. Related to the purchase of Uruguá and Tambaú, Enauta has also signed a contract to acquire the MODEC-operated FPSO Cidade de Santos for $48.5 million.
Enauta has acquired a 23% stake from QatarEnergy Brasil for the Parque das Conchas cluster in the Campos Basin offshore Brazil. The cluster comprises the Abalone, Ostra and Argonauta fields and is operated by Shell, with a 50% equity stake, and ONGC holds the remaining 27%. The deal totals US$150 million, with an initial payment of US$15 million upon signing. The remaining balance, adjusted by the cash flow from July 1st, 2023, will be settled in three installments following approval from Brazilian regulatory authorities.
BP, Chevron, Hess and Talos Energy have executed lease exchange agreements under which the parties are consolidating acreage across 15 blocks in the deepwater Green Canyon area of the US GOM. Talos Energy stated that the consolidation would allow the parties to execute prospective drilling opportunities in the acreage more efficiently. Talos’s participation in these blocks is expected to be between 15% and 20%. Chevron entered into an agreement in October 2023 to acquire Hess, and noted that the two companies had complementary assets in the US GOM.
Malaysia’s Petronas Carigali has signed agreements with Thailand’s PTTEP concerning the development of PTTEP-operated Blocks SK405B and SK410B off the coast of Sarawak, offshore Malaysia. The two companies signed a Memorandum of Understanding (MoU) and two Technical Assistance Agreements (TAAs). The MoU covers the scope of potential evacuation of production from Block SK405B through D35/D21/J4 Production Sharing Contract (PSC) facilities, Post 1976 Balingian PSC facilities, and Bintulu Crude Oil Terminal operated by PETRONAS Carigali. The first TAA covers the study and design work for Block SK405B fields into the same PETRONAS Carigali-operated facilities.The second TAA is for the assistance of engineering design for the potential construction, tie-in works, pipeline, and cable crossings of Block SK410B for Lang Lebah’s gas evacuation to the Bintulu Additional Gas Supply Facilities 2, as well as for the potential production and handling of Lang Lebah’s condensate at the Bintulu Integrated Facilities. PTTEP holds 49.5% participating interest in Block SK405B PSC, with MOECO Oil (Sarawak) Sdn Bhd and Petronas Carigali holding 25.5% and 25%, respectively. For Block SK410B PSC, PTTEP and Kuwait Foreign Petroleum Exploration Company each holds 42.5% interest, with the remaining 15% held by Petronas Carigali.
Europa Oil & Gas has entered into an offshore license in Equatorial Guinea through the acquisition of a 42.9% stake in Antler Global Limited. Antler Global holds an 80% working interest in the recently acquired EG-08 production sharing contract (PSC), with Guinea Ecuatorialde Petroleos (GEPetrol), the national oil company, holding the remaining 20%. As per the subscription agreement, Europa Oil & Gas will pay a total sum of $3 million to Antler, payable in four installments, with the first being shortly following entering into the subscription agreement and the final scheduled for October 2024. This will fund the first-year work program costs, including the acquisition of existing 3D seismic data, which will be reprocessed alongside preparations to drill, while ensuring all financial obligations under the EG-08 PSC with the Republic of Equatorial Guinea and GEPetrol, are met. The EG-08 license has a first exploration period of four years with a drill or drop deadline after two years. During the initial two-year duration of the license, there isn’t a mandatory requirement for well drilling. Three separate prospect targets have been identified and are estimated to hold a combined prospective resource of 1.4 trillion cubic feet of gas equivalent (TCFE). Antler intends to initiate a farm-down process to seek a partner for drilling operations.
Brazilian state oil company Petrobras has agreed to acquire interest in three offshore exploration blocks in São Tomé and Príncipe, marking its return to Africa. Petrobras has now acquired a 45% stake in blocks 10 and 13, and a 25% stake in block 11, through a competitive process conducted by Shell. Financial details were not disclosed. In 2020, Petrobras exited African operations after selling its 50% stake in its Nigeria-focused subsidiary, Petrobras Oil & Gas B.V.
Vår Energi has completed the sale of a 12.2% stake in the Brage field off Norway to Petrolia NOCO. The Brage field is a late-life-producing asset located in the North Sea, operated by OKEA. The water depth at the field is 137 metres. The field started production in 1993 and comprises a production, drilling, and quarters platform with oil transportation via the Oseberg Transport System (OTS) to the Sture Terminal and gas offtake through Gassled. Vår Energi’s net production from the field was 1.5 kboepd in the first nine months of 2023 and had remaining net reserves of 1.9 mmboe at year-end 2022. The sale to Petrolia NOCO marks the exit of Vår Energi from the Brage field.
Image credit: Seadrill
