As is tradition, the first week of January is generally quiet across the board; nevertheless, there were still some noteworthy updates related to new contracts, drilling activities, and rig moves.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
After a bidding process for rigs to work at the Buzios field offshore Brazil, Valaris has been awarded a 1,064-day contract for its drillship Valaris DS-4 with Petrobras. This contract, set to begin around December 2024, holds an estimated value of approximately $519 million, encompassing additional services and mobilisation fees. The 12,000-ft 6th generation drillship Valaris DS-4 is currently working with Petrobras in the Santos basin’s BM-S-11 block, on a contract now expected to end in September 2024. After concluding its ongoing contract, the rig is scheduled to undergo essential customer-required capital upgrades for approximately 90 days, prior to commencement of the new contract. In December 2023, Seadrill also announced that it was awarded contracts with Petrobras for the 12,000-ft drillship West Auriga and the 10,000-ft West Polaris. These were also bid into the tender for work at Buzios.
Noble Corporation and Petronas Suriname have agreed to a rig swap for an extended scope offshore Suriname. The 12,000-ft drillship Noble Voyager is set to drill one well in Block 52, taking over the contract option previously assigned to the 10,000-ft semisub Noble Discoverer. The contract extension is slated to begin in February 2024, with an estimated duration of 120 days at a clean dayrate of $470,000. Additionally, both parties have mutually decided to include a new one-well option within the contract terms. The Noble Voyager concluded its offshore Mauritania contract with Shell and has since moved to Port of Spain, Trinidad and Tobago, to initiate preparations for the upcoming Petronas job. This rig swap deal comes weeks after Noble Corporation secured additional work with Petrobras for the Noble Discoverer in Colombia.
Drilling Activity and Discoveries
Galp stated that Mopane-1X, its first exploration well on PEL 83 offshore Namibia, indicates preliminary signs of hydrocarbon presence. The company noted that drilling and data acquisition campaigns are underway, “making any conclusion premature before operations are completed and results assessed.” Galp began drilling Mopane-1X on 17 November 2023 with Odfjell Drilling-managed semisubmersible Hercules. The rig is expected to drill two wells as part of the campaign. Once it completes work with Galp in Namibia, Hercules is expected to move to Canada for a term with Equinor. Galp is the operator of PEL 83 with 80% interest, while its partners NAMCOR and Custos each hold 10% interest.
Harbour Energy has started drilling at the Gayo-1 exploration well in the Andaman II block, offshore Indonesia. The company is using the 10,000-ft West Capella drillship for the operation, which is expected to take 78 days to complete. Mubadala Energy recently used the rig to make a large gas discovery in the South Andaman Gross Split PSC. This was the first deepwater well operated by the company and was drilled to a depth of 13,805 ft in ~3,960 ft of water. Harbour Energy said at the time that it would move Seadrill’s 2008-built drillship to drill its operated Halwa and Gayo wells on Andaman II. The West Capella is managed and operated on behalf of Seadrill by Vantage Holdings International.
Talos Energy has started oil and natural gas production at its Lime Rock and Venice discoveries in the US Gulf of Mexico. The two discoveries are located near Talos’ 100% owned and operated Ram Powell platform. Talos initially held a 100% working interest in both prospects before farm-downs to achieve its targeted and current working interest of 60% in both wells. The Lime Rock prospect was acquired in Lease Sale 256 in November 2020 and is approximately seven miles from Ram Powell. The Venice prospect was identified within the existing Ram Powell unit acreage approximately three miles from the platform. The Lime Rock and Venice wells were drilled in late 2022 using Seadrill’s 12,000-ft semisub Sevan Louisiana and confirmed as discoveries in early 2023. Both wells were brought online in late December 2023 and have achieved an initial combined gross production rate of over 18,500 barrels of oil equivalent per day, averaging about 45% oil and 55% liquids. The estimated combined gross ultimate recoverable resources of these two discoveries are approximately 20 to 30 million barrels of oil equivalent.
Murphy Oil Corporation has concluded drilling the Oso #1 exploration well on Atwater Valley Block 138 in the US GOM. Non-commercial hydrocarbons were present and the well will be plugged and abandoned. The Oso #1 well was drilled with Noble 12,000-ft drillship Noble Valiant. Once the well for Murphy has been plugged and abandoned, Noble Valiant is expected to begin work with LLOG on a six-month contract in the US GOM. Murphy has revised its exploration expense guidance for Q4 2023 from $53 million to $83 million, including a net well cost of $64 million for Oso #1.
Demand
ONGC emerges as a major winner in India’s eighth Open Acreage and Licensing Policy (OALP) bidding round, securing seven of the ten awarded oil and gas fields. ONGC was awarded 6 offshore blocks – 3 shallow water, 1 deepwater, and 2 ultra-deepwater blocks – along with 1 onshore block. The remaining three offshore acreages were granted to a consortium comprising India’s Reliance Industries and supermajor BP, Oil India, and Sun Petrochemicals. ONGC stood as the sole bidder for six blocks, while the ultra-deepwater block KG-UDWHP-2022/1 saw exclusive bidding from the Reliance-BP consortium. The Indian government distributed a total of 10 blocks across nine sedimentary basins, covering an area of 34,364 square kilometres. The estimated investments in the awarded blocks for committed exploration work programmes amount to approximately $233 million.
Mobilisation/Rig Moves
Valaris 400-ft jackup Valaris 107 has left the Kupe field offshore New Zealand after drilling the Kupe South 9 gas development well. It is understood that the rig will now be moving to Australian waters, where it has several contracts lined up. The rig began work at the Kupe field in late October 2023. In December 2023, Beach Energy’s partner NZOG said that the well had confirmed a gas column and would be completed as the field’s fourth producer well, starting to flow in the new year. AIS information on 29 December 2023 showed that Valaris 107 was being towed southward by the AHTS Go Sirius. The rig’s next contract is with a publicly undisclosed operator offshore Australia, scheduled to run from January to February 2024, followed by another contract offshore Australia with an undisclosed operator from March to September 2024. EOG Resources has stated in filings with Australian offshore energy regulator NOPSEMA that it is considering using Valaris 107 to drill the Beehive-1 exploration well on WA-488-P in the Joseph Bonaparte Gulf off western Australia. However, EOG recently submitted a revised Beehive-1 drilling environment plan for public comment, which closed in mid-November 2023 and it is understood that the operator will not be drilling the well in January 2024. Furthermore, Valaris 107 is scheduled to begin a one-year contract with ExxonMobil offshore Australia in October 2024, with two 180-day priced options also available. ExxonMobil will use the rig for the plug and abandonment of 26 wells in the Gippsland Basin. The company also plans to drill a well at the Kipper field in 2025.
Transocean’s 1,640-ft Cat D semisub Transocean Endurance has this week arrived in Australia, after a trip from Singapore. The rig, which left the Norwegian market in October 2023, is currently located near Dampier, W. Australia, and is expected to start a P&A contract with Woodside within days. The semisub has a fixed contract until February 2025, and four $390,000-day fixed-priced options that could keep it busy in Australia into January 2026.
Noble’s CJ70 jackup Noble Integrator is heading to a North Sea well location after leaving Stavanger anchorage where it had been warm stacked since September 2023. The rig was hired by Harbour Energy in August 2023 for a one-well contract in Norway with a duration of 35 days and a dayrate of $205,000. Harbour has already secured a drilling permit and safety consent to use the Noble Integrator for the well. Under this contract, the rig will drill the wildcat well 15/9-25 Amethyst, which is located in production licence 1138. The water depth at the site is 84 metres. The jackup is expected to arrive at the Amethyst well location on 6 January 2024. Following the completion of the Harbour contract, the jackup has a short option period with Aker BP followed by a firm period with the same operator, which is expected to end in November 2027.
Other News
The Council of Ministers in the Republic of Congo has approved the award of the PNGF Bis licence to a contractor group led by Perenco as an operator. Partners in the licence expect a production sharing agreement to be signed in early 2024. PNGF Bis is adjacent to the Perenco-operated PNGF Sud licence offshore Republic of Congo and contains the undeveloped Louissima and Louissima SW discoveries. Perenco has been leading negotiations for the licence since 2019. PetroNor has a 22.7% interest in the licence via its subsidiary Hemla E&P Congo.
PetroNor E&P has completed the farmout of its interest in blocks offshore Guinea Bissau to Apus Energy, with Apus Energy paying $23 million to PetroNor towards past licence costs and long lead items ahead of the drilling of the Atum-1 prospect in 2024. The agreement between PetroNor and Apus was announced in July 2023 and the government of Guinea Bissau approved the transfer of the the Sinapa (Block 2) and Esperança (Blocks 4A and 5A) licence interests to Apus during October 2023. Apus Energy is expected to drill an exploration well to test the Atum-1 prospect on the Sinapa licence late in the second quarter of early in the third quarter of 2024. AGR will provide well management services for the well, which is understood to be drilled with Diamond Offshore 12,000-ft drillship Ocean BlackRhino. In case of a successful well, PetroNor stands to receive two contingent earn-out payments of $30 million each, contingent upon government approval of a field development plan and sustained production.
The Norwegian Ministry of Energy has approved PGNiG Upstream Norway as operator and partner with Horisont Energi in Polaris (CO2 exploration licence EXL003), a CO2 storage licence located in the Barents Sea off Norway. The Polaris carbon storage development started in February 2020. The Polaris exploration licence EXL003 was applied for in 2021 and awarded on 10 June 2022. Horisont Energi and PGNiG Upstream Norway (PUN) on 11 December 2023 announced a sales purchase agreement making PUN a licence partner. The governmental appointment of PUN as operator and approval as licensee represent a key milestone in the development of the Polaris project. Horisont Energi and PUN each have a participating interest of 50% in the EXL003 CO2 licence Polaris, which will provide CO2 storage for Horisont Energi’s and Fertiberia’s Barents Blue project as well as other CO2 customers.
Malaysian oil firm Petronas, via its subsidiary PC Ketapang II Ltd. (PCK2L), has secured a 20-year extension of the Production Sharing Contract (PSC) for the Ketapang Working Area, located in the Java Sea, in Indonesia, and originally set to expire in 2028. The Ketapang PSC extension was officially granted by the Government of Indonesia through the Ministry of Energy and Mineral Resources on 22 December 2023. In Indonesia, Petronas is the operator for the Ketapang, North Madura II, and North Ketapang PSC, located offshore East Java, and is a joint venture partner in seven PSCs located both onshore and offshore Sumatra, Natuna Sea, East Java, as well as East Indonesia.
Image credit: Noble
