Esgian Rig Analytics Market Roundup (Week 4)

In case you missed it, you can access our previous Rig Market Round-Up here.

Contracts

Dragon Oil and and Bluewhale Offshore have signed a three-year contract extension for the 300-ft jackup Caspian Driller, keeping the rig working for Dragon Oil offshore Turkmenistan. The extension is effective immediately following the conclusion of the rig’s current contract in the first quarter of 2024. Caspian Driller has been working for Dragon Oil for over 10 years.

Drilling Activity and Discoveries

Equinor has discovered oil in exploration well 30/12-3 S in the North Sea off Norway. The well also included a sidetrack well, 30/12-3 A, which was dry. Equinor drilled the well on behalf of Aker BP, which is the operator of production licence 272 B where the wells are located. The licence is part of the Munin field, which was discovered in 2011. The authorities approved the plan for development and operation (PDO) for Munin in June 2023. The wells, targeting prospects Surtsey and Jolnir (sidetrack), were drilled about 40 kilometres south of Oseberg and 150 kilometres west of Bergen. The drilling was conducted by Odfjell Drilling’s 10,000-ft semisub Deepsea Stavanger. The water depth at the site is 106 metres. Between 0.15 and 0.55 million standard cubic metres (Sm3) of recoverable oil equivalent (o.e.) was proven in well 30/12-3 S. Preliminary calculations show that the discovery is not profitable with current price assumptions. Well 30/12-3 S encountered a 3.5-metre oil column in the Tarbert Formation, in a sandstone reservoir with moderate reservoir quality. The Tarbert Formation was about 195 metres thick, 97 metres of which was sandstone rocks with moderate-good reservoir quality. The oil/water contact was encountered 3110 meters below sea level. The Ness Formation was about 163 metres thick in total, 19 metres of which was a sandstone reservoir with moderate reservoir quality. Well 30/12-3 A encountered the Tarbert Formation with a thickness of about 216 meters, 19 meters of which was sandstone rocks with poor reservoir quality. The Ness Formation was about 50 metres thick in total, 11 metres of which was a sandstone reservoir with moderate reservoir quality. The well was dry.

Tullow Oil expects to conclude its drilling activity at the Jubilee field offshore Ghana around six months ahead of schedule. The company and its joint venture partners then intend to take a break from drilling in Ghana before resuming in 2025. Tullow Oil has been drilling at its Jubilee and TEN fields offshore Ghana with Noble 12,000-ft drillship Noble Venturer (previously Maersk Venturer) for the past several years. Noble Corp. previously expected the contract for Noble Venturer to run through March 2025. Tullow brought four producer wells and three water injection wells at Jubilee onstream in 2023 and plans to bring another three producer wells and two water injection wells onstream in 2024 before concluding this drilling activity. Tullow said that it would then take a break from drilling offshore Ghana while existing well stock sustains production at Jubilee and production decline at TEN is minimised. The company expects to resume drilling in 2025 and will commence the procurement process for a new rig in 2024.

After more than a year on standby offshore Darwin, Australia, the 8,200-ft semisub Valaris MS-1 has resumed drilling operations at Santos’ Barossa development. The rig arrived at the Barossa field in mid-January from its standby location southeast of Cape Fourcroy, Bathurst Island, in the Beagle Gulf. After a legal challenge that saw an environment plan (EP) for the development drilling at the Barossa field suspended in September 2022, Santos’ revised EP secured NOPSEMA approval in December 2023. “Following approval of the revised Drilling and Completions Environment Plan on 15 December 2023, drilling has now recommenced,” Santos confirmed on Thursday. Drilling activities resumed in the field on 13 January 2024. Santos said that, despite the delays, it still expected the first gas from Barossa in 2025, however, not in the first half of 2025, as originally planned when the FID was made in 2021. “Santos as operator has revised cost and schedule for the Barossa project. It is expected to require an additional $200-$300 million in capital expenditure and that first gas is expected in the third quarter of 2025,” Santos said.

Borr Drilling 400-ft jackup Gunnlod has completed work with SapuraOMV after drilling six development wells at the Jerun field offshore Sarawak, Malaysia. Gunnlod is expected to remain in Malaysia for upcoming work with an undisclosed operator, scheduled to run from around February to May 2024, based on a binding LOA fixed in 2023.

Murphy Oil is advancing plans to drill two exploration wells in the Cuu Long Basin offshore Vietnam in 2024. The wells are expected to be spud in the second half of 2024 with Japan Drilling 425-ft jackup Hakuryu-11. The company is currently targeting a spud date in Q3 2024 for the Hai Su Vang well on Block 14-2/17 and Q4 2024 for the Lac Da Hong well on Block 15-1/05. Hakuryu-11 was contracted for this work in late 2023. Murphy has projected a mean to upward gross resource potential of 160 to 430 MMBOE for Hai Su Vang and 65 to 135 MMBOE for Lac Da Hong. The company stated that the drilling adds upside to its Lac Da Vang field development project which was sanctioned in Q4 2023 and is targeting first oil in fiscal year 2025 with development through fiscal year 2029.

Occidental Petroleum (Oxy) will drill two exploration wells in the eastern US GOM in 2024, with spud dates targeted for the second quarter of 2024. Oxy plans to drill the Ocotillo well on Mississippi Canyon Block 40 and the Orange well on Mississippi Canyon Block 216. The company called these wells “promising exploration opportunities” in late 2023. Oxy is the operator of Mississippi Canyon Block 40 with a 33% interest, partnered with Murphy and Shell each with a 33% interest. Oxy operates Mississippi Canyon Block 216 with a 50% interest while Murphy holds the remaining 50%. Oxy has two drillships under contract in the US GOM; Valaris 12,000-ft unit Valaris DS-16 and Diamond Offshore 10,000-ft unit Ocean Blackhawk. Valaris DS-16 is contracted into mid-2026 following a recent two-year contract extension, while Ocean Blackhawk began a one-year contract with further options available in November 2023. In addition to the exploration wells, Oxy plans to drill and complete five development wells in close proximity to existing facilities this year.

Portuguese oil company Galp said Friday it had discovered a significant column of light oil in reservoir-bearing sands of high quality at AVO-2, a deeper target of the Mopane-1X well, offshore Namibia. The news comes after Galp earlier this month confirmed the discovery of a significant column of light oil in reservoir-bearing sands of high quality at the Mopane-1x well. Galp is using the Odfjell Drilling-managed semisubmersible Hercules for the operation. The 10,000-ft semisub is now expected to be relocated to the Mopane-2X well location to evaluate the extent of the Mopane discoveries, after which a Drill Stem Test (DST) is expected to be performed in Mopane-1X. The Mopane is located in the PEL 83 offshore block. “Galp will continue to analyse the acquired data during the coming weeks to assess the commerciality of the discoveries,” the company said. Galp is the operator of PEL 83 with 80% interest, while its partners NAMCOR and Custos each hold 10% interest. Following the completion of its work in Namibia, the Hercules rig, owned by SFL Corporation, is expected to move to Canada for work with Equinor.

Demand

The recent updates on the Sea Lion development progress have included an updated development plan to align with Navitas Petroleum LP’ reservoir models, leading to an 11% increase in certified resources across the entire North Falkland Basin portfolio. According to the 2024 Netherland Sewell & Associates (NSAI) Independent Report, the certified gross 2C resources in the overall North Falkland Basin have increased from 712 MMbbls to 791 MMbbls. Navitas has identified suitable and available existing floating production storage and offloading (FPSO) vessels and is actively working with leading industry vendors to secure all long lead equipment, with the goal of reaching the Sea Lion Phase 1 Final Investment Decision (FID) in 2024 and achieving first oil by the end of 2026. The Sea Lion development plan still comprises 23 wells drilled in two phases, showing a 16% increase in gross 2C resources from 269 MMbbls to 312 MMbbls out of the overall 791 MMbbls certified discovered resources in the basin. The initial gross capex required for first oil has been reduced from $1.3 billion to $1.2 billion, with a capex of approximately $8 per barrel. The opex across the life of the field has been reduced to under $17 per barrel. The break-even price is now below $25 per barrel, compared to the previously reported $27. An updated development plan has been submitted to the Falkland Islands Government, and it is anticipated that an updated Environmental Impact Assessment will be submitted during the first quarter of this year. The Sea Lion field is operated by Navitas with a 65% interest, in partnership with Rockhopper Exploration plc, which holds a 35% interest.

Sonangol and its partners are continuing planning for activity at Blocks B3/05 and B3/05A offshore Angola. Partner Afentra stated that planning is continuing on the selection of the initial phase for electric submersible pump installation, workovers and infill wells at B3/05 and B3/05A. Drilling candidates include the undeveloped Bufalo Nord field, Gazela discovery and an exploration well at Pacassa South West. Afentra said that a decision on this activity will occur in 2024 for programs to be delivered in 2026. Water depths at these blocks are around 328 ft. Afentra currently holds non-operated 18% and 5.33% working interests in Blocks 3/05 and 3/05A, respectively with working interests to increase to 30% and 21.33% following the completion of a transaction with Azule Energy expected in Q1 2024.

Mobilisation/Rig Moves

COSL’s 4,921-ft semisub COSLProspector has left the Canary Islands and is now en route to its final destination, Norway. The rig left China in October 2023 and has made various stops since then, including its most recent yard stay in the Canary Islands at the Zamakona shipyard for maintenance and crew change. It left the shipyard over the weekend and is sailing to Norway’s CCB yard for SPS work and the Acknowledgement of Compliance (AoC) completion ahead of a new contract. The semisub is expected to reach Norway in early February 2024. Following preparations, it will start a two-year firm contract with Vår Energi in the Barents Sea in Q3 2024.

The Shelf Drilling-owned 300-ft jackup, Main Pass IV, has recommenced operations with Saudi Aramco in the Middle East. The Main Pass IV performed its planned maintenance at Zamil Shipyard in Saudi Arabia. With the recommencement of this contract, the rig will be busy until March 2025. Main Pass IV is a Friede & Goldman L-780 Model II rig design that operates in water depths of 300 ft.

Stena Drilling’s 1,640-ft semisub Stena Don is at a yard in Norway where it is undergoing some recertification works related to special periodic survey (SPS)/UWILD. The rig has been under contract with Shell in the UK from May 2023, but the contract has been paused recently for it to undergo these works related to the SPS, which is due on 27 February 2024. The unit moved from the UK North Sea to CCB base in Ågotnes, Norway earlier in January. Once these operations are completed, the semisub will return to the North Sea. In addition to the remaining scope under the P&A contract which has recently been paused, the rig has another six months of firm work ahead, exercised in December 2023, and six more months as an option period.

Valaris 350-ft jackup Valaris 118 has been docked in Chaguaramas, Trinidad for routine maintenance and upgrades ahead of its next six-well campaign with bp. Valaris 118 has been working for bp in Trinidad since October 2022. After the completion of its yard stay, the rig will return to bp offshore Trinidad for a six-well contract extension, fixed in November 2023. This term is expected to begin around March 2024 and run for around a year and has an estimated total contract value of around $51 million.

Transocean 1,640-ft semisub Transocean Endurance has left Dampier, Australia, and is being towed to Woodside’s Stybarrow site to start a P&A contract. The rig, which arrived in Australia from Norway earlier this year, has its destination set to Eskdale, a reservoir that is part of the Stybarrow Development, together with the Stybarrow reservoir. The Cat D rig is expected to reach the site on Thursday, 25 January, and upon final acceptance, it should start its contract by the end of the week. The semisub has a fixed contract until February 2025, and four $390,000-day fixed-priced options that could keep it busy in Australia until January 2026.

Other News

The Government of the Republic of South Africa has given final approval for the transfer of a 6.25% interest in Block 3B/4B from Eco Atlantic subsidiary Azinam Limited to Africa Oil Corp. With this transaction, first announced in July 2023, Africa Oil now holds an operated 26.25% interest in the block, while Eco Atlantic has a 20% interest and Ricocure (Pty) Ltd holds a 53.75% interest. Africa Oil has made a payment of $2.5 million to Eco Atlantic in line with the transaction. Under the terms of the agreement, upon a further farm out to a third party into Block 3B/4B, Eco Atlantic will receive a further payment of $4 million from Africa Oil and when the first well is spud an additional $1.5 million will be due. Block 3B/4B is located offshore South Africa in the Orange Basin, in water depths ranging between 1,640 ft and 8,202 ft (500m and 2,500m).  Africa Oil has identified a set of prospects in the block with the majority in around 4,920 ft (1,500 m) of water. The company and its partners are progressing plans to conduct a drilling campaign on the block and are in discussions with potential partners to farm out a share of their working interest. They are also working with an environmental consulting firm in conducting an Environmental and Social Impact Assessment process, in preparation for permitting and drilling activity on the block.

W&T Offshore has acquired six fields in shallow waters of the US GOM for $72 million, excluding certain closing costs. W&T Offshore bid on these assets offered by Cox Operating and related companies which filed for bankruptcy in May 2023. The six fields acquired are Eugene Island 064, Main Pass 061, Mobile 904, Mobile 916, South Pass 049 and West Delta 073, all located in water depths between 15 and 400 feet and close to W&T’s existing operations. Recent estimated production from the field has ranged from around 3,700 to 5,700 BOE/d. W&T plans to implement a series of workovers, recompletions and general maintenance work to increase total production from the fields. As a result of this new acquisition, W&T plans to invest additional funds for increasing production and reducing costs in these assets long term. The company now plans to defer the drilling of Holy Grail, which is a proven undeveloped well in 3,900 ft of water on the Magnolia field, which lies on Garden Banks Blocks 783 and 784 in the US GOM. The company will now explore a drilling joint venture, which may include certain W&T owned and operated wells including Holy Grail, and the Thunderbolt, Zeus and Redbolt wells in around 500 ft of water. The company also plans to drill at least one exploratory well on the US GOM shelf as part of this joint venture.

Eco (Atlantic) Oil & Gas Ltd. has initiated entry into the Second Phase of the Second Renewal Period for the Orinduik Licence in Guyana, effective from 14 January 2024. In this Second Phase, there is a commitment to drill an exploration well in the Cretaceous formation by the end of the licence period on 13 January 2026. Additionally, Eco informed the Minister of Natural Resources of the Cooperative Republic of Guyana that TOQAP Guyana B.V (the SPV joint entity held by TotalEnergies and QatarEnergy in a 60:40 ratio) has opted to relinquish their 25% working interest for strategic reasons and will not participate in the upcoming phase. The former TOQAP Guyana B.V 25% interest will be transferred to Eco Guyana. Pending government notifications, Eco will continue to operate with a 40% work interest in the Orinduik Licence as Eco Guyana and a 60% stake as Eco Orinduik BV. The company acquired its stake in the block from Tullow Oil at the end of last year.

Stena Drilling’s 5,000-ft harsh environment semisubmersible Stena Spey is being marketed for sale. Maritime consultancy Clarksons is assisting with the divestiture of the unit. Stena Spey was delivered from DSME in 1983 as High Seas Driller and has worked primarily in the UK North Sea and offshore Ireland since then. The rig is currently warm stacked in Invergordon, following the completion of work with Ithaca in UK waters in December 2023. Stena Spey is an F&G L-907 Enhanced Pacesetter design unit with an 8-point mooring system. The rig is outfitted for work in up to 1,500 ft of water and can drill wells up to 25,000 ft. Stena Spey underwent upgrades during its 2013 SPS which included increasing its accommodation to 120 POB, and a new helideck, aft crane, and moonpool and drill floor cherry pickers.

Malaysia’s Petronas has awarded Production Sharing Contracts (PSCs) for six exploration blocks and one Discovered Resource Opportunities (DRO) cluster marketed under the Malaysia Bid Round 2023 (MBR 2023). Petronas has now also launched Malaysia Bid Round 2024. Petronas expects this to garner more than RM1.3 billion (~$275 million) worth of capital investment to the country in the form of exploration work activities. The seven new PSCs were awarded to Petronas Carigali, E&P Malaysia Venture (EPMV), Petroleum Sarawak Exploration & Production (PSEP), SMJ Energy, INPEX, Pertamina, Jadestone Energy, Shell, and E&P O&M Services (EPOMS). The licensees are: Petronas Carigali and EPMV for Block PM342; Jadestone Energy and Petronas Carigali for Block PM428; Petronas Carigali, EPMV and PSEP for Block SK330; Petronas Carigali, INPEX, Pertamina and PSEP for Block SK510; Shell, Petronas Carigali and PSEP for Block 5E; Petronas Carigali, EPMV and SMJ Energy for Block SB403; EPOMS for Bambazon Cluster. The blocks under the PSCs span across three regions in offshore Malaysia, comprising two blocks in offshore Peninsular Malaysia, three blocks off the coast of Sarawak, as well as one exploration block and one DRO cluster situated off the coast of Sabah. Bacho Pilong, who represented Petronas at the award ceremony held in Kuala Lumpur, said that with these awards, all exploration blocks offshore Sarawak Basin and Northwest Sabah Basin have been fully licenced. On the same day, Petronas also launched the Malaysia Bid Round 2024 (MBR 2024), offering five exploration blocks and five clusters of DRO to potential investors. The five exploration blocks are located in Langkasuka Basin in the Straits of Melaka, and Semporna and Sandakan Basins, off the eastern coast of Sabah. Additionally, Petronas said, the three DRO clusters offered are within shallow waters of Peninsular Malaysia and Sabah, and the two DRO clusters are within the deepwater realm of Sabah, located nearby existing facilities. The MBR 2024 virtual data room is now officially open until the bid submission deadline, set for 1 August 2024.

NEO Energy has filed the environmental statement (ES) for its Buchan Horst development in the UK North Sea to the country’s regulator. The NEO Energy-operated Buchan Redevelopment Project involves the redevelopment of the Buchan Horst field, in the Outer Moray Firth in UKCS Blocks 20/05a and 21/01a in the Central North Sea, c. 115 km northeast of the Aberdeenshire coastline. The proposed project will comprise the drilling of up to five production wells and two water injection wells, across two drill centres located within a single 500 m safety zone. At the time of preparing the ES, NEO had yet to determine if a semisubmersible or a heavy-duty jackup rig would be used to drill the proposed wells. The water depth, weather conditions, and seabed conditions in the area are such that either type of drilling rig could be used. The ES therefore took into consideration both options, and for each environmental aspect considered, the drilling rig resulting in the worst-case environmental impact was assessed. According to the ES, drilling operations are scheduled for the Q2 2025 – Q4 2026 period. First oil is expected in Q4 2026. The wells will be tied-back to the redeployed Western Isles FPSO. Oil will be exported via shuttle tanker and gas via a new pipeline tied into either the SAGE (Scottish Area Gas Evacuation) pipeline system or the Frigg UK Association (FUKA) pipeline system. Recently, Serica Energy has joined the project through a farmout agreement with Jersey Oil & Gas. The completion is expected in early 2024 and the partnership will consist of NEO Energy (50%), Serica Energy (30%), and Jersey (20%).

United Oil & Gas Plc has secured a two-year extension to its Walton Morant Licence offshore Jamaica to 31 January 2026. The company has a 100% working interest in the block. During this extension, United intends to undertake additional technical studies including piston core sampling and seismic reprocessing, aimed at further de-risking the petroleum system and better defining the prospects and leads identified on the licence. United will also continue its farm-out campaign to secure a partner for exploration on the block. The company stated that positive interest has been shown by several parties. The Walton Morant Licence is a 22,400 sq km exploration block to the south of the island of Jamaica and contains the Colibri prospect. United Chief Executive Officer Brian Larkin stated that Walton Morant contains “potentially over 2.4 billion barrels of unrisked mean prospective resources.”

Petrobras has formally expressed its interest to the National Energy Policy Council (CNPE) in securing the right of first refusal for the pre-salt Jaspe block within the Campos Basin. This asset is slated for tender in the third round of the Permanent Offer System, operating under the Production Sharing Regime. By exercising preferential bidding rights, Petrobras can secure a 30% operating stake in Jaspe. Despite this preferential right, the company will still need to submit a competitive proposal, either independently or as part of a consortium, during the bidding round to officially claim the block. According to the Brazilian market regulator ANP, Jaspe is estimated to contain approximately 2.5 billion barrels of oil equivalent.