It was the week of rig moves, as several units completed their respective campaigns and moved on to ports either to wait for new assignments or to prepare for upcoming jobs. Meanwhile, Saudi Aramco, the largest operator in the jackup market, is reversing its plans for a production increase, raising questions about the impact on rig demand in the region.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
New work has been awarded to Seadrill-owned drillships West Vela in the US GOM and West Capella in Indonesia. Seadrill stated that these new contracts totaled $97.5 million in value. Talos Energy company Talos Production awarded a 150-day contract to the Seadrill-owned 12,000-ft drillship West Vela in the US GOM. This contract is expected to commence in the third quarter of 2024 and has a total contract value of $73.5 million, excluding managed pressure drilling services. West Vela is currently under management of Diamond Offshore and is working for Beacon Offshore until around the of March 2024. The rig will then transition from Diamond Offshore’s management to Seadrill before beginning a three-month contract with QuarterNorth Energy in the US GOM around June 2024. Earlier this month, Talos Energy announced that it would acquire QuarterNorth, with the transaction expected to close by the end of Q1 2024. The Seadrill-owned 10,000-ft drillship West Capella is currently working for Harbour Energy offshore Indonesia and is under management of Vantage Drilling. Harbour Energy has exercised a one-well option for the rig with Vantage Drilling, beginning in direct continuation of its current program and extending its operations by around two months. The total contract value is $24 million. Seadrill intends to take over management of West Capella once it completes work with Harbour Energy. Harbour Energy has further options available that would keep the rig working into mid-2025 if exercised.
Due to changes in bp’s drilling sequence, the company will release the 12,000-ft drillship West Auriga in February 2024, ahead of the previously expected end date in May 2024. West Auriga is owned by Seadrill and is currently managed by Diamond Offshore. Seadrill stated that it would now resume management of the rig in the first quarter of 2024, allowing it to accelerate preparations for its upcoming contract with Petrobras offshore Brazil. Fixed in late 2023, this 1,064-day contract is scheduled to begin in the second half of 2024.
Borr Drilling’s 400-ft jackup Prospector 1 has secured an extension with Neptune Energy in the Dutch sector of the North Sea. The rig has been working for Neptune since early 2022. This latest extension changes the end of the firm term with Neptune from January to mid-March 2024. Neptune also has the optionality to extend the contract further through Q2 2024. The rig has no other commitments thereafter.
SeaMex (also known as Fontis Energy) has secured a one-year contract for 400-ft jackup Titania FE with Mexican state oil company PEMEX, starting in mid-February 2024 and contributing around $55 million in backlog. Titania FE has been working for PEMEX under various contracts since 2015 and has continued operating under its existing contract beyond an early termination date of 16 March 2023 via a well completion clause. The rig’s new contract will begin in direct continuation of this work. SeaMex (Fontis Energy) took over from Seadrill as rig manager of its Mexico-based jackup fleet in 2023. SeaMex owner Paratus Energy Services stated that it remains optimistic about future contracting opportunities for the SeaMex Group fleet, which also includes the 400-ft jackup Oberon and 350-ft jackups Courageous, Defender, and Intrepid.
Drilling Activity and Discoveries
Woodside is nearing completion of its Sangomar Field Development Phase 1 project offshore Senegal with the project 94% complete at the end of 2023. First oil is targeted for mid-2024. The company’s development drilling program with Diamond Offshore 12,000-ft drillship Ocean BlackRhino is continuing. As of December 2023, 17 of 23 wells had been completed. Ocean BlackRhino is expected to remain with Woodside until around July 2024, after which the rig will move to Guinea-Bissau to drill a well for Apus Energy. In addition to Ocean BlackRhino, Woodside also used sister rig, the 12,000-ft drillship Ocean BlackHawk, for Sangomar drilling from August 2022 to July 2023.
Petrobras has completed the Pitu Oeste exploration well on BM POT-17 in the Potiguar Basin offshore Brazil, confirming that it had identified the presence of hydrocarbons but that the economic viability was inconclusive. Petrobras began drilling Pitu Oeste in late December 2023, with the intent to confirm the extension of the Pitu oil discovery made in 2014. The well was drilled with Foresea 10,000-ft drillship ODN II, which is under contract to Petrobras into late 2026. Petrobras will continue exploration in deep waters of the Potiguar Basin with the drilling of the Anhangá well on POT-M-762. Petrobras stated that it intends to obtain more geological information about the area in order to evaluate reservoir potential and direct is next steps for exploration.
The Norwegian Offshore Directorate (NOD) has granted Wellesley Petroleum a drilling permit for the Toppand East well in the North Sea offshore Norway. The wildcat well 35/11-29 S is located in production licence 248 C, which is operated by Equinor with Wellesley Petroleum and Petoro participating as partners. Wellesley will operate the drilling of the prospect on behalf of the licence partners. As previously reported, the partners in the licence assigned the 2,460-ft semisub COSLPromoter, which is under contract with Equinor, to drill this well. Drilling is planned to start on 1 March 2024 at the earliest, with a duration of 67 days upon discovery. Toppand East is a low risk appraisal target following Toppand discovery from January 2022. It has the potential to add significant volumes to Toppand and to the Ringvei Vest area development.
The Valaris-owned 10,000-ft semisub, Valaris DPS-1, arrived in January 2024 at Woodside’s Scarborough gas development offshore Western Australia and spudded the first production well of the programme. Woodside plans to drill up to ten development wells in WA-61-L, about 374 km west-northwest of Dampier, where the Scarborough project is located. Woodside’s Environment Plan, accepted by NOPSEMA in December 2023, includes drilling and subsea tree installation activities for eight planned development wells and the potential for a further two additional contingency wells. Woodside may also need to intervene, workover, or re-drill the wells. Drilling and completions for the development wells are expected to take approximately 50–60 days per well to complete. The semisub has a contract with Woodside running until the end of April 2025.
Demand
Saudi Arabian state oil company Saudi Aramco has received a directive from the country’s Ministry of Energy to maintain its Maximum Sustainable Capacity (MSC) for crude oil production at 12 million barrels per day (MMB/D), and not to continue increasing MSC to 13 MMB/D. This reverses the directive Aramco received in March 2020 to increase its MSC from 12 million MMB/D to 13 MMBD. The company’s MSC is determined by the state, pursuant to the Hydrocarbons Law enacted in 2017. Due to the new directive, Aramco stated that it will update its capital spending guidance when its full-year 2023 results are announced in March 2024. Saudi Aramco is the largest operator in the jackup market. A total of 111 fixtures for jackups with Saudi Aramco have been recorded since 2020 and as of January 2024, 91 jackups are either currently contracted to Aramco or have a future contract with the operator. By comparison, around 60 units were working in Saudi Arabia in January 2020, which fell to 40 working units and 11 with future contracts in November 2020 as activity declined due to the 2020 oil price crash and the COVID-19 pandemic. Jackup demand in Saudi Arabia has trended upwards since mid-2022. Many major jackup contractors have rigs working with Aramco including ADES, Arabian Drilling, Borr Drilling, COSL, Saipem and Shelf Drilling. Additionally, Aramco is one of the owners of ARO Drilling, a jackup-focused joint venture with Valaris. ARO Drilling manages 16 jackups working for Saudi Aramco, plus the 350-ft newbuild unit Kingdom 2, which is expected to be delivered and start work with the state oil company in the near future.
Oil India Limited (OIL) has issued a new tender for a jackup rig to work in India in 2025. The tender is for one jackup for drilling, testing, and completion of wells in water depths of a minimum of 9 meters in Indian waters for a period of ten months or until completion of four wells, extendable by another five months for an optional well. The estimated commencement of drilling activities is by Q1 2025. 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. Bidders will have to commit to mobilise the rig to a location within a period of 180 days from the date of issuance of the Mobilisation Notice by OIL. This tender follows the request for a budgetary proposal launched in December 2023. Bids due date is yet to be confirmed. A pre-bid conference will take place on 14 February 2024.
Partners involved in the development of the Marigold Project in the UK North Sea plan to submit the final field development plan (FDP) and environmental statement (ES) to authorities for the project by the end of May 2024. The Marigold Project is a joint development of the Marigold field between Ithaca Energy, Anasuria Hibiscus, and Caldera Petroleum. The field is located in UKCS blocks 15/13a and 15/18b, around 210 km North East from Aberdeen and about 16 km to the east of the Piper field. In September 2023, Ithaca, Anasuria, and Caldera entered into a Unitisation and Unit Operating Agreement (UUOA) to jointly develop the Marigold field. This is also when work on the FDP started and since then several meetings have been held with the NSTA to stay fully aligned. The current plan is to submit both the final FDP and the ES by the end of May 2024. Marigold will be a seven-well development. The team revisited the FPSO development option and the result of the investigation showed that the FPSO reviewed is not technically or economically feasible and this option has been dropped. Anasuria Hibiscus has held several engagements with the Piper/Flotta operator (Repsol) to negotiate tariff terms, the outcome of which are critical to feasibility of the Marigold development. This work is ongoing. While the FDP and the ES are being evaluated by the regulating bodies, the operator plans to begin FEED to optimise the development design of Marigold to accommodate the seven-well development. The current forecast for the first oil date is January 2028. This was previously expected in 2027.
Mobilisation/Rig Moves
Ocean Oilfield’s 280-ft jackup Aras Driller completed its P&A campaign offshore United Arab Emirates (UAE). Aras Driller started its operations offshore in the UAE in July 2023, and by the end of January 2024, the rig completed its P&A campaign. Aras Driller is being tugged to Abu Dhabi KEZAD, UAE, where it will perform maintenance and contract preparation for its new campaign through ADNOC Drilling for Pakistan International Oil Limited in the UAE. The contract has a firm term of 230 days with a 50-day option, and it is scheduled to start at the end of Q1 2024.
Constellation 3,600-ft semisubmersible Olinda Star has completed its contract with Oil and Natural Gas Corporation (ONGC) offshore India. The semisubmersible secured this 502-day contract with ONGC in January 2022, and the rig started operations in May 2022. The contract activities were extended until the end of January 2024. Olinda Star is available for new opportunities after the end of this contract.
Transocean 12,000-ft drillship Dhirubhai Deepwater KG1 has completed its contract with Reliance offshore India. Dhirubhai Deepwater KG1 started its operations with Reliance in Q3 2018 offshore India, and by the end of January 2024, the rig completed its drilling campaign. KG1 has been mobilised to Kakinada, India, where it will perform maintenance and the contract preparation for its new campaign with the Oil and Natural Gas Corporation (ONGC). The contract has a firm term of 21 months and is scheduled to start at the end of Q1 2024.
Noble’s CJ50 350-ft jackup Noble Resilient has moved from the port of Frederikshavn to the port of Skagen, both in the northern part of Denmark. The rig had been completing its special periodic survey (SPS) and undergoing repairs in Frederikshavn from late 2023. It has now moved to Skagen. The unit has firm contracts with two different operators and at two different locations this year. The first one is for P&A work in the Danish North Sea with Wintershall Noordzee. It is expected to start in April and last about 60 days. Later in 2024, it is scheduled to start a contract with Petrogas in the UK sector of the North Sea. The contract has a minimum duration of 120 days plus a two-well option available, which could keep it busy into Q1 2025.
Diamond Offshore’s 3,000-ft semisub Ocean Patriot has completed its contract with Repsol in the UK North Sea. The two-well P&A contract at the Tartan field started in early October 2023. The rig is now heading to Invergordon, where it’s expected to arrive on 1 February, for a warm stack period. Currently, the semisub has no further commitments for 2024 and is playing the North Sea sport market to fill out the remaining availability for the year. It does, however, have a long-term contract starting in early 2025. The 35-well P&A campaign in the UK for TAQA represents three years of firm work with up to 17 additional P&A wells under priced options that would add a fourth year of work.
COSL’s 2,460-ft semisub COSLInnovator has completed its campaign with CNOOC in the UK North Sea and is moving to Norway for its special periodic survey (SPS) ahead of a new contract in the UK sector. The semisub had worked for CNOOC since 2022. After completing its operations at the Buzzard field, the rig is now heading to CCB base in Ågotnes, Norway for its SPS due in February 2024. It is expected to stay there for a little over a month and afterwards return to the UK North Sea for a new contract with Petrofac, who is managing these operations on behalf of Serica Energy and Dana Petroleum. In Q2 2025, the rig is going back to the Norwegian sector where it will work for Equinor under a contract firm for two years with options for a further three years, which could keep it busy into Q2 2030.
The Seadrill-owned 10,000-ft drillship West Polaris has completed its contract with Oil and Natural Gas Corporation (ONGC) offshore India. West Polaris started its operations with ONGC offshore India in Q4 2022, and by the end of January 2024, the rig completed its drilling campaign. Market sources indicate that the current manager Vantage Drilling will mobilise the rig to Singapore to hand it over to its owner Seadrill, who will take over the management of the rig. This is expected to be completed by early March 2024. West Polaris will not to stay in Singapore for long. In late December 2023, Seadrill secured a 1,064-day contract for the rig with Petrobras offshore Brazil, with commencement set for November 2024. Seadrill acquired the Vantage Drilling-managed drillships West Polaris and West Capella and the 10,000-ft semisubmersible West Aquarius in April 2023, when it completed its acquisition of Aquadrill.
Other News
Following an application for an extension of the first phase of the FEL 4/19 licence in Ireland, which contains the Inishkea West prospect, Europa Oil & Gas has now received consent for the extension of the licence. Europa applied for the extension in October 2023 and it has now received notification from the Irish Government’s Department of the Environment, Climate and Communications (DECC) that the Minister has given his consent to extend the Phase 1 of FEL 4/19 to 31 January 2026. The company intends to use the extension to carry out further technical studies and allow more time to secure a partner to advance development of the licence.
Karoon Energy has almost completed technical and commercial feasibility studies for the potential Neon development offshore Brazil and intends to make a decision on whether to enter the concept select phase by the end of March 2024, depending on the results of the studies. The Neon field is located on Blocks S-M-1037 and S-M-1101 in the Santos Basin. Karoon drilled the Neon-1 and Neon-2 wells at the field in 2023 with Noble 10,000-ft semisub Noble Developer. The company is considering a standalone FPSO, a subsea tieback from Neon to the nearby Baúna FPSO or from Baúna to an FPSO at Neon. Karoon also secured 100% interest in Blocks S-M-1536 and S-M-1482 in the Santos Basin in December 2023, located southeast of the Baúna Project. The company expects these blocks to be formally granted to Karoon in the second quarter of 2024 and believes the Baúna-Neon hydrocarbon source and reservoir system is believed to extend into these two blocks. Once formally granted, Karoon intends to undertake further studies of identified leads on these blocks.
Norway’s Ministry of Energy has sent a proposal for the announcement of the licencing round APA 2024 (allocation in pre-defined areas) for public consultation, expanding the area with new blocks in the Norwegian Sea and the Barents Sea. With the proposal, new areas in the Norwegian Sea and the Barents Sea will be included in the APA area. An announcement with an application deadline is expected in Q3 2024 and an award in January 2025. Energy Minister Terje Aasland said the government wants to expand the APA area by 37 blocks to facilitate further development. The proposal for the expansion includes 3 blocks in the Norwegian Sea and 34 blocks in the Barents Sea. Earlier this month, the Norwegian government offered ownership interests in a total of 62 production licences on the Norwegian shelf to 24 companies as part of the awards in the APA 2023 licencing round.
TotalEnergies has agreed to acquire OMV’s 50% stake in Malaysia-based gas producer and operator SapuraOMV for a consideration of $903 million (including the transfer of a $350 million loan granted by OMV to SapuraOMV). This will mark OMV’s exit from the SapuraOMV joint venture, in which the remaining 50% stake is held by SapuraEnergy. SapuraOMV’s main assets are its 40% operated interest in block SK408 and 30% operated interest in block SK310, both located offshore Sarawak in Malaysia. In 2023, SapuraOMV’s operated production (100%) was about 500 Mcf/d of natural gas, feeding the Bintulu LNG plant operated by Petronas, as well as 7 kb/d of condensates. On block SK408, the development of the Jerun gas field is on track for startup in the second half of the year 2024. SapuraOMV also holds interests in exploration licences in Malaysia, Australia, New Zealand, and Mexico, where a discovery was made in 2023 on block 30. The transaction is expected to close by the end of the first half of 2024. OMV also said Wednesday the sales process for 100 percent of the shares in OMV New Zealand Limited is continuing.
The UK’s North Sea Transition Authority (NSTA) has offered 24 new offshore licences in the second tranche of the country’s 33rd oil and gas licencing round. According to the NSTA, 17 separate companies have today (31 January 2024) been offered a total of 24 licences in the second tranche of the 33rd oil and gas licencing round. The full list of companies which have been offered these new licences includes: Anasuria Hibiscus UK Limited, Apache Beryl I Limited, bp, Dana Petroleum, Deltic Energy, Eni, EnQuest, Equinor, Harvester Energy, NEO Energy, North Sea Natural Resources, Orcadian Energy, Painted Wolf Resources Limited, Parkmead (E&P) Limited, Ping Petroleum, Shell, and TotalEnergies. These awards follow the 27 licences offered in the first allocation made in October 2023 and more will follow in the coming months. The 74 blocks and part-blocks offered this time are all in the Central North Sea, Northern North Sea, and West of Shetland areas. The remaining blocks, the majority in the Southern North Sea and East Irish Sea, will be offered when environmental evaluations, including Habitat Regulation Assessment (HRA) Appropriate Assessments, have been finalised by OPRED. Internal NSTA analysis show that the average time between licencing and first production is now close to five years, which means that licences awarded now could be producing before the end of the decade.
Eni S.p.A has closed its acquisition of Neptune Energy Group Limited, first announced in June 2023. The transaction comprises Neptune’s entire portfolio other than its operations in Norway, which were purchased by Vår Energi, and Germany, which was carved out of the transaction. Eni noted that the acquired assets include Neptune’s stake in the Eni-operated Geng North-1 gas discovery offshore Indonesia and stated that the acquisition is strategic in terms of increased gas production in North Africa and CCS opportunities in Northern Europe. Offshore assets acquired in the deal include the Neptune-operated Cygnus and Seagull fields and non-operated stakes in Elgin Franklin and J-Block in the UK North Sea, operations at offshore hubs in the Dutch North Sea, interests in the Jangkrik and Merakes fields offshore Indonesia and an interest in the Petrel project offshore Australia. Vår Energi, which is majority-owned by Eni, acquired the business in Norway directly from Neptune before the completion of the Eni transaction. The carve-out of Neptune’s activities in Germany was also completed prior to the closing of the sale.
Longboat Energy has completed a farm-down of two exploration licences on the Norwegian Continental Shelf (NCS) to Concedo. Under a transaction announced in December 2023, Longboat JAPEX has farmed down its interest in PL1182S from 30% to 15% in return for a full carry of the DNO-operated Kjøttkake/Lotus exploration well, up to an agreed cap above the dry well budget. The well is expected to spud in Q3 2024 with the Odfjell Drilling-managed 3,900-ft semisub, Deepsea Yantai. In the DNO-operated PL1049, which contains Jasmine and Sjøkreps prospects, Longboat JAPEX has farmed down its interest from 40% to 25% in return for Concedo carrying an element of the company’s 2024 exploration expenditure, which mainly consists of seismic costs and studies. The deadline for a potential drilling decision is by February 2025.
Image: DS West Capella; Credit: Mubadala Energy
