Esgian Rig Analytics Market Roundup (Week 11)

In case you missed it, you can access our previous Rig Market Roundup here.

Contracts 

COSL Drilling has emerged as the winner for Petrobras’ moored semisubmersible tender with the 4,600-ft Nanhai 8 (also known as Nan Hai Ba Hao). The contract, awarded on 13 March 2024, spans 1,250 days with an option for an extension of the same duration. Out of the six offers received, COSL emerged as the preferred choice for Petrobras. The contract value stands at $183,467,000.00. The Nanhai 8 is a 3rd generation moored semisubmersible rig, delivered by Dalian – DSIC in 1983. It is outfitted for operations in water depths of up to 4,600 ft, and capable of drilling wells up to 25,000 ft. The rig was previously owned by Transocean under the name Jim Cunningham. It underwent major upgrades in 1995 and between 2004 and 2005. COSL acquired the rig in 2012, and had it operating mostly in China and Russia.

Noble has secured a high-dayrate drillship contract with Prime Energy in the Philippines. Under the firm part of the contract, the 12,000-ft drillship Noble Viking is to drill three wells over a minimum period of 140 days. For this, Prime Energy will pay $69.9 million, excluding additional fees for MPD services, mobilisation, and demobilisation. This means the dayrate for the firm part is around $499,000. The contract also includes one option well, with an estimated duration of 20 days minimum. The contract value for the option period is $10.98 million, which would bring the dayrate to $549,000. The contract will start in direct continuation of Noble Viking’s current contract in Malaysia, estimated in Q2 of 2025. Prime Energy will use the drillship to drill wells in the Malampaya-Camago field, located offshore the Philippines.

Drilling Activity and Discoveries

Wintershall Dea will begin drilling the Kan-2 appraisal well on Block 30 offshore Mexico in the second half of 2024, following up the company’s discovery at the Kan exploration prospect made in April 2023. Partner Harbour Energy confirmed that Wintershall Dea’s Kan appraisal plan, submitted in 2023, has been approved and drilling is expected to begin later this year. The well is understood to be drilled by Borr Drilling 400-ft jackup Ran, which is anticipated to start work with Wintershall Dea in October 2024 following its current job with TotalEnergies offshore Mexico. Ran was also used to drill the original Kan exploration well in around 164 ft of water on Block 30 in the Sureste Basin. Announced in April 2023, Wintershall Dea estimates that the discovery may contain 200 to 300 million barrels of oil equivalent in place. Wintershall Dea holds 40% in Block 30, with Harbour Energy and Sapura OMV holding each 30%. In December 2023, Harbour Energy announced an agreement for the acquisition of substantially all of Wintershall Dea’s upstream assets. Harbour expects the acquisition to be completed in th fourth quarter of 2024.

UK operator Harbour Energy has reported a small gas discovery at its Ametyst exploration well located offshore Norway. The Ametyst well 15/9-25 is located in production licence 1138 in the North Sea. It was drilled with the 492-ft CJ70 jackup Noble Integrator. Before mobilising and starting drilling operations for Harbour in early January 2024, the rig had been warm stacked in Stavanger since September 2023. Harbour confirmed the Ametyst well as a small gas discovery in its 2023 full-year results; however, no further details about the discovery have been provided. The jackup has now completed its contract with Harbour – with a dayrate of $205,000 – and is demobilising from the location before starting a new, long-term contract with Aker BP, also in Norway. This should keep it busy until late 2027.

The Norwegian Ocean Industry Authority (Havtil) has given Equinor consent for exploration drilling of a well in the Barents Sea with the 1,640-ft semisubmersible Transocean Enabler. The consent is related to the drilling of the wildcat well 7220/2-2, targeting the Snøras prospect, in block 7220/2. The well is located in production licence 1080, which is operated by Equinor in partnership with Vår Energi and Petoro. The water depth at the site is 427 metres. Equinor has already secured permits from the Norwegian Environment Agency (Miljødirektoratet) and the Norwegian Offshore Directorate (NOD) to drill this well. The Transocean Enabler is scheduled to drill this exploration well in the second quarter of 2024. The rig is under a long-term contract with Equinor until October 2025 with options that could keep it busy until June 2026.

Harbour Energy has recently confirmed a gas discovery in its Ametyst well offshore Norway and the Norwegian Offshore Directorate (NOD) has now shared details about discovered resources. The discovery is under consideration for tying into existing infrastructure in the area. This gas discovery has previously been proven in two other exploration wells, 16/7-2 and 16/7-10, drilled in 1982 and 2011, respectively. The Ametyst well 15/9-25 is located in the Harbour Energy-operated production licence 1138 in the North Sea. The well was drilled using the 492-ft CJ70 jackup, Noble Integrator, northeast of the Sleipner area, about 210 kilometres west of Stavanger. According to the NOD, the overall gas volume is calculated at between one and three million standard cubic metres (Sm3) of recoverable oil equivalent (o.e.). Licensees Harbour Energy, Sval, and Aker BP will consider whether there is a technical and financial basis for tying the discovery into existing infrastructure in the area. In the primary exploration target, well 15/9-25 encountered a 22-metre thick layer of aquiferous sand with very good reservoir quality in the Hugin Formation in the Vestland Group. In the Ty Formation, the well encountered a 10-metre gas column in a 118-metre thick sandstone reservoir with very good reservoir quality. The gas/water contact was encountered 2,330 metres below sea level, which confirms the contact encountered in nearby wells. The well was drilled to a measured depth of 2,872 metres below sea level and was terminated in the Smith Bank Formation in the Upper Triassic. The water depth at the site is 84 metres.

Norwegian operator Vår Energi is on track for doubling production by end-2025 with a tangible plan for sustaining production of 350-400 thousand barrels of oil equivalent per day (kboepd) towards 2030. The plan is supported by 10 development projects in execution, more than 20 early phase projects being matured, a doubling of exploration activity ​with participation in approximately 60 wells planned over the next four years, and a foundation of more than 3 billion boe of resource potential. Vår Energi is delivering more than 100 wells in 2024, including development, infill and exploration wells. Specifically, the operator has plans for ~50 development wells, ~40 infill wells, and, as previously reported, 16 exploration wells. Out of these 16 wells, 14 are near-field and 2 are high-impact wells. The company’s 2024 capex guidance is at $2.7-2.9 billion, excluding exploration and abandonment. The exploration capex guidance is around $300 million and abandonment is at $100 million. Vår Energi currently has two semisub rigs working for it in Norway, the Odfjell Drilling-managed 3,900-ft Deepsea Yantai and the Seadrill-owned 7,874-ft West Phoenix. In addition, the COSLProspector semisub arrived from China to Norway in early February 2024 ahead of its two-year firm contract in the Barents Sea.

Pertamina’s subsidiary PT Pertamina Hulu Energi Offshore Northwest Java (PHE ONWJ) is looking to boost drilling activities in the Northwest Java Sea in the near future. According to Jufrihadi Sikumbang, Senior Manager in charge of Drilling and Well Intervention at Region 2 Pertamina EP, the company has plans to intensify exploration and drilling activities in the region, with a plan of deploying additional drilling rigs successively from Q3/2024, with an anticipated total of 4 jackup rigs by early 2025. This piece of information was shared during a contract kick-off meeting with Vietnam’s PV Drilling, that was held regarding the 400-ft PV Drilling III jackup rig. Pertamina awarded PV Drilling III a 3-year firm contract back in November 2023, with a contract start-up scheduled for early 2025. Pertamina will have an optional two-year extension available, too. The rig will be used by both PHE ONWJ and PHE OSES in the Northwest Java and Southeast Sumatra regions, respectively. Once the rig starts the contract, PV Drilling will have two rigs working simultaneously for Pertamina, PV Drilling III and the 400-ft PV Drilling II. The 2009-built PV Drilling II has a contract with Pertamina running until December 2025.

The Norwegian Offshore Directorate (NOD) has granted Equinor a drilling permit for well 15/3-13 S & 15/3-13 A located offshore Norway. The exploration well 15/3-13 S and A is planned to be drilled in the Brokk and Mju prospects in the Southern North Sea in the Equinor-operated production licence 025. Drilling operations will be conducted using the 10,000-ft semisub Deepsea Stavanger and Equinor has already received consent from the Norwegian Ocean Industry Authority (Havtil) for this. The water depth at the site is 110 meters.

The Norwegian Offshore Directorate (NOD) has granted Aker BP a drilling permit for an exploration well in the North Sea. The well 24/12-8 S, targeting the Rumpetroll prospect, is located in production licence 869 operated by Aker BP in partnership with Vår Energi. The well will be drilled with the 6,560-ft Odfjell Drilling-managed semisub Deepsea Nordkapp, which late last year got a two-year extension with Aker BP. The operator has already received consent from the Norwegian Ocean Industry Authority (Havtil) for this well. Drilling operations are scheduled for the third quarter of 2024.

Portugal’s Galp Energia has drilled the Mopane-2X well, located in block PEL83 offshore Namibia, to its designed depth, and made a light oil discovery. Galp is the operator of the licence with an 80% interest and its partners are NAMCOR and Custos (10% each). According to Galp, the drilling encountered a significant column with light oil in reservoirs of high quality. The AVO-3 exploration target, the AVO-1 appraisal target, and a deeper target were fully cored and logged. The AVO-1 appraisal target found the same pressure regime as in the Mopane-1X discovery well located around 8 km to the east, confirming its lateral extension. Drilling operations were conducted using the Odfjell Drilling-managed 10,000-ft semisub Hercules. The rig will now return to the Mopane-1X well location to conduct a DST until early April. Galp will continue to analyse the acquired data during the coming weeks to assess the commerciality of the discoveries.

Demand

Speaking during the Saudi Arabian state oil company Saudi Aramco’s 2023 results call, CEO Amin Nasser said the company would be dropping a few offshore rigs working on oil projects, but that it would also pick up more rigs for work on gas projects. Nasser expectss the number of onshore and offshore rigs Aramco is using to remain at a little over 300 rigs. Aramco currently has around 86 jackups under contract with another 6 jackups to begin work with the company offshore Saudi Arabia in the near term. Nasser confirmed that some jackups would be dropped due to the cancellation of work at the Safaniya field but that the number of rigs would equalise as other units would be hired for work at gas fields. In January 2024, Aramco 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), reversing the March 2020 directive to increase its MSC from 12 MMB/D to 13 MMBD. In its 2023 results, Aramco stated that “the directive to maintain Maximum Sustainable Capacity at 12 million barrels per day, mainly from deferral of projects not yet commissioned and reductions in infill drilling, is expected to reduce capital investment by approximately $40 billion between 2024 and 2028.” Aramco’s capital investments in 2023 reached $49.7 billion. In 2023, Aramco’s average hydrocarbon production was 12.8 million BOE/d including 10.7 million b/d of total liquids.

Oil and Natural Gas Corporation Limited (ONGC) has opened commercial bids for its four-jackup tender, which is estimated to start in Q4 2024. The bidders are Shelf Drilling, Dynamic Drilling, and Greatship. For Category I, Shelf Drilling was the lowest bidder with the 300-ft Baker Marine BMC-300-IC Trident XII with a dayrate of $95k. The other bidders were Dynamic Drilling with the 328-ft LeTourneau 116-C Victory Driller with a dayrate of $96k, and Greatship with the 350-ft LeTourneau Super 116E Class Greatdrill Chaaya with a dayrate of $104k. For Category II, Shelf Drilling offered the 300-ft F&G L-780 MOD II J.T. Angel with a dayrate of $96k. All four rigs are currently working for ONGC. Bidders will need to match the lowest bid to be awarded contracts. ONGC also has the HPHT tender for three jackups for the duration of three years, for which the awards have not been finalised yet.

Eco Atlantic Oil & Gas CEO Gil Holzman said during a company presentation that Eco Atlantic is in active discussions with 9 to 10 companies to farm out up to 80% interest in the Orinduik Block offshore Guyana. Eco Atlantic aims to secure a partner in the block in 2024, to be followed by an exploration well in the next 12 to 18 months. Eco Atlantic currently holds a 100% interest in Orinduik, a 1,354 sq km block offshore Guyana and adjacent to ExxonMobil’s Stabroek block, after acquiring Tullow Oil’s 60% interest in November 2023. Eco Atlantic does not intend to drill a well as the sole interest holder in the block but is open to remaining as operator of the block or transferring operatorship to its eventual farm-out partner. Holzman did not name specific companies involved in the farm-down process but said those involved were “big companies.” The exploration well, planned for 2025, will target multiple stacked pay targets in Cretaceous sandstone at a 4,000 to 5,500m depth range. Previous discoveries on Orinduik include the Jethro-1 and Joe-1 discoveries made by Tullow in 2019. Eco Atlantic also holds an interest in the Canje block offshore Guyana but said that operator ExxonMobil would make decisions for drilling on that block.

Following the recent farm-in of TotalEnergies and QatarEnergy to Block 3B/4B offshore South Africa, partner Eco Atlantic Oil & Gas expects the drilling of two exploration wells on the block to begin in the next 18 months. Drilling on the block is expected to begin in 2025, following the completion of the transaction and transfer of operatorship to TotalEnergies. Block 3B/4B is located in the Orange Basin and is adjacent to the TotalEnergies-operated Deepwater Orange Basin (DWOB) block, where the company has also applied to drill an exploration well. Announced in early March, TotalEnergies and QatarEnergy have entered into an agreement to acquire interests in the block from Africa Oil, Eco Atlantic subsidiary Azinam Limited and Ricocure. Upon completion of the deal, TotalEnergies will have 33% participating interest and operatorship, while QatarEnergy will hold a 24% interest, Ricocure a 19.75% interest, Africa Oil SA a 17% interest, and Eco Atlantic (Azinam) a 6.25% interest.

Mobilisation/Rig Moves

Transocean’s 1,640-ft Cat D rig, the Transocean Equinox, has set sail from Singapore and is now en route to Australia, to begin its contract with Shell. The rig had arrived in Singapore on 18 February aboard the heavy lift and transportation vessel Blue Marlin after a long journey from Norawy. According to AIS information, the semisub left Singapore on Thursday, 7 March, and should reach Broome, Australia, between 19 March and 21 March, after which it will start its contract with Shell. The contract is firm until the end of March/mid-April 2025, depending on the startup date. Shell has an extension option as well. After this, the rig will start working for a consortium which includes Beach Energy, Cooper Energy, Woodside Energy, and ConocoPhillips, which will share the unit for their respective drilling programmes. Following the firm part, and if all related options are exercised, the semisub will stay busy in Australia until September 2028.

Seadrill’s 10,000-ft drillship West Polaris has arrived in Singapore, with Seadrill taking over management of the rig from Vantage Drilling. The rig is now docked at the Seatrium yard, where it will be prepared for its next contract offshore Brazil. West Polaris left India in February 2024 after completing work for ONGC under management with Vantage Drilling. Seadrill acquired rig in April 2023 with its acquisiton of Aquadrill. Seadrill are now readying the rig for a 1,064-day contract with Petrobras offshore Brazil, expected to begin in November 2024.

Diamond Offshore’s 10,000-ft semisub Ocean GreatWhite is expected to leave bp’s Schiehallion field located West of Shetland on Monday 11 March and go to a port for repair and maintenance following an incident earlier this year. As reported in early February, the lower marine riser package (LMRP) and deployed riser string unintentionally separated from the rig at the slip joint tensioner ring and dropped to the seabed. Since then, Diamond has been working to recover the lost equipment. Diamond estimated the rig would be off rate for approximately 90-100 days, which could result in approximately $24-$27 million reduction in revenue over the course of the first and second quarters. It is estimated to be back earning dayrate by the end of April or early May 2024. The timing of the rig’s departure is subject to weather and operations. Currently, it’s expected to reach Kishorn on Friday 15 March. The mooring ground chain sections and pennants will remain in place while the rig is away, with no surface buoys in place.

Transocean’s 12,000-ft drillship Deepwater Aquila has left Singapore and begun its journey to Brazil, where the rig is scheduled to begin a three-year term with Petrobras in June 2024. The 7th generation drillship was delivered from Hanwha Ocean in South Korea in October 2023 then underwent contract preparations in Singapore. According to ship tracking service AISLive, the rig will stop in Mauritius en route to Brazil.

Well-Safe Solutions’ 1,200-ft semisub Well-Safe Defender has arrived in Invergordon, Scotland following the completion of a short P&A contract in the UK North Sea. The rig started its one-well contract with Spirit Energy on the Appleton field in February 2024 after completing another job with the same operator, at the Chestnut and Trees fields. The Appleton job has now also been completed and the unit moved to the Port of Cromarty Firth.

Other News

Challenger Energy signed its AREA OFF-3 license offshore Uruguay on 7 March 2024. The company was granted the AREA OFF-3 licence on 2 June 2023, during the Open Uruguay Round. Starting from 7 June 2024, the initial exploration phase will span four years, ending on 6 June 6 2028. Following a successful strategy employed for the AREA OFF-1 license, as announced on 6 March 2024, with a farm-out agreement with Chevron, Challenger Energy aims to expedite its technical work program. This involves additional discretionary tasks to enhance existing prospects, uncover new plays and prospects, and ultimately attract a strategic partner early in the process.

Brazilian rig owner and manager Petroserv Marine Inc. and PS Marine Holding Ltd, a special purpose vehicle formed by a consortium of financial investors, have signed an agreement under which the consortium will acquire substantially all of Petroserv’s assets via a share purchase of Petroserv’s direct subsidiary, Universal Energy Resources Inc. The transaction is expected to close in the second quarter of 2024. Petroserv stated that the sale would result in a “recapitalized industry-leading” company backed by new shareholders. Petroserv’s fleet will continue to be operated by its existing management team and employees. Petroserv currently owns and manages the 10,000-ft drillship Carolina and 10,000-ft semisubmersible SSV Victoria, both of which are contracted to Petrobras offshore Brazil. In addition, Petroserv manages the 10,000-ft semisub SSV Catarina, which is owned by a group of Norwegian investors and is currently warm stacked in Indonesia. The company will also manage the Eldorado Drilling-owned 12,000-ft drillship Zonda, which was recently delivered and will start work with Petrobras offshore Brazil later this year.

Bangladesh has launched an offshore bidding round offering nine shallow water blocks and 15 deepwater blocks, in its first offshore bid round since 2012. According to the government and Petrobangla, to qualify for bidding, the bidder, whether individually or in case of joint venture, at least one member, must have offshore daily production of at least 15,000 barrels of oil or 150 mmscf of gas as an operator to be qualified for bidding. The blocks on offer are SS-01, 02, 03, 05, 06, 07, 08, 10 & 11 in shallow water, and DS-08, 09, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21 & 22 in deep waters. Under the contract terms, there will be no duty for equipment and machinery imported for petroleum operations, and the companies are promised “100 percent cost recovery with a yearly cap of 75%.” Bids should be submitted no later than 1:00 pm BST on September 9, 2024. TGS, in partnership with SLB and Petrobangla, has acquired a 2D multi-client seismic data survey encompassing over 75,000 square kilometres across all 24 blocks on offer in the bid round. David Hajovsky, Executive Vice President of Multi-Client at TGS, said: “The Bengal Fan is one of the world’s largest deep-water fans with significant evidence of working petroleum systems. It is widely considered one of the most extensively underexplored frontier regions. With limited existing offshore Bangladesh data, this new high-quality seismic, combined with the revised Production Sharing Contract 2023 (PSC), is a critical component for companies to evaluate and submit competitive bids for the blocks on offer in the Bid Round.”

Discussions over a proposed transaction in which a consortium of bp and ADNOC would acquire 50% of Israeli partnership NewMed Energy have been suspended, with the parties citing “uncertainty created by the external environment.” The proposed transaction was announced in March 2023, with bp and ADNOC offering to purchase for cash all of the publicly held participation units in NewMed Energy along with some of controlling holder Delek Group’s units. NewMed Energy stated that the consortium has reiterated its interest in the transaction but the process will remain suspended until such time as discussions resume or the process is terminated. NewMed Energy’s assets include a 45.34% working interest in the Leviathan field offshore Israel and a 30% working interest in the Aphrodite field offshore Cyprus, along with a 33.33% interest in exploration Block I offshore Israel.

Energy Drilling (Edrill), a company specialising in tender assist drilling rigs, and China’s SinoOcean Assets Management have agreed to work towards greater cooperation in offering more offshore assets to the international market. Energy Drilling said the agreement followed a “a very successful” partnership between the two companies in the deployment of the 6,561-ft semisubmersible tender rig GHTH (Guo Hai Tai He) for PTTEP International since early 2023. PTTEP is using the self-erecting, semi-tender assist drilling rig for its operations in Myanmar. Energy Drilling’s CEO Marcus Chew recently met with SinoOcean’s management and its VP Wang Dongshi, where they discussed the marketing development of SinoOcean’s diverse portfolio of drilling rig assets, spanning from shallow water to deep water, to tap into broader markets and enhance operational efficiency. The two companies have signed a memorandum of understanding with the aim of pooling resources and expertise to win new contracts for SinoOcean’s rigs. SinoOcean was formed in 2019 to manage offshore rigs left stranded in Chinese shipyards.

Dolphin Drilling has made a decision to scrap the 1,500-ft semisubmersible rig Bideford Dolphin. Dolphin revealed that Bideford Dolphin was a candidate for sale back in late 2023. The rig, which is nearly 50 years old, has been stacked for years and it is currently anchored in Norway. The rig owner said the decision to scrap the unit aligns with its ongoing efforts to optimise the fleet and enhance operational efficiency. Dolphin added that the rig will be sold and scrapped in a responsible manner in accordance with applicable international standards. This is one of two moored semisubmersibles in the North Sea region that has recently been announced for sale; the other one being Stena Drilling’s 5,000-ft Stena Spey. The rig has been warm stacked in Invergordon since late 2023. Meanwhile, Dolphin’s other semisub, the 1,500-ft Borgland Dolphin, is in Norway preparing for transit to Las Palmas where it will be reactivated ahead of new contracts in the UK in 2025 while its cold stacked 5,500-ft Transocean Leader, to be renamed Dolphin Leader, is under consideration for reactivation.

Image credit: Borr Drilling