Esgian Rig Analytics Market Roundup (Week 13)

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

Esgian Webinar

Earlier in March 2024, Esgian analysts held a webinar discussing the activities of Q1 2024 and providing forecast into 2025. Watch the entire 30-minute session titled “Navigating 2024: A global Q1 review and year ahead forecast,” here.

Contracts 

ADES has received a Letter of Intent (LOI) from PTTEP Energy Development Company Limited for an 18-month jackup drilling contract in the Gulf of Thailand. Operations are expected to begin in the second half of 2024, with an unspecified jackup. The contract comprises an 18-month firm term with a nine-month optional extension. The total contract value from the firm and optional terms is around SAR 354 million ($94.4 million), including mobilisation. The LOI marks ADES’ entry into Thailand and follows the company’s expansion into Indonesia with a three-year contract for the 375-ft Emerald Driller fixed in November 2023. ADES stated that the group is delivering on its strategy to grow its global footprint in Southeast Asian markets.

Drilling Activity and Discoveries

The Norwegian Offshore Directorate (NOD) has granted Aker BP a drilling permit for an exploration well in the North Sea offshore Norway. The well 24/6-5, targeting the Alvheim Deep, is located in production licence 203, which is operated by Aker BP with ConocoPhillips participating as a partner. The water depth at the site is 120 meters. Aker BP has already secured consent from the Norwegian Ocean Industry Authority (Havtil) to drill the well with the 492-ft CJ70 jackup Noble Integrator. The rig has recently completed drilling operations for Harbour Energy in the North Sea, making a small gas discovery with the Ametyst well. The discovery is being considered for tying into existing infrastructure in the area.

Mubadala Energy has started drilling the Tangkulo-1 exploration well in the South Andaman block offshore Indonesia. The drilling operation kicked off on Sunday, 24 March 2024, using the 10,000-ft West Capella drillship. The Tangkulo-1 exploration well is located 166 km north-east of Banda Aceh City and 67 km north of Lhokseumawe City, Aceh Province. Mubadala’s partner, Harbour Energy, said earlier in March that the Tangkulo was a shallower prospect to the south of the Layaran discovery, aiming to prove up additional volumes. In December 2023, Mubadala Energy said it had made a discovery at the Layaran offshore well with a potential for over 6-TCF of gas-in-place and for multi-TCF expansion within the broader structure, labelling it “one of the most significant Southeast Asia discoveries for many years.”

South African environmental non-profits The Green Connection and Natural Justice have launched a legal challenge against the 2023 government decision to grant TotalEnergies environmental authorisation for exploration drilling on Block 5/6/7. The respondents in the legal challenge include the Minister and the Director-General of the Department of Mineral Resources and Energy (DMRE), who initially granted the authorisation and the Minister of the Department of Forestry, Fisheries, and the Environment (DFFE), which dismissed appeals against the decision. The non-profits stated the government had failed to assess “the socio-economic impacts of a potential oil spill on local fisheries, while also ignoring the climate change impacts associated with oil or gas usage.” The groups also cited concern “over the lack of proper evaluation of Oil Spill Blowout Contingency Plans” and said that the government had ignored the impacts of drilling activities extending to Namibia and international waters. Block 5/6/7 is offshore the southwest coast of South Africa, between Cape Town and Cape Agulhas. TotalEnergies Exploration & Production South Africa has proposed the drilling of one exploration well on the block and success dependent, up to four additional wells.

Thailand-focused oil company Valeura has shared its offshore drilling plans for the year ahead. At the Jasmine/Ban Yen fields, the company plans to drill approximately seven wells in the second half of the year, in addition to one exploration well to test the Ratree prospect. The company said it believed that with continued infill drilling and ongoing well workovers on the Jasmine/Ban Yen fields, it can reduce the effect of natural declines and continue the fields’ „long history of year-on-year reserve additions.“ At the Nong Yao field, the company plans to start development drilling, with up to nine gross wells planned, of which six producers and three water injectors. Also, the company is planning to drill the Nong Yao D exploration well. Last year, Valeura Energy resumed production from the Wassana field and drilled appraisal wells which confirmed the presence of oil deeper than previously proven, leading to a potential re-development of the field and an extension of field life beyond 2030. Valeura has commissioned a project team to select a suitable development concept for the redevelopment of the Wassana field and anticipates making a final investment decision in 2024. One drilling rig was actively drilling across all of Valeura’s Thailand assets in 2023. The rig in question is Borr Drilling’s 350-ft jackup, Mist. In February, Borr Drilling said it had secured a contract extension with Valeura for the Mist that should keep the 350-ft rig busy in Thailand through August 2025.

Demand

The government of Equatorial Guinea has approved the joint operating agreement for VAALCO Energy’s previously approved Venus-Block P plan of development. The company’s partners have also signed the final documents. The Block P production sharing contract provides for a development and production period of 25 years from the date of the approval. VAALCO will now proceed with plans to develop, operate, and begin producing from the discovery in Block P offshore Equatorial Guinea over the next several years. The company will start with a FEED study followed by a final investment decision (FID) for the Venus plan of development. In a recent company presentation, VAALCO anticipated FEED studies and FID in 2025, to be followed by a three-well drilling campaign. VAALCO acquired an interest in Block P in 2012. Discoveries on the block were made by the previous operator Devon.

The UK’s North Sea Transition Authority (NSTA) has granted Ithaca Energy a licence extension for the Cambo field, located west of the Shetland Islands, extending it by two years. However, given the current fiscal environment in the UK, the company still does not want to commit to a timeline. The Cambo project’s final investment decision (FID) has been delayed several times and the previous two-year licence extension was granted in March 2022, extending it to March 2024. The Cambo licence has now been extended from 31 March 2024 to 31 March 2026. Following the extension and given that Ithaca has full ownership of the project, the operator is actively engaging with potential farm-in partners to secure an aligned joint venture partnership that would enable the future progression of the Cambo project towards FID and assist in obtaining the additional funding required for the project. The company is also mindful that the outcome of the 2024 General Election in the UK could have implications for the project as well as the wider fiscal uncertainties on oil and gas investment in general. Speaking about the Cambo project timeline during the company’s FY2023 financial results webcast on Wednesday, Ithaca’s executives stated that, following previous delays to the project FID, the operator currently doesn’t want to commit to a timeline without having some certainty from the government. As the recent Energy Profits Levy (EPL) changes don’t provide stability, the operator is in discussions with the government and also taking into consideration the upcoming elections. In conclusion, Ithaca said it is considering its options given the fiscal environment.

The Government of Mozambique has approved the terms and conditions of concession contracts for offshore blocks A6-E, A6-G, A6-D, S6-A and S6-B awarded to CNOOC in partnership with Mozambique state company Empresa Nacional de Hidrocarbonetos (ENH). The awarded blocks were offered in Mozambique’s sixth public tender, originally launched through Mozambique’s Ministry of Mineral Resources and Energy in November 2021. Under the concession contracts, CNOOC will acquire at least 26,000 square kilometres of 3D seismic, drill a minimum of four deepwater wells, and carry out geoscientific studies in the Save and Angoche areas.

Offshore UK Licence P2478, which contains the Dunrobin prospect, will be surrendered to the UK North Sea Transition Authority (NSTA) following delays with licence commitments resulting from the wind farm construction activities in the area. Due to this, there is no longer a clear pathway to acquiring the necessary 3D seismic and subsequently drilling an exploration well on the licence. Reabold Resources is the Licence P2478 administrator with a 36% interest, Baron Oil holds a 32% interest in the licence, and Upland Resources holds the remaining 32% interest. The licence is located in the Inner Moray Firth Basin, directly updip of the Beatrice field. In July 2023, Reabold was granted a two-year extension for licence P2478. The Dunrobin West prospect, agreed by JV to be the proposed location of the first exploration well on the licence, would target 119 mmboe aggregate gross unrisked Pmean Prospective Resources. A ‘Drill or Drop’ decision was required on or before 14 July 2025. The JV planned to carry out a new seismic programme over the licence during the first half of 2024 and subsequently re-engage with interested parties for the drilling of an exploration well. However, the licence is now expected to be surrendered to the NSTA on 31 March 2024, following “unavoidable and significant delays to the acquisition of 3D seismic data, as had been stipulated in the Deed of Variation concerning the extension to Phase A of the licence,” Baron Oil said. According to Baron Oil, the delays largely result from the continuous wind farm construction activities in the area. All Phase A commitments have been fulfilled and there remain no further obligations beyond the statutory submission of a relinquishment report. Jon Ford, Technical Director of Baron, commented: “Despite strenuous efforts by the Licence administrator on behalf of the Joint Venture, ourselves and the NSTA to establish a way forward for the licence, we have reluctantly agreed that there is no clear pathway to acquiring the necessary 3D seismic and subsequently drilling an exploration well on P2478 in a timely fashion given the competing activities in the licence area.”

Parkmead has made progress towards drilling Skerryvore, its first operated exploration well offshore the UK, with well planning activities underway. However, despite previous plans to start drilling in late 2024, the well is now expected to be drilled in early 2025. Skerryvore is located in the UK Central North Sea Licence P.2400. Parkmead’s joint venture partners on the licence are Serica Energy (20%) and CalEnergy (30%). So far, progress has been made on well planning, site survey contractor selection, and the identification and sourcing of critical path long lead items. The crucial offshore surveys are currently scheduled to take place in the second half of 2024, to deliver the planned well in early 2025. This was previously expected in Q4 2024. Parkmead is looking at all options to maximise the commercial benefit by collaborating with other operators to achieve an optimal rig slot as part of a wider, multi-operator drilling campaign, or ‘Rig Club’, to share costs where possible, such as rig mobilisation. The company’s technical work programme has confirmed the considerable multi-interval potential of Skerryvore. The planned well will penetrate the main stacked exploration prospects, at Mey and Tor intervals, which studies indicate could contain significant volumes of light oil, with potential recoverable reserves of over 130mmboe gross. The sub-surface team believe there is a high geological chance of success at the Mey of c.43% as this area is surrounded by fields producing from the same target interval. The licence also contains additional prospectivity at the Ekofisk and Jurassic levels. A successful discovery would allow for a tieback to nearby infrastructure.

Mobilisation/Rig Moves

The ADES Advanced Drilling Services-owned 300-ft jackup Admarine 11 has commenced operations with Oil and Natural Gas Corporation (ONGC) offshore India. Admarine 11 (ex-Valaris 54) completed its previous campaign with Saudi Aramco in Saudi Arabia in Q1 2023 under Valaris’ management. In November 2022, ADES bought the 1983-built jackup from Valaris. After Aramco’s campaign, the rig performed its recertification and contract preparations in Bahrain. The commencement of this three-year campaign with ONGC will keep the rig busy until Q1 2027. Admarine 11 is a F&G L-780 MOD II Class rig that operates in water depths of 300 ft.

The Dynamic Drilling-managed 300-ft jackup Divine Driller has commenced operations with Oil and Natural Gas Corporation (ONGC) offshore India. In Q4 2023, Divine Driller got a contract with ONGC for three years under Category I. The commencement of this three-year campaign with ONGC will keep the rig busy until Q1 2027.

Northern Offshore’s 375-ft jackup Energy Emerger has started work with Masirah Oil on the Yumna field in Block 50 in Oman. The programme consists of the drilling and completion of a new infill well and the workover of two existing production wells (estimated duration +/- 60 days).

The Foresight-owned 350-ft jackup Vivekanand 2 will commence operations with Oil and Natural Gas Corporation (ONGC) offshore India around the end of March 2024. The Vivekanand 2 completed its previous campaign with ONGC in India in mid-January 2024, and the rig performed its recertification and contract preparations in Mumbai, India. This new contract was awarded under Category I awards in Q4 2022. With the commencement of this three-year campaign with the same operator, the rig will be busy until Q1 2027. Vivekanand 2 is a LeTourneau Super 116E Class rig that operates in water depths of 350 ft.

Malaysian oil firm Vestigo is set to move the 350-ft jackup Naga 2 from the Berantai East oil field offshore Terengganu, Malaysia. The rig arrived at the Berantai field back in February from the East Belumut field. Now, between 28 March and 9 April, Vestigo, a subsidiary of Petronas, will move the rig to the Kayu Manis South East (KMSE) oil field, offshore Sarawak. The Ena Endeavor and Two Pacific offshore vessels will support the rig move. The Velesto-owned rig is one of three jackups that recently secured long-term contracts with Petronas Carigali.

Malaysian oil firm Petronas Carigali is set to move the 375-ft jackup Naga 6 to the Anding-A field. According to the Malaysian Marine Department, Petronas will move the Velesto-owned rig from the Gedombak well in PM 306 to the Anding-A field for drilling activity. The whole operation, including the tow to the location and drilling, is expected to last between 30 March and 12 May 2024. The JM Setia and Perdana Marathon vessels will support the towing operation. Petronas Carigali recently awarded the rig a $97 million contract, running from 7 February 2024 to 6 February 2026.

Other News

Brazilian company Enauta has signed a purchase and sale agreement with affiliates of Westlawn Americas Offshore LLC (WAO) for WAO to acquire a 20% participating interest in the BS-4 Concession offshore Brazil. BS-4 includes the Atlanta and Oliva fields. WAO is a portfolio company of Houston, Texas-based private investment firm Westlawn Group LLC and owns various interests in the US GOM. The agreement involves the acquisition of a 20% stake in the Atlanta and Oliva fields for $301.7 million, to be paid at transaction closing and subject to adjustments related to the net cash flow with investments for the delivery of Atlanta and Oliva generated between the effective date of 1 November 2023 and the closing of the transaction. Enauta also has the option to sell a 20% stake in affiliate company Atlanta Field B.V. for $65 million exercisable in 2024 upon agreement.

Australian oil and gas company Woodside has completed the sale of a 10% stake in the Scarborough Joint Venture to LNG Japan. Woodside received $910 million in sale proceeds, comprising the purchase price, reimbursed expenditure, and escalation. Woodside holds a 90% interest in the Scarborough Joint Venture and will remain the operator. Following the completion of the transaction with JERA, announced on 23 February 2024, Woodside’s interest will be 74.9% in the Scarborough Joint Venture. The Scarborough Energy Project comprises the Scarborough Joint Venture, the Pluto Train 2 Joint Venture, and modifications to Pluto Train 1 to process Scarborough gas. The Scarborough Joint Venture includes the Scarborough field and associated offshore and subsea infrastructure. The Scarborough field is located approximately 375 km off the coast of Western Australia. Scarborough gas will be processed at the Pluto LNG facility, where Woodside is currently constructing Pluto Train 2. Woodside spudded the first production well at the Scarborough project using the 10,000-ft semisubmersible Valaris DPS-1 in January.

Dolphin Drilling has come to an agreement with General Hydrocarbons Limited (GHL) regarding past due payment amounts and remaining work under the drilling contract offshore Nigeria for semisubmersible Blackford Dolphin. Dolphin stated that the agreement would allow it to receive payment of all sums due under the contract and enable GHL to continue to use the rig. The 6,000-ft Blackford Dolphin started a 12-month contract with GHL offshore Nigeria in March 2023 at a dayrate of $230,000. In November 2023, Dolphin reported that GHL had past due payments totaling $17.3 million. Dolphin received payments from GHL in January and February 2024. Following the agreement, Dolphin has received a further payment and the Blackford Dolphin will continue working for GHL, with the next payment due in late April 2024. Upon conclusion of the agreement, Blackford Dolphin will leave Nigeria for India for a contract with Oil India. Dolphin CEO Bjørnar Iversen stated, “It was important for us to find a win / win solution with GHL on the current contract, payment and work scope, and to create a predictable exit for the rig Blackford Dolphin from Nigeria while also ensuring on-time delivery of the unit for our next client in India.”

North Sea operator Ithaca Energy has entered into an exclusivity agreement for a potential transformational combination with substantially all of Eni’s UK upstream assets including the recently acquired Neptune Energy assets, excluding certain assets including Eni’s CCUS and Irish sea assets. As a reminder, Eni has recently closed its acquisition of Neptune Energy Group Limited, first announced in June 2023. The transaction included 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. Ithaca and Eni have now entered into the exclusivity agreement to allow time to separately progress the contractual documentation required in connection with the potential combination. With this, Eni has granted Ithaca Energy exclusivity in respect of the assets, the subject of the potential combination, for a period of 4 weeks from the date of this announcement. Eni will contribute its UK business in exchange for the issuance of new Ithaca Energy shares to Eni, with Eni anticipated to hold between 38% and 39% of the enlarged issued share capital of Ithaca Energy following completion. Eni has a well-diversified asset base across 4 key hubs: Elgin Franklin, J-Area, Cygnus, and Seagull and Ithaca Energy is already a partner in the Elgin Franklin and Jade fields. Ithaca Energy anticipates that the potential combination will require shareholder approval as a Class 1 transaction. Although the discussions are at an advanced stage, there can be no certainty that the combination will occur, nor as to the final terms or timing on which it might be concluded. If it goes through, the deal would create the second-largest independent operator in the UKCS.

Stena Drilling is planning a significant equipment upgrade for its 7th Generation 12,000-ft drillship, Stena Evolution. With this enhancement, the drillship will be capable of drilling and completing wells requiring 20,000 psi (20k) pressure control, enabling drilling in previously inaccessible reservoirs. As a reminder, Stena Drilling took delivery of Stena Evolution from Samsung Heavy Industries’ yard in Geoje, South Korea in January 2024 and the rig started its journey to the US GOM soon after. The rig has recently reached the Gulf ahead of a contract with Shell, which is scheduled to start around April 2024. Stena Drilling, together with equipment supplier NOV, and Shell, will start the installation of the 20k subsea blow-out preventer (BOP) and other key equipment in 2026. When this new 20k equipment package is installed, the Stena Evolution will be able to perform completion operations in the Sparta field on behalf of Shell in the U.S. Gulf of Mexico.

ADNOC has announced the start of crude oil production from its Belbazem offshore block. The Belbazem offshore block is operated by Al Yasat Petroleum, a joint venture between ADNOC and China National Petroleum Corporation (CNPC). Production capacity at the Belbazem offshore block is set to progressively ramp up to 45,000 barrels per day (bpd) of light crude and 27 million standard cubic feet per day (mmscfd) of associated gas, contributing to ADNOC’s target of reaching 5 million bpd by 2027 and enabling gas self-sufficiency for the UAE. The Belbazem block uses WellInsight, an AI tool developed by AIQ, to analyze reservoir data and manage operations. The block will also integrate advanced technologies already deployed at Al Yasat’s Bu Haseer offshore field, to optimise production and reservoir management. The Belbazem block is leveraging operational synergies by utilising the facilities of Satah Al Razboot (SARB), an offshore field operated by ADNOC Offshore. Located 120 kilometres northwest of Abu Dhabi city, the Belbazem Block consists of three offshore fields; Belbazem, Umm Al Salsal, and Umm Al Dholou.

Offshore drilling contractor Vantage Drilling reduced its fourth quarter 2023 loss, compared to the prior-year quarter, driven by an increase in revenues. Vantage Drilling reported a net loss attributable to controlling interest of approximately $14.6 million for Q4 2023, as compared to a net loss attributable to controlling interest of $16.4 million for Q4 2022. For the full year 2023, Vantage reported a net loss attributable to controlling interest of approximately $15.4 million as compared to a net loss attributable to controlling interest of $3.4 million for 2022. Total revenues for Q4 2023 were $94.5 million, compared to $76.2 million in Q4 2022. Vantage’s revenues for 2023 were $383 million, compared to $278.7 million in 2022. Ihab Toma, Vantage CEO, commented, “As for 2024, while in many ways, it is a year of transition for some of our rigs with shipyard stays and preparation time between contracts, I am excited about what the future holds for Vantage. Fundamentally, the market continues to be in a healthy place, and we are in a good position to take advantage of this.” Earlier this year, Vantage and TotalEnergies signed an agreement to create a new joint venture (JV) that will acquire the 12,000-ft drillship Tungsten Explorer from Vantage Drilling. It was agreed for TotalEnergies to pay $199 million for a 75% interest in the JV, with Vantage owning the remaining 25%. The JV will contract Vantage to operate the rig for 10 years.

Malaysian oil and gas company Petronas Carigali is set to start survey work ahead of planned drilling offshore Sarawak. Using the Cassandra VI vessel, Petronas Carigali will carry out a marine geohazard survey running until 27 April 2024 (approximately 32 days.) The Cassandra VI is currently located off the coast of Kuala Baram, in Sarawak. The well sites the survey will be conducted over include Manjakani-1, Sinsing-2, D18KP-A, Baronia North, Silungen-1 (at Gayong-1) and Cemumar-1 (at Kumang East).

Image credit: Vantage Drilling