Esgian Rig Analytics Market Roundup (Week 15)

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

Esgian Rig Analytics Story

In the wake of the Covid-19 pandemic in 2020, the offshore drilling market faced significant hurdles, with several drilling contractors filing for bankruptcy. The global market has recovered significantly since then, with total utilisation rising from as low as 49% in November 2020 to 70% in March 2024. However, there has been a discernible difference in recovery in the North Sea compared to other regions. Read Esgian’s latest analysis of developments in the North Sea market over the last several years here.

Contracts 

Borr Drilling has announced new contract commitments for three of its premium jackup rigs, the 400-ft Prospector 1 and Gunnlod, and a rig to be determined. The commitments total 820 days and $158.6 million in contract revenue, including mobilisation and demobilisation compensation. In the North Sea, multiple contracts have been secured for the Prospector 1 jackup, totalling 250 days of backlog that started in March 2024. Following several short-term extensions, the jackup completed its work scope with Neptune in the Netherlands in mid-March and moved to the UK sector for a new job, which is part of the scope that has just been announced. In Southeast Asia, the company has secured a one-well commitment for the Gunnlod, with an anticipated duration of 90 days, that will begin in May 2024. The rig is currently in Malaysia. Finally, an undisclosed customer has issued a firm and binding Letter of Award for a campaign expected to begin between Q4 2024 and Q1 2025, with an estimated duration of 480 days. Borr Drilling is one of the contractors that has recently announced a suspension of a contract with Saudi Aramco in Saudi Arabia. The temporary suspension for the 400-ft jackup Arabia I is for a period of up to 12 months and it is expected to start in the second quarter of the year.

Energean has awarded a one-well contract to Stena Drilling for the drillship Stena Forth. Energean will use the rig to drill the Anchois-East appraisal and development well, located within the Lixus licence, off Morocco. Energean will have a further one-well option. Energean officially became the operator of the Lixus and Rissana licences on Tuesday following farmout agreements with Chariot Limited, announced in December 2023, and has now paid $10 million in cash to Chariot upon farm-in closing. Energean now holds 45% and 37.5% of the respective interests in, and is operator of, the Lixus and Rissana licences, offshore Morocco. Chariot retains 30% and 37.5% of the respective interests in these licences, with ONHYM maintaining a 25% stake in each. As for the Anchois drilling, Energean said it was planning to drill the appraisal well on the Anchois field (Lixus licence) in Q3 2024. The aim of the appraisal well is to undertake a drill stem test on the main gas-containing sands and target an additional 11 Bcm of gross unrisked prospective resource. Stena Forth is currently on contract with Shell in Egypt. Shell has further options on the rig from late 2024.

Shelf Drilling subsidiary Shelf Drilling North Sea has secured more work with Equinor for the jackup Shelf Drilling Barsk, until recently known as Noble Lloyd Noble. Firstly, Equinor has exercised one of two previously agreed options for work at its Sleipner Vest field where the jackup is expected to start its 270-day firm, two-well contract in May. With the first option now exercised, the 500-ft rig should stay at the field for at least 83 days more. Furthermore, Equinor has also awarded a two-well contract extension for the rig, this time at the Gudrun field, off Norway. The contract is for 254 days and Equinor will have options for three further wells at Gudrun. Shelf Drilling said that the contract value of the additional firm period excluding certain integrated services was approximately $81 million.

Drilling Activity and Discoveries

Petrobras has discovered an accumulation of oil at the Anhangá exploratory well in the POT-M-762_R15 Concession in the Potiguar Basin. The well was drilled with Foresea 10,000-ft drillship ODN II in 7,204 ft of water in Brazil’s Equatorial Margin area. Well 1-BRSA-1390-RNS (Anhangá) is Petrobras’ second discovery in the Potiguar Basin this year after it determined the presence of hydrocarbons at the Pitu Oeste well on BM-POT-17 in January 2024. Petrobras said that both discoveries require additional evaluation. The company called the discovery of oil-bearing turbidite reservoirs of Albian age in the Potiguar Basin “unprecedented” and stated that it will continue exploratory activities in the POT-M-762_R15 Concession in order to evaluate the quality of the reservoirs, the characteristics of the oil and the technical and commercial viability of the find. Petrobras began drilling Anhangá in February 2024. In early March 2024, Petrobras extended the contract for ODN II by 363 days, keeping the rig working in the Equatorial Margin.

Shell Egypt has started drilling the Khufu-1 prospect, the last exploration well in its drilling campaign in Egypt. The supermajor is using Stena Drilling’s 10,000-ft drillship Stena Forth for the campaign. This prospect is located in the North East El-Amriya block, where late last year the operator announced the Mina West-1 gas discovery. Stena Forth will move to Morocco in Q3 2024 for a drilling campaign with Energean.

Demand

Norwegian operator OKEA, in collaboration with its partners, has made a final investment decision (FID) for the development of the Brasse field, to be renamed Bestla, based on a tie-back to the nearby production facilities of the Brage field offshore Norway. Bestla (PL740), located in the northern North Sea, is estimated to contain 24 million barrels of oil equivalent (MMboe) in recoverable reserves. The Bestla partnership includes OKEA (39.3%) as operator, DNO Norge (39.3%), Lime Petroleum (17%), and M Vest Energy (4.4%). All four companies are partners in Brage, which is also operated by OKEA. This alignment of interests and a common operator have helped speed up studies and decisions. Longer term, Bestla will extend the commercial viability of the Brage facilities. Discovered in 2016 and appraised by five wells in 2017-2019, Bestla will be developed with a two-well subsea tie-back to the Brage platform located at a distance of 13 kilometres; Brage will serve as the host facility for production, processing, and export. The plan for development and operation (PDO) will be submitted during April and Brasse will be renamed Bestla upon approval of the PDO. The field is expected to come on stream during the first half of 2027 and is anticipated to operate until 2031 with the potential for extension. Plateau production is estimated at around 10 kboepd OKEA share (26 kboepd gross) and is expected within the first year of production.

ExxonMobil has made a final investment decision for the Whiptail development offshore Guyana, following required government and regulatory approvals. Whiptail is the sixth project on the Stabroek block and is expected to add around 250,000 b/d of capacity by the end of 2027. The Whiptail project will include up to 10 drill centers with 48 production and injection wells. ExxonMobil values the project at $12.7 billion. An FPSO for Whiptail is currently under construction, along with FPSOs for the Yellowtail and Uara projects offshore Guyana, which are expected to begin production in 2025 and 2026, respectively. ExxonMobil currently has six drillships working offshore Guyana, with four Noble drillships on long-term charters into 2027. ExxonMobil affiliate ExxonMobil Guyana Limited is operator and holds 45% interest in the Stabroek block offshore Guyana. Hess Guyana Exploration Ltd. holds a 30% interest, and CNOOC Petroleum Guyana Limited holds a 25% interest.

Mobilisation/Rig Moves

Dorado, a recently delivered 7th Generation 12,000-ft ultra-deepwater drillship, has departed South Korea. The rig left Samsung Heavy Industries yard on Saturday, and is now en route to Labuan, Malaysia. The drillship is owned by Eldorado Drilling and is expected to arrive in Labuan on 18 April 2024. Eldorado Drilling acquired three Samsung 12000 design rigs – the Zonda, Dorado, and Draco, in 2023, with Dorado bought in January 2023. Asset management company Pelago Management, which has been overseeing the delivery and operational readiness of the three drillships since September 2023, shared the Dorado sailaway news on Monday, 8 April. The rig, previously named West Dorado, was originally ordered by Seadrill in 2013. The order was then eventually cancelled in 2018, and the shipyard assumed ownership of the unit. The rig was delivered earlier this month. The Zonda drillship was delivered in early March 2024, while the Draco – also known as West Draco – has yet to be delivered and is still in the Samsung Heavy Industries shipyard in South Korea.

COSL Drilling’s 2,460-ft semisub COSLInnovator has mobilised from a yard in Norway to the UK sector of the North Sea for a contract with Petrofac. Following the completion of a contract in the UK earlier this year, the rig had been at the CCB yard in Norway since early February 2024 undertaking a special periodic survey (SPS). Now that the SPS operations have been completed and Petrofac has accepted the rig, the unit is mobilising to the Bittern field on a four-well contract in the Triton area managed by Petrofac for Serica Energy and Dana Petroleum. The first well is a sidetrack of existing well (B1z) on the Bittern field. Other wells in the campaign are the GE-05 well on Gannet E, the EC well on Guillemot North West, and the EV-02 well on Evelyn. Serica has also exercised an option to use the COSLInnovator to drill a fifth well in direct continuation of the four-well campaign. This may be the development well on the Belinda field. The draft FDP for this project was submitted to the NSTA in September 2023. After completing this campaign and a short yard stay in Norway, the rig is expected to begin a two years firm contract with Equinor in late Q2 2025. COSL has also recently confirmed another contract in Norway; this time for the 2,460-ft COSLPioneer with Vår Energi. This contract ensures that all of COSL’s North Sea units will be operational in the Norwegian sector by mid-next year.

Other News

Australian oil and gas company Woodside has decided to retain its stakes in the Macedon and Pyrenees assets offshore Western Australia. Woodside started a process in the second half of 2023 to consider the potential for divestment of its interests in the Macedon and Pyrenees assets. However, Woodside said Thursday that following completion of the process it has decided to retain its current ownership levels in both assets. “Macedon continues to be a critical supply source of gas to the Western Australian domestic market and Woodside continues to see strong value in both assets,” Woodside said. In February, Jadestone Energy said it was participating in the bid to acquire Woodside’s interests in the Macedon and Greater Pyrenees Projects. Woodside’s net working interest production from the Macedon field and Pyrenees Area in the second half of 2023 averaged c.28,000 boe/d.

U.S. oil major Chevron has withdrawn from the Yadana project offshore Myanmar. Following the withdrawal in the first week of April 2024, Chevron’s interests held via its Myanmar subsidiary Unocal Myanmar Offshore Company Limited (UMOC) were distributed to the remaining partners, resulting in Thai-based PTTEP’s participating interest of 62.9630 % in the Yadana project. This implies that the remaining 37.037% stake is owned by the state-owned Myanma Oil and Gas Enterprise (MOGE), which was sanctioned by the U.S. in October 2023. The Yadana project, located in the Gulf of Moattama, Myanmar, started its first natural gas production in 1998. “This project holds strategic importance in energy security for both Thailand and Myanmar. PTTEP, as the operator of the project, will carry out the gas production from the field in order to supply energy to meet people’s needs and maintain energy security in both Thailand and Myanmar,” PTTEP said in a statement.

DS Stena Forth; Credit: Stena Drilling