Esgian Rig Analytics Market Roundup (Week 10)

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

Contracts 

Beach Energy has awarded a 70-day contract to Valaris 400-ft jackup Valaris 107. Work is expected to commence in the third quarter of 2023. Valaris stated that the total contract value is around $26 million. Beach Energy is planning to spud the Kupe South 9 development well to return the Kupe gas field to capacity production in early 2024. Valaris 107 is currently working offshore Australia for Eni, with a recently exercised option to keep it working into April 2023. The rig has two additional contracts with other operators lined up that are to keep the rig working offshore Australia into September 2023.

Valaris has confirmed that its 12,000-ft drillship Valaris DS-8 has been awarded a three-year contract with Petrobras offshore Brazil. The rig is being reactivated for the contract after being cold stacked in the Canary Islands in 2020. Valaris put the total contract value at $500 million, including a $30 million mobilization fee. As previously reported by Esgian, the rig is to begin work with Petrobras by November 2023.

Aquadrill Offshore-owned 10,000-ft drillship Capella has been awarded a one-well contract with an undisclosed operator in East Africa. Work is expected to commence in mid-April 2023 and to run until the end of May 2023. The rig is currently managed by Vantage Drilling. Aquadrill expects the total contract value for the contract to be around $37 million.

Valaris has secured a 100-day contract with a TotalEnergies affiliate for the 12,000-ft drillship Valaris DS-12. The contract is expected to commence in the second quarter of 2023. Valaris DS-12 is currently in Angola, where a previously fixed contract with another operator is due to run from March to May 2023. The location of the newest contract is undisclosed, but market sources have indicated that it is also in West Africa. In November 2022, the rig secured a four-well contract with BP offshore Egypt with a start date in the fourth quarter of 2023.

Seadrill has announced the execution of six months of term extensions for the 12,000-ft drillship West Neptune with LLOG Exploration Offshore, L.L.C (LLOG) in the U.S. Gulf of Mexico. The extensions will start in direct continuation of the existing term and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. The drillship has been working for LLOG since late 3Q 2021. The total contract value for the extension is about $79 million.

Shelf Drilling’s 350-ft jackup Shelf Drilling Scepter has secured a two-year contract with an undisclosed operator offshore Nigeria, planned to start in May 2023. The contract also includes a one-year option. Shelf Drilling put the contract value for the firm period, including mobilization revenue, at around $118 million. Shelf Drilling Scepter has been warm stacked in Singapore since August 2022 and last worked for the Cuu Long JOC offshore Vietnam from June to August 2022.

Following a letter of award in January 2023, Dolphin Drilling has signed a contract with Peak Petroleum for the 7,000-ft semisubmersible Blackford Dolphin to drill offshore Nigeria. As announced in January, the new contract with Peak Petroleum will start in direct continuation of the rig’s 12-month contract with General Hydrocarbons Limited (GHL). Blackford Dolphin arrived in Nigerian waters for the GHL work in early March 2023. The new contract is a minumum of 120 days and up to 485 days. The effective dayrate for the minimum firm period is $325,000, which includes the mobilization fee.

Vantage Drilling-owned 375-ft jackup Topaz Driller has received a letter of award (LOA) for a 75-day contract extension with Petrobel in Egyptian waters of the Mediterranean. Topaz Driller is currently operating under a bareboat charter to ADES in Egypt for Petrobel, which provides a fixed fee of $20,000 to Vantage plus a variable fee based on a percentage of gross margin generated on a monthly basis. The contract amendment for the 75-day extension is pending finalization. Topaz Driller recently secured a contract with Eni offshore Morocco, expected to run for 90 days. This contract is expected to begin in the third quarter of 2023.

Drilling Activity and Discoveries

IOG plc has confirmed that the Blythe H2 well, located in the UK North Sea, was spudded on Sunday 5 March 2023. The well was sanctioned in February 2023 and it is being drilled by the 400-ft Noble Hans Deul jackup rig (to be renamed the Shelf Perseverance) under IOG’s contract with Shelf Drilling (UK) signed in 2020. The rig’s firm part of the contract ends in July with an option that could run into September. As with previous IOG development wells, Petrofac is the designated Well Operator. The H2 well is expected to take approximately three months to drill, complete and hook-up, subject to the usual offshore operational risks to scheduling. The Blythe H2 well has the potential to enhance IOG’s current production levels, reduce water production into the pipeline and minimise associated opex. It also has fast payback potential and will enable the company to boost cash flow from mid-2023.

Oil major Shell has made a light oil discovery in the Jonker-1X deepwater exploration well drilled in PEL 0039 Exploration License located in the Orange Basin offshore Namibia. The Jonker-1X well was drilled using the Deepsea Bollsta semisubmersible rig, which completed the transit to Namibia and started its contract with Shell in December 2022. The rig is owned by Northern Ocean and Odfjell Drilling provides operations management. The deepwater well is located 270 km offshore Namibia. Drilling operations began in December 2022 and were concluded in recent days. The well was drilled to a total depth of 6,168 meters in a water depth of 2,210 meters. The acquired data is being evaluated while further appraisal is planned to determine the size and recoverable potential of the discovery. The PEL 0039 license is held by a consortium comprised of operator Shell with a 45% working interest, QatarEnergy with a 45% working interest, and the National Petroleum Corporation of Namibia (NAMCOR) with a 10% working interest. The Deepsea Bollsta will remain in PEL 0039 to drill further wells as part of the joint venture’s ongoing exploration and appraisal campaign. Shell reported two discoveries on PEL 0039 in 2022. The company encountered light oil in the primary and secondary targets at the Graff-1 exploration well in February 2022, followed by hydrocarbon pay at multiple levels at the La Rona-1 prospect in April 2022. Both wells were drilled with Valaris drillship Valaris DS-10. The Graff discovery is thought to hold up to 2 billion barrels of oil equivalent.

Occidental is expected to drill its Pancheron prospect in the US Gulf in the first half of this year. A permit has not yet been approved for the exact location. The drilling plan indicates the prospect is located in Green Canyon Blocks 991 and 992, and Walker Ridge Blocks 24 and 25. The average well water depth of the 25 locations proposed in the exploration plan is about 5,400 ft, calling for the use of a floating rig. Occidental only has one floating rig under contract in the US Gulf. The 12,000-ft drillship Valaris DS-16 is committed to the operator until May 2024, pending a one-year option.

Talos plans to spud its Rigolets prospect in the US Gulf in Q2 2023. The prospect will be drilled by Seadrill’s 12,000-ft semisub Sevan Louisiana in 3,323 ft of water in Mississippi Canyon Block 162. Sevan Louisiana has been under contract to Talos since August 2022 and recently drilled both the Lime Rock and Venice discoveries for the operator. The rig is expected to remain with the operator through at least the end of this year.

The Norwegian Petroleum Directorate (NPD) has granted Equinor a drilling permit for a wildcat and an appraisal well in the North Sea off Norway. The wells, 31/2-23 S and 31/2-23 A, are located in production licence (PL) 923 where Equinor is the operator and DNO Norge, Petoro, and Wellesley are its partners. Targeting the Eggen prospect, the wells will be drilled using the Odfjell Drilling-owned 10,000-ft semisub rig Deepsea Stavanger. The rig has been working for Equinor since early 2022. The start of operations on these two wells is scheduled for April 2023 for a duration of up to 50 days. According to DNO’s recent quarterly results report, the Eggen prospect has pre-drill volumes estimate of 15-100 million barrels of oil equivalent and a 38% chance of success. In addition to six other discoveries made earlier in this area close to the Troll field, Equinor has also recently made another oil and gas discovery in PL 923, named the Røver Sør. The company has started field development projects to coordinate the development of these discoveries by using existing infrastructure and this latest discovery will be part of this work.

The Project Greensand consortium, operated by INEOS, has initiated the first CO2 storage in the Danish North Sea, marking the first time ever for the entire CCS value chain in the EU to be implemented across borders. Following the installation of equipment for CO2 storage late last year and the departure from Port of Esbjerg in January 2023, Noble’s 350-ft jackup rig Noble Resolve now serves as a platform for CO2 storage and INEOS’ depleted Nini West oil field in the Danish North Sea serves as a storage site. By early April 2023, residual emissions from a Belgian industrial plant, collectively representing up to 15,000 tonnes of CO2, will be stored during the ongoing demonstration phase. Transporting the CO2 from Belgium and Denmark has been made possible by a bilateral agreement that these two countries concluded last year. By 2025/2026, 1.5 million tonnes of CO2 could be stored per year as part of Project Greensand. In the final expansion phase, scheduled to begin in 2030, plans call for storing up to 8 million tonnes of CO2 each year. Carbon capture and storage (CCS) projects represent a potential new market for offshore drilling contractors with Noble and Transocean being the early movers.

CGX Energy has encountered hydrocarbon shows in the Wei-1 well, which is being drilled by semisub Noble Discoverer (ex-Maersk Discoverer) off Guyana. The well has been drilled to 15,400 ft measured depth and has a target depth of 20,500 ft. Geophysical logs are being obtained in the open hole section in which the hydrocarbon shows were encountered. Wei-1 was spudded on 20 January 2023 and is expected to take 4-5 months to reach total depth. Noble Discoverer is currently uncommitted following this campaign, but sources indicate the contractor is in discussions for follow-up work.

In 2023, Neptune Energy plans to drill nine new exploration and appraisal wells, including key wells in Norway, Indonesia, and Egypt. Neptune also expects to progress evaluation of appraisal results of the TotalEnergies-operated Isabella discovery in the UK North Sea, as it assesses the commerciality of the reservoir. Neptune’s exploration strategy is focused on lower risk, value-creating opportunities close to existing infrastructure, preferably as operator. In Norway, Neptune is planning to drill four wells, including appraisal of the Ofelia discovery and an exploration well targeting the operated Cerisa prospect in the North Sea, which could add further resources within the Gjøa area. Non-operated wells are planned to target the Eirik prospect, operated by OMV, and Mulder prospect, operated by Equinor. The Mulder prospect is located close to Fram and is due to be drilled in June. In Egypt, Neptune expects to drill the Yakoot prospect in the Gulf of Suez at the start of the third quarter. This will be the first Neptune-operated well in the North West El Amal Concession and follows the acquisition of advanced 3D seismic in 2020. The company has identified a number of prospects and leads within the licence area. In the Eni-operated North Ganal licence offshore Indonesia, the Geng North deepwater exploration well is scheduled to begin drilling in mid-2023, with the well targeting a large multi-Tcf gas prospect. Neptune believes that a successful well result at Geng North could create a significant new growth opportunity.

Murphy has temporarily suspended its drilling of the Oso-1 prospect in Atwater Valley Block 138 in the US Gulf before reaching the objective. The operator intends to return to the well in the second half of this year. Transocean’s 12,000-ft drillship Deepwater Asgard has been working with Murphy since early December 2022. Murphy will next drill the Longclaw prospect from Green Canyon Block 389 into Green Canyon Block 433. Deepwater Asgard has been permitted to drill this well. Following Murphy’s campaign, Deepwater Asgard has a charter with Hess for one year plus three one-year options. Meanwhile, Murphy also has the 12,000-ft drillship Noble Stanley Lafosse under contract. The rig is on location in the Samurai field.

Demand

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) is amending its Scheduled Land Tenure System in relation to the timing of cumulative parcels being available for offer in future Calls for Bids in the Eastern Newfoundland Region. ‘Cumulative parcels’ refers to unawarded parcels from previous Calls for Bids, plus Exploration Licences that have reverted to Crown reserve areas. Starting this year, the board may issue a Call for Bids for cumulative parcels in the Eastern Newfoundland Region annually, subject to ministerial approval, in addition to scheduled Calls for Bids. The C-NLOPB notes that the current two-year cycle for new lands to be offered in the Eastern Newfoundland Region in potential future Calls for Bids will not change, with the next cycle for new lands scheduled to begin next year.

Petrobras has targeted about $6 billion for exploration activities over the next five years. Areas of focus include the Brazilian Equatorial Margin and the Tayrona block off Colombia. Petrobras’s exploration phase in the Equatorial Margin is waiting for final approval from regulatory authority IBAMA. The operator anticipates approval may happen in the first quarter of this year. A total of $2.9 million has been targeted for the Equatorial margin in the coming years, which is nearly half the budget. Turning to Colombia, Petrobras will be focused on gas production. Last year, the company made a gas discovery with the Uchuva-1 well in the Tayrona block in about 830 m of water. Market sources tell Esgian the tender for a floating rig for 400 days plus an option for 400 days remains open, as the first stage of the process was scheduled to close in early March. Operations are targeted to start in April 2024.

Chariot Limited has completed the front-end engineering and design (FEED) on components of its Anchois gas development offshore Morocco. The project is to have three initial subsea producer wells, including the Anchois-2 well drilled in 2022. The project will also include subsea infrastructure capable of delivering produced hydrocarbons from the wells to onshore facilities via a subsea flowline, with future expansion capabilities to tie back to additional wells. Onshore components will include a central processing facility and a pipeline to deliver gas to offtakers via the Maghreb Europe Gas Pipeline. As Chariot moves towards project sanction, EPC commercial proposals have been requested, a field development plan is being finalized, and development drilling planning is ongoing to further evaluate the potential of additional gas resources at the field. Chariot last drilled at Anchois with Stena semisub Stena Don from late 2021 into the first quarter of 2022 and is understood to have been looking for a semisubmersible for its development drilling. The Anchois gas field is located within the Lixus Offshore licence area. Chariot is the operator with a 75% interest, while ONHYM holds a 25% interest.

Perenco and its joint venture partner Tullow Oil have high-graded options adjacent to current infrastructure for near term drilling programmes at the Simba licence offshore Gabon. Tullow stated that the partners are focused on maturing the prospective resource base within the licence. Tullow included drilling costs for one non-operated well at Simba in its capital expenditure for 2023 and indicated that drilling could take place from 2023 to 2025. Perenco is the operator of the Simba licence while Tullow holds a 57.5% interest. The field was discovered in 2003 and currently produces via the Simba-2 well, which was drilled and completed in December 2018 and came online in January 2019, and the Simba-3 well, which came online in September 2021.

Africa Oil stated that the company and its partners are progressing plans to conduct a two-well campaign on Block 3B/4B in the Orange Basin offshore South Africa and are in discussions with various potential partners to farm out up to a 55% gross working interest in the block. Africa Oil said that it could begin drilling its first prospect on the block as soon as 2024. Africa Oil is currently the operator of Block 34/4B with a 20.00% participating interest. Ricocure Pty. Limited has a 53.75% interest and Eco Atlantic Oil & Gas Ltd. subsidiary Azinam South Africa Limited has a 26.25% interest. RISC Advisory recently completed an independent review of prospective resources and probability of geological success of exploration prospects within the block and reported total unrisked gross P50 prospective resources of around 4 billion BOE. The report had probability of success ranged from 11% to 39% over the 24 prospects identified via 3D seismic. Africa Oil stated that these prospects are of similar age and type to the discoveries announced by Shell and TotalEnergies in the Orange Basin offshore Namibia.

Murphy has identified two drill-worthy prospects in Block 15-2/17 in the Cuu Long Basin off Vietnam. The operator has received a two-year exploration extension out to Q4 2024 and has a one-well commitment. Seismic reprocessing and geological/geophysical studies are ongoing. Water depths in the block average about 56 m (183 ft), calling for the use of a jackup.

Mobilisation/Rig Moves

At the end of February 2023, the naming and departure ceremony of the 300-ft jackup rig Perro Negro 12 (PN12), which was managed by Ocean Challenger, an offshore asset management company affiliated with CIMC group, was held at the CIMC Raffles shipyard in China. Saipem chartered the rig late last year for deployment with Saudi Aramco in the Middle East. The site team of Saipem, representatives of ABS Classification Society, CIMC Raffles Project Team, CIMC Offshore assets team and other parties attended the ceremony. Chiara Perotti, Project Manager of Saipem, named the rig. PN12 is of the F&G Super M2 design and is capable of operating in a water depth of 300 feet and able to drill to a depth of 30,000 feet. After the departure in early March, PN12 will complete its upgrading works in the Middle East, where it will start its drilling and workover operations for Saudi Aramco in 4Q 2023.

Norway’s Petroleum Safety Authority Norway (PSA) has given Aker BP consent to use Noble’s CJ70 jackup rig Noble Invincible on the Edvard Grieg field offshore Norway. The 492-ft jackup rig has been on standby since January 2023 and is currently in Stavanger where it’s waiting to continue its work for Aker BP. The unit is under a framework agreement with the operator, which was renewed in January 2023. This frame agreement is expected to keep the rig occupied until late 2027. The consent from the PSA is related to operations in production licence 338 in the North Sea, which contains the Edvard Grieg field. The water depth in the area is 110 metres. The field is developed with a fixed installation with a steel jacket and full process facility, and it utilises a jackup rig for drilling and completion of wells. Production started in 2015.

Other News

The semisub previously known as Capricorn has been renamed Hunter Queen by the current owner, PetroRio. The 10,000-ft Hunter Queen was purchased from Aquadrill last year. It is being reactivated in Trinidad and Tobago under the management of Ocyan. Early this year, Ocyan was awarded a 730-day charter to manage operations off Brazil, which are expected to begin in August.

The Norwegian Ministry of Petroleum and Energy has received applications from five companies in connection with the announcement of an area in the North Sea for potential storage of CO2. The ministry has been contacted by commercial players who are interested in securing the award of specific acreage for CO2 storage. This acreage, located in the North Sea, was announced on 11 January. As of the application deadline on 22 February, applications were received from: Equinor, Neptune Energy Norge, Storegga Norge, Sval Energi, and Wintershall Dea Norge. According to the plan, acreage will be awarded in the first half of this year. As previously reported, Sval Energi applied for the CO2 storage licence along with partners Storegga and Neptune. The Trudvang project has the potential to store up to 225 million tonnes of CO2.

Well-Safe Solutions is supporting the decommissioning of two suspended wells in BP’s Kate field in the North Sea, 220km from Aberdeen. The programme of work, expected to be executed from the 492-ft Noble Innovator jackup rig during Q2 2023, will see Well-Safe Solutions carry out well engineering support services using its Well Decommissioning Delivery Process (WDDP). The rig is currently undergoing SPS in the UK after which it will start its contract with BP. Well-Safe Solutions personnel will work alongside BP staff throughout the campaign. Well-Safe is currently preparing for the mobilisation of the 1,200-ft semisub Well-Safe Defender and the fitting out of the 1,500-ft semisub Well-Safe Guardian with a dive spread system by summer 2023.

Energean has reported the delivery of the first gas from its North El Amriya and North Idku (NEA/NI) development in shallow waters of the Mediterranean offshore Egypt. Gas is being produced from the NEA#6 well, with the remaining three wells to be brought online over 2023. The development, sanctioned in January 2021, involves the subsea tieback of four wells to Energean’s North Abu Qir PIII platform. Energean stated that NEA/NI contains an estimated 39 mmboe of 2P reserves. NEA/NI fall under the management of AbuQir Petroleum, a joint venture between Energean and Egyptian General Petroleum Corporation. The four-well campaign at the development is being carried out with Egyptian Drilling 375-ft jackup El Qaher I.

Image source: Lundin