Esgian Rig Analytics Market Roundup (Week 13)

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

Esgian Rig Analytics story

There has been a lot of talk lately about rigs leaving the North Sea due to a lack of opportunities in the region and accelerated demand elsewhere with the Middle East being the hotspot for jackup rigs and the Golden Triangle – the U.S. Gulf of Mexico, South America, and West Africa – for floaters. More here…

Contracts 

Equinor has awarded contracts for the use of two of Transocean’s Cat D rigs, the 1,640-ft Transocean Encourage, mainly in the Norwegian North Sea, and the 1,640-ft Transocean Enabler, for the Johan Castberg field in the Barents Sea. At the same time, the companies have signed a strategic collaboration agreement. The semisubs have been on eight-year contracts with Equinor that expire on 1 December 2023 and 1 April 2024, respectively. This will be the first contract extension since the rigs were built. The drilling programme for Transocean Encourage in the Norwegian North Sea consists of nine wells to be drilled on the Tyrihans, Verdande, Andvare and Vigdis fields located in the Tampen area. Verdande and Andvare will be tied in to the Norne field. The drilling programme also include exploration wells, and may be further extended, adding six wells. The estimated total contract backlog for the firm work, which is set to start in December 2023, is about $165 million, excluding additional services and potential performance bonuses. This results in a dayrate of approximately $359,000 for about 460 days. On the Johan Castberg field, Transocean Enabler will have a fixed drilling programme of 19 wells plus options for up to eight wells. The total contract backlog for the firm portion of the charter is approximately $217 million, excluding additional services and potential performance bonuses, making the dayrate about $381,000 for an estimated 570 days. The new contract will come into effect between 1 April and 1 July 2024. More here…

This week, Transocean secured new work for three of its four Cat D rigs with one of the contracts being for operations outside of the North Sea. Transocean has thereby fulfilled its own prophecy about more rigs leaving the North Sea region. Namely, one of these new contracts means that a rig which has been operating in Norway since its delivery in 2016 will move to Australia, where it could be held up throughout 2025 if a series of options under the contract are exercised. More here…

Odfjell Drilling has signed two Letters of Intent (LOIs) with a single client for the 10,000-ft Deepsea Atlantic semisubmersible rig to conduct operations in the North Sea region. The LOIs have a combined firm duration of 23 months and a value of approximately $290 million excluding integrated services, upgrades/modifications or mobilisation fees. This gives a dayrate of about $420,000. In addition to the base value, the LOIs include provisions for performance bonuses and fuel incentives. Following the firm period, there are four priced one-well options. The arrangement also provides for three further optional periods of approximately one-year each with the rates for each period to be mutually agreed prior to exercising. The LOIs are contingent on license approval with one of the LOIs also contingent on governmental approval and formalisation of the contract. The work will begin consecutively following the completion of the Special Periodic Survey (SPS), currently planned during the first half of 2024. According to Esgian Rig Analytics, the rig’s SPS due date is in February 2024. The rig has been working for Equinor in Norway for years and the current contract on the Johan Sverdrup field is set to end in August 2023 after which it will continue working for Equinor under a five-well option which was exercised in November 2022. The 190-day option ends in 1Q 2024.

Drilling Activity and Discoveries

Equinor has received consents from Norway’s Petroleum Safety Authority (PSA) to use two rigs for operations offshore Norway. The first consent applies to using the 1,640-ft Transocean Encourage semisub for production drilling on the Åsgard field, which is located in production licence 094 in the Norwegian Sea. The consent includes drilling and completion of production well 6506/12-P-3 BH (Blåbjørn) on the field. The second consent relates to exploration drilling in block 31/2 in the North Sea for which Equinor will be using Odfjell Drillling’s 10,000-ft Deepsea Stavanger semisub rig. The rig will drill well 31/2-24 (top hole) and 31/2-U-13 (pilot hole) on the Litago prospect, which is located in production license 923. The water depth at the site is 333 metres. Using the same rig, Equinor will also drill 31/2-23 S well on the Eggen prospect, for which it has already secured a drilling permit. The water depth at the site is 343 metres. The Eggen prospect has pre-drill volumes estimate of 15-100 million barrels of oil equivalent and a 38% chance of success.

Transocean’s 10,000-ft semisubmersible Transocean Barents has started drilling the Benriach exploration well, located West of Shetland, for TotalEnergies. The Benriach exploration well is located on block 206/05c West of Shetland. TotalEnergies E&P UK is the operator of the licence and Kistos is a partner. TotalEnergies estimates the well is targeting P50 prospective resources of 638 Bcf. The well is expected to complete in Q3 2023. Last year, the Transocean Barents worked for Shell on the Ormen Lange field offshore Norway. Following the completion of Shell operations in early 4Q 2022, the rig was warm stacked in Ølen, Norway where it was prepared for the UK job. The contract with TotalEnergies, announced in November 2022, started earlier this month and it’s expected to end in July 2023 after which the rig is available for new work.

After arriving on location at the Q10-A gas field, located offshore the Netherlands, in November 2022, the 400-ft Valaris 123 rig has recently departed after completing its work programme for Kistos. The campaign for Kistos includes sidetrack of the A01 well in the Slochteren formation, stimulation of the A04 well in the Clastics, and installation of velocity strings on A05 and A06 wells. Further clastics wells are being considered over the next 18 months. Kistos said that the results of the campaign were mixed. This was due to mechanical issues arising from utilising the existing well stock rather than reservoir performance issues. The Kistos technical team, with the assistance of external consultants, is undertaking a detailed evaluation of the results and future production enhancement options. Future work programmes are being considered and could include the drilling of further Zechstein clastics wells in 2024 in combination with development drilling at the Orion oil field. Following the successful drilling and flow testing of an appraisal well in 2021, the Orion development has moved from the concept assess phase to the concept select phase. Engineering design work has now been completed to enable the installation of two more risers on the platform, which would allow it to host additional wells. The Orion field continues to progress through the concept select phase, which Kistos is undertaking with the assistance of Rockflow Resources. In direct continuation of the Kistos contract, the Valaris 123 earlier this month moved on to its 195-day contract with ONE-Dyas.

The Eni-operated Orion X1 well on the North East Hap’y block offshore Egypt is now expected to spud in late 2023, following a delay due to rig availability. Previously, the well was planned to spud in the first half of 2023. A formal request to enter the second exploration period on the block was entered in June 2020 after the Nigma-1 exploration well drilled with Vantage Drilling’s 12,000-ft drillship Tungsten Explorer in the first phase in late 2019 did not encounter commercial hydrocarbons. Energean currently holds a 30% interest in the licence which it expects to farm down to 18% ahead of spudding the well. Operatorship and the other 70% is held by Eni via its subsidiary IEOC.

Demand

Navitas Petroleum and partner Rockhopper Exploration are progressing their plans to develop the Sea Lion field in the Falkland Islands. Navitas farmed into the asset in 2022 and took over operatorship. The revised development plan proposes a two-phase programme and the use of a redeployed FPSO. Following a final investment decision (FID), which is now expected during 2024, Phase 1 drilling would begin approximately 12 months later. A total of 18 wells are planned for Phase 1, with 11 of these to be drilled before the first oil, which is anticipated approximately 30 months following FID. The Phase 2 drilling campaign would consist of five wells to be added about 42 months after the first oil.

US Gulf of Mexico Lease Sale 259 was held on 29 March 2023 and resulted in 353 bids on 313 blocks from 32 companies. Interest in shallow-water blocks is still strong. A total of 98 blocks in water depths up to 200 m (656 ft) received bids. However, deepwater blocks continue to dominate operator interest. A total of 122 bids were received for blocks located in 1,600 m (5,249 ft) or more of water. The sum of all bids received was $309,798,397, while the sum of all apparent high bids was $263,801,783. The blocks that drew the most competition were Atwater Valley Block 6 and Mississippi Canyon Block 386, both of which received four bids. Shell was the apparent high bidder of Atwater Valley Block 6 with a bid of $3.0 million, and Murphy was the apparent high bidder of Mississippi Canyon Block 386 with a bid of $2.96 million. Meanwhile, the single highest bid was submitted by Chevron for Keathley Canyon Block 96 with a bid of $15.9 million, beating out bp, which offered $4.0 million. More here…

Eni is planning to drill two exploration wells in the Ibleo Area offshore Sicily in 2024, targeting the Gemini and Centauro prospects. Eni holds a 60% interest in the area, while Energean has a 40% interest. Energean stated that the two prospects are close to the Cassiopea development, where infrastructure is available for future discoveries in the area to be tied into. Eni is also planning new wells and recompletions at Cassiopea in 2024.

Jersey Oil & Gas is in advanced exclusive negotiations with “a significant UK North Sea operator” to farm out its Greater Buchan Area (GBA) located in the Central North Sea. Heads of terms have been agreed for the farm-out of a material interest in the GBA licences to this company and both parties are working towards finalising a fully termed agreement in the near future. An exclusivity period until 30th April 2023 has been agreed upon. Jersey did not name the operator but said that it is a well-funded industry heavyweight, adding that there are no guarantees of a successful conclusion of the process. Jersey is looking to develop the Greater Buchan Area, including Verbier and Buchan, with an area-wide development plan. The company expects to take the Final Investment Decision (FID) and submit the Field Development Plan for approval and in 2023. Last November, Jersey got an extension for the second term of its P2170 Licence in the UK North Sea, the site of the Verbier oil discovery, making P2170 aligned with the P2498 Buchan licence with the current phase expiring at the end of August 2023.

The Norwegian Ministry of Petroleum and Energy has offered four companies exploration licences for CO2 storage in two areas in the Norwegian North Sea. The companies are Aker BP, OMV Norway, Wintershall Dea Norway, and Stella Maris CCS. The authorities have reviewed applications from six companies following the announcement of suitable acreage in November 2022. The two exploration licences that have been offered are located in the southern part of the North Sea. They are offered with a binding work program with installed mileposts that ensure fast and efficient progress, or the return of the areas if the licences do not carry out the storage project. More here…

Parkmead has started well and site survey planning work for its Skerryvore exploration target located in the UK Central North Sea, with a rig tendering process due to start in Q2 2023. Parkmead increased its equity in Skerryvore from 30% to 50%, and progressed the project to Phase C as Licence Exploration Operator with industry partners. Skerryvore will be Parkmead’s first operated exploration well. Its partners in the licence are Serica Energy (UK) Limited (20%) and CalEnergy (Gas) Limited (30%). The well management services contract was awarded to Exceed Energy in January 2023. Parkmead’s detailed technical work programme has confirmed the considerable multi-interval potential of Skerryvore. The planned well will target the main stacked exploration prospects, at Mey and Chalk intervals, which studies indicate could contain significant volumes of light oil. The licence also contains additional prospectivity at the Ekofisk and Jurassic levels. A successful discovery would result in a tieback to nearby infrastructure. According to Parkmead, the area around Skerryvore is currently seeing important activity on several fronts, with Harbour Energy now in the execute phase of the adjacent Talbot development project, and NEO Energy proceeding with the redevelopment of Affleck field. Activity is also ongoing on the Isabella discovery by TotalEnergies. Further development activity is also taking place in the Norwegian sector in close proximity to Skerryvore at Tommeliten A, a licence operated by ConocoPhillips.

Mobilisation/Rig Moves

Island Drilling’s 4,000-ft semisubmersible Island Innovator is in transit from West Africa to Norway, where the rig will undergo preparations for its next contract with Dana Petroleum in the UK North Sea. Island Innovator had been working offshore Mauritania during the first quarter of the year, conducting plugging and abandonment work at Tullow Oil’s Banda and Tiof fields with Petrofac managing these operations. The rig recently stopped at a yard in the Canary Islands before setting off for Norway. Following a contract award in December 2022 and the exercise of an option in January 2023, Island Innovator has a four-well work program with Dana Petroleum lined up, expected to run for around 110 days.

Valaris’ 400-ft jackup Valaris 115 is completing a yard stay in Singapore for its special periodic survey (SPS) and contract preparations. The unit is scheduled to begin a four-year contract with Brunei Shell Petroleum in April 2023. The rig secured its upcoming contract offshore Brunei in July 2022. Valaris 115 last worked offshore Thailand for Mubadala Energy under a series of contracts that concluded in November 2022.

Ocean Oilfield’s 280-ft jackup Aras Driller completed its drilling campaign in Turkiye. Aras Driller started its nine wells’ operations in Turkiye in Q4 2021, and by the end of February 2023, it successfully completed its Kuzey Marmara Underground Gas Storage Drilling Campaign. Aras Driller is being demobilized on a heavy-lift vessel on course to Abu Dhabi Port, United Arab Emirates, where it will be available for new work.

Other News 

NOV Rig Technologies has reached an agreement with Petrobras to supply an automation system that will be implemented in partnership with Etesco on drillship Etesco Takatsugu J. The drilling and pipe handling automation platforms NOVOS and Multi Machine Control, and robotics technology ATOM RTX will be used, along with NOV’s Automation Lifecycle Management services. Moreover, third party Brazilian companies will use the NOVOS Software Development Kit to create apps for deployment on this rig. Etesco Takasugu J was delivered in 2011 and is contracted to Petrobras into early 2025.

A consortium of bp and ADNOC has made a joint non-binding offer to take Israeli natural gas company NewMed Energy private, via the cash purchase of all of NewMed’s publicly held participation units and a partial acquisition of the unit’s held by the Delek Group. This would result in bp and ADNOC holding 50% of NewMed Energy. NewMed Energy holds a 45.34% working interest in the Leviathan gas field offshore Israel, partnered with Chevron and Ratio. NewMed also has a 30% interest in the Aphrodite gas field offshore Cyprus, with Chevron and Shell holding the remaining interest. The company also has interests in onshore exploration licenses in Israel. bp and ADNOC intend to form a new joint venture focused on gas development in international areas of mutual interest including the East Mediterranean. bp stated that the proposed transaction would be the first step in establishing this joint venture. The consortium intends to purchase 45% of NewMed via acquiring capital held by the public and 5% of the issued unit capital from Delek Group. After this transaction, the consortium and Delek Group would each hold 50% of equity and interests in the NewMed partnership. The non-binding is to pay ILS 12.05 for each purchased unit.

QatarEnergy has entered into a farm-in agreement with ExxonMobil Canada for two exploration licences offshore the province of Newfoundland and Labrador, Canada. Pursuant to the agreement, QatarEnergy holds a 28% working interest in licence EL 1167. ExxonMobil is the operator of this licence with 50%, while Cenovus Energy holds 22%. QatarEnergy now also holds a 40% working interest in licence EL 1162, where ExxonMobil is the operator with a 60% interest. ExxonMobil is to drill the Gale exploration well on EL 1167 with the Odfjell Drilling-managed 10,000-ft semisub Hercules later this year.

Rex International Holding’s 91.65 per cent subsidiary Lime Petroleum has been pre-qualified as an operator on the Norwegian Continental Shelf (NCS). Following the completion of a pre-qualification process which started in April 2022, Lime was pre-qualified by the Norwegian Ministry of Petroleum and Energy on 28 March 2023. Lars Hübert, Chief Executive Officer of Lime, said the company will continue to build a stronger presence on the NCS, actively seeking new opportunities to enhance its asset portfolio. Lime was pre-qualified as a partner company in February 2013 and has since built a portfolio of licences focusing on mature areas close to existing oil and gas infrastructure. Lime has interests in 21 licences offshore Norway. Late last year, the company acquired a 10% interest in the Repsol-operated Yme field in Norway from Kufpec.

UK operator Ithaca Energy is very focused on accelerating its developments, including two major projects in the UK, its operated Cambo development and the Equinor-operated Rosebank. However, due to the challenges posed by the fiscal instability in the UK, Ithaca is hoping for changes that would allow it to continue to move ahead with these projects. Ithaca has today presented its 2022 full-year results, revealing that its previous FY 2023 guidance for net producing asset capex of $450 – 550 million was reduced to $400 – 460 million. The guidance range reflects the deferral of activity to 2024 and the reduction in scheduled activity following the introduction of the Energy Profit Levy (EPL) and optimisation of the capital programme. The EPL was first introduced in May 2022 and changed in November of the same year, extending it from December 2025 to March 2028. Due to the EPL, the UK oil and gas operators have been reducing their spending plans for the UK assets and have been asking for the introduction of the price floor, which would allow for the levy to be switched off should the oil prices return to ‘normal levels’. Gilad Myerson, Ithaca Energy’s executive chairman, said there are two unintended hurdles or consequences of the EPL. More here…

Image credit: Transocean