Esgian Rig Analytics Market Roundup (Week 25)

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

Contracts

Borr Drilling’s 350-ft jackup Mist has been awarded a contract extension with Valeura Energy for work offshore Thailand. The contract extension will extend the firm term for an additional nine months and the jackup will remain working until August 2024. The contract value of the extension is USD 41 million, excluding unpriced options.

Constellation’s 9,000-ft semisub Alpha Star has been awarded the tender from 3R Petroleum. The tender was for a floating rig to begin a 14-month campaign in October 2023 targeting redevelopment of the Papa-Terra and Malombe fields. However, market sources indicate the job is expected to take less than 14 months to complete. Alpha Star was also the low bidder in Lot 3 of Petrobras’s pool tender for up to four rigs. Lot 3 has a term of 1,095 days and a start window between January and November 2024. While the contract has not yet been finalised, this job should complement the 3R work and keep Alpha Star working into late 2027, pending an option with Petrobras for the same term.

Dolphin Drilling is expanding its fleet following the announcement of the acquisition of two semisubmersible rigs from Transocean, the 1,969-ft Paul B. Loyd Jr. and the 5,500-ft Transocean Leader, for a total of $61.5 million (plus an additional $3 million). Dolphin Drilling currently has three semisub units, the 6,000-ft Blackford Dolphin is currently working in Nigeria, and 1,500-ft Bideford Dolphin and 1,500-ft Borgland Dolphin are smart stacked in Norway. Dolphin Drilling is contemplating a private placement of approx. $60 million to finance the transaction with Transocean. Currently, the Paul B. Loyd Jr. is under contract with Harbour Energy in the UK with the firm period slated to last until September 2024, and the Transocean Leader is cold stacked in the UK. Bjørnar Iversen, CEO of Dolphin Drilling, said the addition of these rigs allows the company to further consolidate the midwater rig segment in a tightening market, characterised by historically low supply and surging dayrates across offshore basins. The agreement is subject to certain customary closing conditions, which must be satisfied before the transaction can be completed. The agreement with Transocean is also conditioned upon approval to novate Paul B. Loyd Jr.’s existing UK HSE safety case to Dolphin Drilling and customary closing conditions and is expected to be closed during the second half of 2023. Following the announcement about buying the two rigs from Transocean, Dolphin Drilling also announced a Letter of Intent (LoI) for a three-year extension to the firm contract period for the Paul B. Loyd Jr. Dolphin Drilling has received a commitment subject to certain conditions from Harbour Energy to extend the firm contract period for Paul B. Loyd Jr for an additional three years until September 2027. The total existing firm contract plus the new extended commitment represents an estimated contracted revenue backlog of $279 million. Harbour Energy also maintains a further five one-year options for future projects post the extension period.

Drilling Activity and Discoveries

TotalEnergies has completed the exploration drilling on the Benriach well, located West of Shetland, using the 10,000-ft Transocean Barents semisub. However, the results point to a sub-commercial resource. TotalEnergies is the operator of the licence P.2411 where the well is located and Kistos Energy and Rockrose Energy are participating as partners with a 25% interest each. The Transocean Barents rig was mobilised from Olen, Norway and spud the well on 21 March 2023. The well encountered gas-bearing sands in the target Royal Sovereign formation. However, the discovered resource is expected to be sub-commercial. The well has been drilled ahead of schedule and the final cost is expected to be within previous guidance. A total measured depth of ~4,400 metres was reached, and an extensive data acquisition programme has been conducted. This confirmed the presence of gas-bearing sands in the target Royal Sovereign formation. TotalEnergies will now carry out the analysis of the acquired data.

Norway’s Petroleum Safety Authority (PSA) has given Equinor consent for exploration drilling in block 30/9 offshore Norway, using the 460-ft jackup Askepott. Drilling operations will be conducted on the Oseberg field in production licence 104. The well 30/9-M-12 BH is targeting the Vesuv prospect. The water depth at the site is 104 meters. The Askepott jackup is under a long-term contract with Equinor in Norway until end of 2025 with multi-year options available.

Norway’s Petroleum Safety Authority has given Aker BP consent to use the 492-ft Noble Integrator jackup for well intervention on Valhall Flanke Vest off Norway. Operations will be conducted in production licence 006 B, which is located in the North Sea and operated by Aker BP with Pandion Energy participating as a partner. The Noble Integrator has been working for Aker BP since 2021. Starting in April 2024, the rig has a frame agreement with Aker BP expected to end in November 2027.

SeaMex’s 400-ft jackup West Titania continues to work for Pemex under a well-in-progress clause. An early termination notice was issued by Pemex in July 2022 with an effective date of 16 March 2023. The current estimated end date is now early Q3 2023. SeaMex has previously indicated it was in discussions for a potential extension, and this remains the case. SeaMex also confirms that it is in active discussions with other operators regarding near-term opportunities.

Oil and gas company bp has begun abandonment activities at the Ephesus well on EL 1168 offshore Newfoundland, Canada. The well was spud on 8 May 2023 with Stena Drilling 10,000-ft drillship Stena IceMAX. The Ephesus exploration well lies in around 1,300 m (4,265 ft) of water in the Orphan Basin. Regulatory authorization from the Canada Newfoundland and Labrador Offshore Petroleum Board had the well being drilled over the course of around 90 days. The company’s plans for the well included permanent plugging and abandonment. Stena IceMAX will mobilize to the US GOM for a two-year term with bp after the completion of work offshore Canada. The next floating rig scheduled to drill offshore Canada is Odfjell Drilling semisub Hercules, which is currently en route to Canada for work with ExxonMobil.

Following a letter of intent for a farm-in from Philippines National Oil Company subsidiary PNOC Exploration Corporation, Sacgasco Limited subsidiary Nido Petroleum has added a well at the Cadlao field offshore The Philippines to its upcoming drilling program. PNOC has agreed to farm in to Service Contract 6B (SC 6B), with the agreement to be finalized by the end of July 2023. PNOC will acquire a 20 percent interest, with Nido Petroleum remaining the operator with a 52.727% interest. SC 6B contains the Cadlao oil field. As part of the agreement, Sacgasco company Nido will drill the Cadlao 4 well and perform an extended well test as the first phase of a redevelopment of the Cadlao field. This will be followed by drilling the Nandino prospect on Service Contract 54, with an extended well test if this is successful. These wells are to be drilled by the Saba Drilling Services-managed drillship Deep Venture, also known as the Valentin Sashin. The rig is currently in Vietnam where it is being readied to drill for Sacgasco/Nido. Drilling is expected to start in the latter half of 2023. Sacgasco stated that in the event of a successful extended well test at Cadlao and depending upon the field data obtained, a full field development may include multiple wells with a dedicated oil production facility. The nearby East Cadlao Prospect may also be drilled, tested and produced from any Cadlao development.

Transocean’s 12,000-ft drillship Deepwater Titan has begun its inaugural contract for Chevron in the US GOM. Deepwater Titan is now under a five-year contract with Chevron, a charter originally fixed in December 2018. Chevron will use the rig for drilling at its Anchor project, which lies in water depths of around 5,000 ft (1,524 m) in the Green Canyon area. The unit was delivered from Sembcorp Marine in December 2022 and is the first offshore rig delivered with two 20,000-psi blowout preventers (BOPs), well-control, riser, and piping systems for high-pressure and high-temperature drilling and completion operations. The rig is equipped with a three-million-pound hook-load hoisting capacity. Sister unit Deepwater Atlas began work for Beacon Offshore Energy in the US GOM in October 2022.

Norway’s Petroleum Safety Authority (PSA) has given Aker BP consent to use Saipem’s 10,000-ft semisubmersible Scarabeo 8 for production drilling on the Hanz field off Norway. The Hanz field is located in production licence 028B in the North Sea. The licence is operated by Aker BP with Equinor and Sval Energi participating as partners. The Hanz development was sanctioned in December 2021. It is an oil and gas discovery that will be tied into the Ivar Aasen platform about 12 kilometres further south. Total investments are estimated at NOK 3.3 billion. The expected start-up is in the first half of 2024. Total reserves are around 20 million barrels of oil equivalent (mmboe). Scarabeo 8 is under a long-term contract with Aker BP, which started in early 2023 and is firm until early 2026 with options that could keep it busy into early 2028.

Demand

Due to the challenging situation in the UK North Sea market, Parkmead is refocusing its offshore UK efforts on acquisitions and on attractive projects such as Skerryvore. As a result, the company is looking to drill this high-impact well as soon as possible. Skerryvore is located in the UK Central North Sea Licence P.2400. Parkmead says that Skerryvore is in an exciting area which, despite the new fiscal and regulatory challenges, could be developed in a timely and cost-efficient manner. Parkmead is the operator with a 50% stake and its partners are Serica and CalEnergy. Parkmead says it is making excellent progress with well planning and vessels and rig tendering with a current forecasted spud date during Q4 2024. The well is targeting an estimated 157 million barrels of oil equivalent from multiple horizons on the flank of a salt diapir. Skerryvore is surrounded by modern infrastructure which provides the opportunity for a number of low-cost tie-back options which, in the success case, would allow a highly economic development of Skerryvore to proceed at pace.

Woodside has made a final investment decision (FID) to develop the large Trion resource in Mexico. First oil is targeted for 2028. Woodside took over as operator of Trion following its acquisition of BHP in 2022. Woodside has a 60% participating interest and PEMEX holds the remaining 40%. During Q4 2022, Woodside issued competitive tenders for the drilling rig, subsea equipment, and installation scopes for subsea, the floating production unit, and the floating storage and offloading vessel. Following the FID, the development is subject to joint venture approval and regulatory approval of the field development plan (FDP), expected in Q4 2023. The forecast total capital expenditure is $7.2 billion ($4.8 billion Woodside share including capital carry of PEMEX of approximately $460 million). The project will target the development of an estimated 479 MMboe of Best Estimate (2C) Contingent Resource of oil and gas. The subsurface has been extensively appraised, with six well penetrations undertaken across the field. The resource will be developed through a floating production unit (FPU) with an oil production capacity of 100,000 barrels per day. The FPU will be connected to a floating storage and offloading (FSO) vessel with a capacity of 950,000 barrels of oil. 18 wells (9 producers, 7 water injectors, and 2 gas injectors) will be drilled in the initial phase, with a total of 24 wells drilled over the life of the Trion project.

OMV Petrom, along with its partner Romgaz, has made the Final Investment Decision (FID) for the development of the Neptun Deep natural gas deepwater project located in the Black Sea off Romania. The Neptun Deep block in the Black Sea has an area of 7,500 square km and is located about 160 km far from the shore, in water depths between 100 and 1,000 meters. OMV Petrom is the operator of the project, with a 50% participating interest. The two companies approved the development plan for the Domino and Pelican South commercial natural gas fields in the Neptun Deep offshore block, which is being submitted to the National Agency for Mineral Resources (NAMR) for endorsement. Estimated recoverable volumes are currently at around 100 bcm (~700 mn boe). The infrastructure required for the development of the Domino and Pelican South commercial offshore natural gas fields includes 10 wells, 3 subsea production systems and associated flow lines, 1 offshore platform, the main natural gas pipeline to Tuzla and a natural gas measurement station. The platform generates its own energy. The entire infrastructure will be operated remotely, through a digital twin. Total development capex is estimated at up to EUR 4 billion, to be spent mostly during 2024-2026. First production is expected in 2027. Plateau production is estimated at around 140 kboe/day for almost 10 years.

Hartshead Resources has submitted its Phase I Field Development Plan (FDP) for the Anning and Somerville gas field developments located in the Southern North Sea to the UK’s North Sea Transition Authority (NSTA). The development plan consists of six production wells from two wireline capable Normally Unmanned Installation (NUI) platforms at Anning and Somerville. These platforms will then connect subsea to infrastructure for onward transportation and processing for entry into the gas network. The company will now discuss the draft FDP with the NSTA to receive technical feedback and amend for any comments and then begin an audit of the revised project schedules with ERCE before publishing independently audited Phase 1 economics. Post receiving technical feedback from the NSTA, the company will move to finalise project debt funding and take the Final Investment Decision (FID) for the Phase I development with its joint venture partner RockRose Energy. The FID is expected in Q3 2023. The development of the Anning and Somerville gas fields will then begin as the company advances towards the first gas expected in 2025.

Mobilisation/Rig Moves

ADES Advanced Drilling Services-owned 375-ft jackup Admarine 506 (ex-West Leda) completed its reactivation and Schedule “G” upgrades at the Lamprell Hamriyah shipyard in Sharjah. Admarine 506 secured its upcoming job with Saudi Aramco in Q2 2022 through Seadrill. In Q4 2022, Seadrill completed the sale of its jackups in the Middle East to ADES. The rig is currently in transit from Hamriyah Shipyard in Sharjah to Saudi Arabia, where it will commence its three years of operations with Aramco by early Q3 2023. Admarine 505 (ex-West Cressida) remains at Lamprell Hamriyah shipyard in Sharjah, completing its reactivation and Schedule “G” upgrades.

Odfjell Drilling-managed harsh environment semisubmersible Hercules has set off from Norway and is now en route to Canada ahead of work with ExxonMobil. The 10,000-ft rig is expected to arrive off Canada in early July 2023. Hercules had been at the Semco Maritime yard in Hanøytangen, Norway since December 2022, undergoing its special periodic survey and other upgrades. Hercules is owned by SFL Corporation and has been managed by Odfjell Drilling since December 2022. The rig was previously bareboat chartered to Seadrill. SFL recently filed a claim against Seadrill, seeking damages over the condition the rig was redelivered in. The unit secured its upcoming contract with ExxonMobil offshore Canada in the fourth quarter of 2022. Valued at around $50 million, this contract had a duration of around 135 days and an extension option of 60 days. Hercules will need to be inspected by local authorities and be given a drilling permit before operations with ExxonMobil commence. Following work offshore Canada, Hercules will relocate to Namibia for a two-well contract with Galp Energia secured in May 2023.

Transocean’s harsh environment semisub Transocean Barents has arrived in Norway following the completion of operations in the UK waters for TotalEnergies. The rig will now prepare for its upcoming contract in Lebanese waters. The semisub was awarded a contract by TotalEnergies to drill the exploration well named Benriach, located West of Shetland, back in November 2022. The well was spud on 21 March 2023 and completed earlier in June. The well encountered gas-bearing sands in the target Royal Sovereign formation. However, the discovered resource is expected to be sub-commercial. Following the completion of operations, the rig reached Ølen on 19 June where it will prepare for its next contract, also with TotalEnergies, in Lebanon. The firm contract is expected to take around 65 days plus three one-well options, which could keep the rig there until the end of the year.

ABL has assisted India’s Oil and Natural Gas Corporation (ONGC) with moving 36 offshore drilling rigs to new locations in advance of the monsoon season. ABL has assisted as tow master and marine warranty service (MWS) provider on the rig moves, which equals the record of 36 pre-monsoon rig moves from 2021. The moves were conducted using ABL’s specialist team of mariners supported by structural and geotechnical engineers, in close cooperation with ONGC’s in-house rig move cell. Each of the 36 rigs were placed at their respective monsoon locations before the onset of the seasonal adverse weather conditions (safe location). The combined total distance travelled for all rigs was 3,680 nautical miles. ABL acted for ONGC’s underwriters, and their appointed consultants, for the duration of the rig moving campaign. Under the agreement, ABL provided marine warranty services to ONGC’s fleet of jackups and mobile offshore production units in Indian waters. Captain Stephen Craig – Middle East and India Operations Manager and ABL’s Jackup Rig Steering Group leader said: “Moving 36 rigs in such a short time frame to new locations before the onset of the southwest monsoon is quite an achievement. Rig moves in the Indian offshore areas, even during normal weather conditions, pose huge challenges to both the tow master and MWS services that must manage environmental, tidal, bathymetric and soil challenges. However, the joint ABL and ONGC team made this a safe and well executed campaign.” In total, ABL has assisted with more than 100 rig moves offshore India during the previous season from September 2022 to June 2023.

Other News

Barryroe Offshore Energy has announced its intention to initiate an orderly wind-down of the business through a Creditors Voluntary Liquidation (CVL) amid going concern issues. On 8 June 2023, Barryroe had €176,000 (£152,000) of working capital remaining which, taking into account the company’s existing commitments, amounted to approximately 3 weeks of working capital. The company warned that, if funding was not secured in the short term, one of the options being considered by the board was an orderly wind-down of the company in the process of CVL. Barryroe is required to publish, by 30 June 2023, its annual accounts for the year 2022. The refusal by the Irish Minister for the Environment, Climate and Communications to grant the Lease Undertaking and the consequential delay to the proposed working capital raise created going concern issues for the company that will delay the publication of its annual accounts. If the company is unable to publish its account by 30 June 2023, then trading in the company’s shares will be suspended on 3 July 2023. More here…

Oil and gas operator Parkmead has re-evaluated its strategic direction due to unprecedented hurdles in the UK North Sea market exacerbated by high tax rates. As a result, Parkmead has decided to abandon its Perth area oil development located off the UK. Due to unprecedented very high hurdles created by the current challenges, the Parkmead has decided that its primary focus will be on building a high-quality portfolio of gas producing assets and electricity generation from renewable energies, that meet the ultimate aim of net-zero. Alongside this, Parkmead will continue to work on its existing portfolio of oil and gas assets where they have the potential to be developed rapidly within the UK transition phase. In recent years, Parkmead has been working to progress its Perth oil development. However, recently updated development capital costs for Perth, including the additional costs of achieving net-zero requirements, have climbed to almost one billion US dollars. In addition, significant concerns were highlighted over the longevity of potential nearby host infrastructure, the inability to pursue a stand-alone FPSO development option under the net-zero requirements and, in particular, industry concerns over the recent numerous fiscal changes. Parkmead says that such an increase materially damages project economics. It has become clear that without full and committed engagement from industrial partners, it would not be practical to progress the Perth development to FID, particularly recognising the massive level of capital investment required. Therefore, the company advised that the potential Perth oil development will not be pursued and that the P588 and P2154 licences containing the Perth discovery are not being extended.

Israeli Prime Minister Benjamin Netanyahu has stated that under the framework of existing efforts between Israel, Egypt and the Palestinian Authority, development of the Gaza Marine gas field off the coast of Gaza will be implemented. Netanyahu’s office released a statement that implementing the project is subject to coordination between the security services and direct dialogue with Egypt, in coordination with the Palestinian Authority, and the completion of inter-ministerial staff work led by the National Security Council. The Gaza Marine license covers the entire marine area offshore of Gaza. BG Group discovered natural gas at the Gaza Marine-1 exploration well in September 2000; the discovery was appraised by the Gaza Marine-2 well with reserves estimated at over 1 trillion cubic feet. Following Shell’s acquisition of BG Group, CC Oil & Gas and the Palestinian Investment Fund acquired Shell’s interest and now each hold a 50% interest. According to media reports from late 2022, Egyptian Natural Gas Holding Company (EGAS) and the Palestinian Authority have been in talks regarding the development of the Gaza Marine field.

Concedo, an exploration company focused on the Norwegian Continental Shelf (NCS), is being acquired by the Lundin family-backed private entity seeking to enter the NCS. Shareholders in Concedo representing 99% of the shares have accepted an offer by Attica Exploration to buy their shares with settlement in cash and/or shares in Attica Exploration. Attica Exploration is a newly formed private entity backed by Lundin family members, created in order to make an entry on the NCS. When the transaction is completed, Concedo will become a 100% owned subsidiary of Attica Exploration, where the Lundin family through Attica Exploration S.à r.l. (Luxembourg) will own the majority of the shares. Concedo shareholders representing 37% of the Concedo share capital will participate in the new company by accepting a settlement in the form of shares. The transaction is subject to necessary government approval. Since 2007, Concedo has been awarded interests in 57 licenses and participated in 22 wells, resulting in 11 discoveries. Discoveries have been sold to Equinor, Wintershall Dea, and Neptune Energy. Concedo is currently participating in 11 production licenses in the Barents Sea and the North Sea.

Seadrill has entered into definitive sale and purchase agreements for the sale of its three tender-assist units, the West Vencedor, T-15, and T-16, to certain affiliates of Energy Drilling Pte. Ltd. (Edrill). The sale is for aggregate cash proceeds of approximately $85 million. The operations and marketing of the tender-assist units are currently managed by Edrill under existing agreements. The transaction is subject to customary closing conditions and is expected to close in early Q3 2023. Upon closing of the transaction, the tender-assist units will be owned by Edrill. Seadrill previously said that the three tender-assist rigs were not its core units and that fleet composition was an active discussion for the company.

Chariot Limited stated that it is in the final stages of a farmout partnering process for the Anchois development and the Lixus and Rissana licences offshore Morocco. The company called the partnership process “competitive” and said that the development project has been validated through “a number of third party farmout offers.” Chariot made a natural gas discovery at the Anchois-2 appraisal/exploration well on the Lixus licence in January 2022. The company has since completed the FEED phase of development and agreed key principles for long-term gas sales as it works towards a final investment decision for the project. Chariot’s initial development plan for Anchois considers three producer wells, including a re-entry of the Anchois-2 well. These wells will be completed subsea with associated infrastructure controlling and collecting hydrocarbons for delivery to onshore facilities via a subsea flowline. Subject to financing, the next technical steps in the development of the Anchois field will be the contracting of the Engineering, Procurement and Construction for the various scopes of the project. The Lixus licence also includes the undrilled Maquereau, Anchois West, and Anguille prospects. Chariot is also planning a 2D seismic acquisition campaign at the Rissana licence.

Jersey Oil & Gas has completed its farm-out transaction with NEO Energy for the Greater Buchan Area (GBA) licences located in the UK Central North Sea. The two entered into the farm-out agreement in April 2023. Now that the transaction has been completed, the companies each hold a 50% interest in the licences that comprise the GBA, being P2498 (Buchan) and P2170 (Verbier), with NEO set to become the operator as part of the transaction. Jersey plans to secure an additional partner ahead of FDP approval and retain a fully carried 20-25% interest in the development programme. Earlier in June, the NSTA approved an extension to the Second Term of the Buchan licence to 28 February 2025. The extension was requested in order to provide the licensees with the time required to prepare the field development plan (FDP). The partners are well advanced with the selection of the Buchan re-development solution and an update on this is expected shortly. Jersey previously said that, upon selecting the preferred development solution, the project would move into FEED activities along with the preparation of the required FDP, which is planned for submission to the North Sea Transition Authority (NSTA) in the first half of 2024. Project sanction is expected in 2024 and the first production is targeted for 2026.

E&P company Longboat Energy has received key approval for the formation of a joint venture (JV) with JAPEX and the creation of Longboat JAPEX Norge. Longboat reached an agreement with JAPEX to form the joint venture in May 2023. The joint venture will be named Longboat JAPEX Norge. The goal is to build a Norwegian-focused independent, pursue a growth-led strategy through the acquisition of development projects, grow 2P reserves, and reach a significant production level within three to five years. The JV will target the drilling of one to three exploration and appraisal wells per year. The Norwegian Ministry of Petroleum and Energy has now given its approval to the formation of the joint venture, which was the key regulatory approval sought. The completion of the transaction is now expected to occur in the first half of July 2023.

Murphy Oil has entered Côte d’Ivoire, signing production and sharing contracts for Blocks CI-102, CI-502, CI-531, CI-709 and CI-103. These blocks cover around 1.5 million acres. Murphy is the operator of Blocks CI-102, CI-502, CI-531 and CI-709 with a 90% working interest, while state oil company PETROCI holds the remaining 10%. Murphy is the operator of Block CI-103 with an 85% working interest, while PETROCI has a 15% interest. This block includes the Paon discovery, made by Anadarko Petroleum in May 2016. The company stated that there is no well commitment for the initial two-year exploration phase for the blocks and that it has identified a “diverse opportunity set across various exploration play types.”

ENI, along with Vår Energi ASA, announced that it has reached an agreement to acquire Neptune Energy.Neptune Energy is an independent exploration and production company with operations in Western Europe, North Africa, Indonesia and Australia. ENI will acquire Neptune’s entire portfolio, except in Germany and Norway. The Norwegian operations will be acquired by Vår Energi under a separate share purchase agreement, while the German operations will be carved out prior to the ENI transaction. The Vår Energi transaction will close prior to the ENI transaction with the proceeds from the Norway sale remaining with the Neptune Global Business purchased by ENI. ENI owns 63% of Vår Energi which is a company listed on the Oslo Stock Exchange. The transaction will add approximately 130,000 boed to the ENI-Vår portfolio. ENI expects to generate G&A and industrial synergies to a value of over USD 0.5bn, Additional cost synergies, exploration and development, including more CCS, financial and midstream value upside potential.

Image credit: Constellation