This was an interesting week in terms of new drilling contract awards, as three semisubs were booked for operations in Norway, two jackups for work in West Africa, and two drillships for work in India and the US Gulf of Mexico.
In case you missed it, you can access our previous Rig Market Roundup here.
Esgian Rig Analytics Story
The North Sea jackup market has been out of the limelight lately, overshadowed by increased contracting activity in the semisubmersible market, resulting in the departure of some of these units from the region. As the North Sea outlook remains soft, what’s on the cards for those remaining jackups without future commitments? Read the full story here.
Contracts
Borr Drilling has received letters of award for 400-ft jackups Prospector 5 and Natt to continue working in West Africa in direct continuation of their current contracts. Under the LOA, Prospector 5 will remain contracted until May 2026 and Natt until December 2025. Both units are currently under contract to Eni offshore the Republic of the Congo. Eni released a market survey earlier this year, seeking two jackups for work in the Congo. According to Borr Drilling, the new contracts have a combined duration of 1,307 days and a total estimated contract value of $211 million.
Transocean has secured a drillship contract worth around $222 million with India’s Oil and Natural Gas Corporation (ONGC). ONGC has awarded a binding notification of award to the Dhirubhai Deepwater KG1 for work offshore India. The 21-month program is expected to begin in the first quarter of 2024 and will contribute an estimated $222 million in backlog, excluding a mobilisation fee of $5 million. As reported in January 2023, ONGC launched a tender to contract two ultra-deepwater drillships for a duration of 21 months starting in Q3 2023. The scope was later revised to include only one ultra-deepwater drillship and ONGC then opened commercial bids. Transocean emerged as the lowest bidder with Dhirubhai Deepwater KG1 with a dayrate of $350,000. The 12,000-ft drillship has been working for Reliance in India since 2018 and its current contract is scheduled to end in late 2023.
Equinor has awarded COSL Offshore Management two contracts and will employ the 2,460-ft COSLPromoter and COSLInnovator semisubs on the Norwegian Continental Shelf. The contract values are calculated at around $369 million for both firm periods. The COSLPromoter is already contracted to Equinor and will begin on the new contract in the first quarter of 2025. The firm contract is for one year, with options for a further four years. This could keep the rig busy with Equinor until 2030. The COSLInnovator is contracted for two years, starting in the second quarter of 2025, and the contract includes options for a further three years, which could keep the rig busy into Q2 2030. The rig is currently working in the UK sector of the North Sea where it will continue operating into early 2025 after which it will move to Norway. The contract value includes running of casing, remote-operated vehicle (ROV), offshore waste management and cement unit maintenance. Mobilisation and demobilisation fees are also included. Equinor said it plans to drill many production and exploration wells in the years to come and these contracts secure the rig capacity which will enable the company to deliver on its ambitions.
LLOG has awarded a six-month contract for the 7th generation 12,000-ft drillship Noble Valiant to perform drilling services in the US Gulf of Mexico. The contract is expected to commence between November 2023 and March 2024, in direct continuation of the rig’s current contract. The clean operating day rate is $470,000, excluding mobilization rates and a potential fee for any use of managed pressure drilling (MPD). Noble Valiant is currently operating for Kosmos Energy in the US Gulf of Mexico. The drillship is further scheduled to complete a one-well contract with an unnamed operator prior to starting the work scope for LLOG.
Vår Energi has secured the COSLProspector semisubmersible for a two-year drilling program in the Barents Sea region, in cooperation with Equinor. The rig contract with COSL Offshore Management builds on a cooperation between Vår Energi and Equinor that will secure access for the companies to the COSLProspector rig for the period 2024-2026, with an option for an additional three years. The 4,921-ft semisub is currently in the South China Sea. Vår says it sees substantial opportunities for further growth and value creation in the north and this contract represents a significant commitment to exploration in the area. Vår Energi will drill exploration wells, appraisal wells, along with certain production wells, over a two-year period starting in the third quarter of 2024. The objective is two-fold, identify additional petroleum resources near Goliat and Johan Castberg for maximum value creation and utilisation of existing infrastructure and targeted exploration for new gas resources that can lead to developing new gas export infrastructure.
Drilling Activity and Discoveries
Equinor has started production from its Statfjord Øst field life extension project in the North Sea offshore Norway, six months ahead of schedule. Further wells are expected to be drilled as part of this project. Equinor and its partners expect to increase production by 26 million barrels of oil equivalent from Statfjord Øst, which began production in 1994. Two new wells have been drilled from existing subsea templates and three additional wells are to be drilled, with completion expected by the end of 2023. Equinor has been using the 2,460-ft semisubmersible COSLPromoter to drill at the field over 2023 and recently received consent to use COSLPromoter for further wells at Statfjord Øst and Statfjord Nord. Statfjord Øst is tied to the Statfjord C platform, and the project includes a modification on Statfjord C and laying of a new pipeline for gas lift to the subsea wells.
Shell has completed drilling of the Cullinan-1X exploration well offshore Namibia, with no discovery made. The well has been plugged and abandoned. Shell noted that there were indications of a working petroleum system in this previously untested area of its PEL 39 licence. Shell stated that it would analyse data gathered from the well before deciding on any follow-up activity but added that they “continue to see important exploration potential in our licence and to progress our multi-well exploration and appraisal campaign.” Culinan-1X follows a string of discoveries made by Shell offshore Namibia; including Graff, La Rona, Jonker and most recently Lesedi. Shell is continuing its drilling program offshore Namibia with the Odfjell Drilling-managed 7,500-ft semisubmersible Deepsea Bollsta, which is contracted to Shell into June 2024 with further options available.
Demand
ExxonMobil subsidiary Esso Exploration and Production Nigeria Limited has launched a pre-tender looking for two deepwater rigs for drilling operations offshore Nigeria, with anticipated contract terms of three years plus an additional two-year optional period. The advertised closing date of this tender opportunity is 13 September 2023. The scope of work involves drilling, completion, testing, temporary abandonment, and workover activities in water depths ranging from 600 to 1,800 meters (1,968 to 5,905 ft). The ExxonMobil subsidiary is the operator of deepwater blocks OML 133, 138, 139 and 154. While a start date for this work was not specified in the tender opportunity, market sources have previously indicated to Esgian that a late 2025 start date may be under consideration.
Mobilisation/Rig Moves
Borr Drilling owned 400-ft jackup Frigg (Arabia III) has commenced operations with Saudi Aramco offshore Saudi Arabia. Frigg secured its five-year contract with Aramco in Q4 2022. With the commencement of this campaign, the rig will be busy until Q3 2028, plus options. Frigg is a KFELS Super A Class rig that operates in water depths of 400 ft.
Other News
Eni has begun production of oil and gas from the Baleine field, which extends into blocks CI-101 and CI-802 offshore Côte d’Ivoire. This development follows the September 2021 Baleine discovery, made with Saipem 10,000-ft drillship Saipem 10000. For this initial phase of the project, production takes place through the Baleine FPSO, which can handle up to 15,0000 b/d of oil and 25 Mscf/d of associated natural gas. The start of Phase 2 is expected by the end of 2024 and will increase field production to 50,000 bbl/d of oil and around 70 Mscf/d of associated gas. The third development phase aims to elevate field production up to 150,000 bbl/d of oil and 200 Mscf/d of gas. The 12,000-ft drillship Deep Value Driller will be arriving in Côte d’Ivoire in the near future for a three-year bareboat contract with Saipem. During this contract, the rig will work for Eni. This work is understood to include development drilling at Baleine.
The government of Cyprus has rejected an updated plan for development of the Aphrodite field submitted by operator Chevron and its partners and has invited the partners to continue discussions on the matter in early September 2023. The companies plan to consider the implications of the decision and prepare for continued discussion with government representatives. Submitted earlier this year, the updated plan would see the production and processing of natural gas from Aphrodite via a subsea pipeline connected to existing offshore and onshore infrastructure in Egypt. The previously approved plan included production of an FPSO in the Aphrodite area. According to partner NewMed Energy, the letter of reply from the government of Cyprus states several reasons for the decision not to approve the updated plan, including the claim that it is expected to increase the technical and commercial complexity of the project. Chevron is the operator of Aphrodite with a 35% interest. Shell subsidiary BG Cyprus Limited holds a 35% interest while the NewMed Energy partnership holds a 30% interest. Chevron recently drilled an appraisal / development well at the Aphrodite field with Stena Drilling 10,000-ft drillship Stena Forth.
Equinor has acquired a 25% interest in the Bayou Bend CCS project, which is positioned to be one of the largest US carbon capture and storage projects, located along the US Gulf coast. The Bayou Bend acreage includes approximately 100,000 gross acres onshore and 40,000 gross acres offshore Beaumont and Port Arthur, Texas. The project is located near major industrial corridors in the Houston Ship Channel and Beaumont / Port Arthur area and will provide a potential decarbonization option for industries in refining, cement, steel, chemicals and manufacturing. The Bayou Bend is a joint venture between Chevron, Talos, and Equinor.
With two semisub rigs operating in Namibia, Northern Ocean reduced its net loss in the second quarter of 2023 when compared to the same period last year. In the second quarter of 2023, contract revenue was $34.7 million compared to $30.7 million in the previous quarter. Revenue was earned from the drilling contracts of the Deepsea Bollsta with Shell and the Deepsea Mira with TotalEnergies, of which $26.7 million was dayrate drilling revenue, $4.8 million was mobilisation and demobilisation revenue, and $3.2 million was other revenue. The net loss from continuing operations in the second quarter of 2023 was $18 million compared to a loss of $16.8 million in the previous quarter and compared to a net loss of $29.1 million in 2Q 2022. The company’s total revenue backlog is estimated to be $209 million, excluding options, performance bonuses and reimbursable revenue. The company’s view is that the offshore drilling market is continuing to improve and strengthen. In the second quarter, it was confirmed that two additional modern sixth generation semisubmersibles will leave the Norwegian continental shelf (NCS), thus bringing the total number, including the company’s two rigs, around seven modern rigs leaving the NCS in the last eighteen months which leaves no similar rigs available for work over the coming years in the NCS. Northern Ocean continues to maintain its rig class and compliance to work in Norway, but will take advantage of the mobility of its assets to work anywhere in the world. The company says that West Africa in general and more specifically Namibia will continue to be an interesting area for its rigs with ongoing tenders for work, both short and long-term, in this area and in South America. Northern Ocean finds it unlikely that newbuilds similar to its rigs will be ordered in the foreseeable future due to yard capacity constraints and the willingness of the yard to build complex assets versus other ship shaped assets, such as a drillship.
Norwegian authorities have received applications from 25 companies in the Awards in Predefined Areas (APA) 2023 oil and gas licencing round. APA 2023 was announced in May 2023 and the application deadline was 23 August 2023. Almost all companies that are active on the Norwegian Continental Shelf have submitted applications in this year’s APA, according to the government. The Norwegian Petroleum Directorate (NPD) is now commencing the work of evaluating the applications, with focus on geological understanding and plans for exploring the areas. The authorities plan to announce which companies will be offered shares in APA 2023 early in the new year – 2024. The companies that applied include: A/S Norske Shell, Aker BP, Concedo, ConocoPhillips Skandinavia, DNO Norge, Equinor, Harbour Energy Norge, INPEX Idemitsu Norge, KUFPEC Norway, Lime Petroleum, Longboat JAPEX Norge, M Vest Energy, Neptune Energy Norge, OKEA, OMV (Norge), Pandion Energy, Petrolia NOCO, PGNiG Upstream Norway, Repsol Norge, Source Energy, Sval Energi, TotalEnergies EP Norge, Vår Energi, Wellesley Petroleum, and Wintershall Dea Norge.
Woodside’s field development plan (FDP) for the Trion project in Mexico has been approved by the Mexican regulator, Comision Nacional de Hidrocarburos (CNH). Woodside is the operator of the Trion development with a 60% participating interest and PEMEX holds the remaining 40%. The first oil is targeted for 2028. Woodside’s final investment decision (FID) to develop the Trion resource, announced on 20 June 2023, was subject to Trion joint venture approval and regulatory approval of the FDP. Both of these conditions have now been met. This milestone allows Woodside to fully progress into execution phase activities with its contractors. The project execution phase activities are progressing and Woodside has executed key contracts relating to the development including, the floating production unit (FPU) engineering, procurement and construction (EPC) contract with HD Hyundai Heavy Industries, the rig contract with Transocean, the FPU and floating storage offloading (FSO) installation contract with SBM Offshore, and the subsea trees contract with OneSubsea UK. Following the approval of the FDP, Woodside has booked Proved (1P) Undeveloped Reserves of 324.7 MMboe gross (194.8 MMboe Woodside share) and Proved plus Probable (2P) Undeveloped Reserves of 478.7 MMboe gross (287.2 MMboe Woodside share).
Hibiscus Petroleum has informed that Anasuria Hibiscus UK Limited and Ping Petroleum have each entered into a separate but identical farm-in agreement with Rapid Oil Production for Licence P2451 in the UK North Sea, which contains an undeveloped Fyne oil field. Under the terms of each farm-in agreement, Anasuria Hibiscus and Ping Petroleum will separately acquire 42.5% equity interest each in the licence, with the balance 15% to remain with Rapid Oil. The deal is subject to approval by the North Sea Transition Authority (NSTA). The licence holds the Fyne oil field, located in the Central North Sea, with an estimated 75 MMboe STOOIP (stock tank oil initially in place.) Upon completion of the proposed acquisition, Anasuria Hibiscus will be appointed as the operator of the field development. First oil is expected in 2026, whereupon Anasuria Operating Company Limited (equally owned by Anasuria Hibiscus and Ping Petroleum) will take over as operator of the Fyne production from Anasuria Hibiscus. The Fyne Field has a water depth of about 90m. As it is approximately 16 km from the Anasuria FPSO vessel, the plan is to initially tie-back a single well development to the vessel. The addition of the Fyne field is expected to increase the value and extend the field life of the existing Anasuria Cluster of assets.
Image credit: COSL
