With summer in full swing, a lull in contracting activity has followed. Nonetheless, due to the high utilisation levels characteristic of an offshore drilling upcycle, numerous rig mobilisations and drilling activities have continued.
In case you missed it, you can access our previous Rig Market Roundup here.
Contracts
Aban Offshore-owned 250-ft jackup Aban II has received a letter of award (LOA) from Oil India for an offshore work programme in Andhra Pradesh, India. The award is for an estimated ten months (five wells). The programme is expected to commence in March 2025 and has an estimated day rate of $75,000. Oil India opened commercials at the end of May, and Aban emerged as the lower bidder. After technical evaluations, Aban and Ocean Oilfields were the only bidders left.
Shelf Drilling North Sea has secured a new 17-month contract for the 400-ft Shelf Drilling Winner (previously known as Noble Sam Turner) jackup rig with TotalEnergies EP Denmark. The contract value for the firm period is approximately $68 million, and the contract also includes two 7-month options. The planned start-up of operations is set for March 2025, in direct continuation of the rig’s current operations in Denmark. The expected availability of the rig is now August 2026. The rig has been working for TotalEnergies in Denmark since 2021. Recently, it started drilling the Harald East Middle Jurassic well, located close to the Norwegian border. The gas will be exported through the Tyra East facilities. In a success case, the well could deliver production by the end of 2024.
Drilling Activity and Discoveries
The Norwegian Ocean Industry Authority (Havtil) has given Aker BP consent to drill an exploration well in block 35/6 in the North Sea off Norway. The consent applies to drilling the well 35/6-5, targeting the Njargasas prospect, located in production licence 1110. The licence is operated by Aker BP with Vår Energi and Wintershall Dea participating as partners. The water depth at the site is 332 meters. The well will be drilled with Odfjell Drilling’s 6,560-ft semisub Deepsea Nordkapp. The rig is under a long-term contract with the operator until 2027 with further options thereafter.
The Norwegian Ocean Industry Authority (Havtil) has given Aker BP consent for exploration drilling in blocks 6507/2 and 6507/5 in the Norwegian Sea. The consent is related to the drilling of wells 6507/2-U-5 and 6507/5-U-4, targeting Ørn/Lunde prospects, located in production licences 942 and 838, respectively. Both licences are operated by Aker BP. The water depth at Ørn is 391 metres and 376 metres at Lunde. Aker BP will carry out these operations using Saipem’s 10,000-ft semisub, Scarabeo 8. The rig is operating under a three-year contract with the operator, which started in early 2023, with further options available.
The Norwegian Offshore Directorate (NOD) has granted Equinor a drilling permit for a wellbore in the North Sea offshore Norway. The exploration well 31/1-4, targeting the Ringand prospect, is located in production licence 923 B, which is operated by Equinor in partnership within DNO and Petoro. Drilling is planned to be carried out with Odfjell Drilling’s 10,000-ft semisub, Deepsea Atlantic, and last for about 65 days upon discovery. Equinor has also recently secured a permit for another well in the North Sea, which will also be drilled with the Deepsea Atlantic.
Beacon Offshore Energy has started up oil production at the Winterfell development in the US GOM, with the initial two production wells of the first phase now online and ramping up production. Kosmos Energy, a partner in the Beacon-operated development, stated that a third well is currently being drilled and is expected to be online by the end of the third quarter of 2024, when these three initial wells are expected to deliver gross production of around 20,000 BOE/d. The first two wells were completed and hooked up in April 2024, though delays in subsequent work resulted in first oil being delivered later than originally anticipated. The first phase of the Winterfell development is expected to have five wells in total. Beacon has been conducting drilling at Winterfell with 12,000-ft drillship West Vela, which is owned by Seadrill and currently managed by Diamond Offshore. Beacon recently had a revised new well permit approved for the WA003 well at Green Canyon Block 943/944 to be drilled by West Vela. The rig will work for Beacon into August 2024, then be released and transition back to Seadrill’s management ahead of a contract with Talos Energy in the US GOM. Winterfell is a Miocene-aged field, originally discovered in 2021 in water depths of around 5,400 ft. The Winterfell unit consists of Green Canyon Blocks 899, 900, 943, 944, 987 and 988 with follow-on opportunities in adjacent blocks.
The Norwegian Offshore Directorate (NOD) has granted Aker BP a drilling permit for an exploration well in the North Sea off Norway. The wellbore 35/6-5 S is located in production licence 1110. The licence is operated by Aker BP with Vår Energi and Wintershall Dea participating as partners. The water depth at the site is 332 meters. The drilling permit comes following a recent safety consent from the Norwegian Ocean Industry Authority (Havtil) to drill the well with Odfjell Drilling’s 6,560-ft semisub Deepsea Nordkapp.
China’s Sinopec has reported ‘high-yield’ flows from its Hai 3 well, in the Beibu Gulf, offshore China. The well, in the Weixi exploration area, was drilled using the 1,500-ft Kan Tan IV (aka Kan Tan Si Hao) semisubmersible rig. According to Sinopec, the well delivered 738 cubic metres of crude oil and 280,000 cubic metres of natural gas per day. This, per Sinopec, marks a record for the highest daily oil and gas output in the Beibu Gulf area. Sinopec said that the Hai 3 site is a target area for reserve expansion of the Weizhou oil field.
Demand
Canadian Natural company CNR International (South Africa) Limited has given notice to its partners in a joint operating agreement that it will withdraw from its 20% interest in Block 11B/12B offshore South Africa. Partner Africa Energy Corp. stated that TotalEnergies is also currently reviewing its options over its 45% interest in Block 11/12B. Under the joint operating agreement, the other parties to the joint venture may advise whether or not they will also withdraw within 30 days. Withdrawing parties assign their interest free of charge to each of the non-withdrawing partners in proportion to the interest of non-withdrawing partners. TotalEnergies is the operator of the block with its 45% interest. QatarEnergy currently holds 25% and CNR 20%. Africa Energy Corp. holds an interest in Block 11B/12 via an investment in Main Street 1549 Pty Ltd., which currently holds a 10% interest and says it does not intend to withdraw from its interest in the block. Block 11B/12B is on the Outeniqua Basin off the southern coast of South Africa and has water depths of 200 to 1,800 meters. The block holds the Brulpadda discovery, made in 2019, and the Luiperd discovery, made in 2020, both natural gas discoveries in the Paddavissie Fairway area. TotalEnergies and its partners had been complementing development for the block and applied for a production right in September 2022, in which they proposed relinquishing the northern portion of the block. TotalEnergies had previously made plans for drilling up to six wells in the development area to bring gas and condensate reserves into production, as well as considered additional exploration drilling in the eastern portion of the block.
Following the Labour Party’s victory in the UK’s general elections, Offshore Energies UK (OEUK) said it is committed to working with the new government on the next steps to a homegrown energy transition, to safeguard energy security, jobs and skills, and create an “irresistible investment environment” in the UK. The previous government’s introduction of the EPL in 2022 and its subsequent changes have eroded investor confidence in the North Sea, causing uncertainty and leading to a curtailment of spending plans and lower demand in the country. Uncertainty increased when the Labour Party launched its election manifesto in June 2024, reaffirming its plans to raise taxes on oil and gas producers, remove the investment allowances, and not issue new licences to explore new fields. In the period ahead of the elections, operators expressed concerns over the impact of potential future changes in the fiscal regime on project economics in the country, deciding to wait for election results and clarity on future fiscal policy before determining the path forward for projects in development. Following the results of the elections, held on 4 July 2024, OEUK, a representative body for the industry, warned many of the industry’s skilled people and investors remain deeply concerned about Labour proposals for a further windfall tax on homegrown oil and gas production and to end new oil and gas licences in UK waters. OEUK says such measures would not create the investment conditions the UK needs to deliver the homegrown energy transition needed to kickstart economic growth. More than 200,000 jobs across the country are currently supported by domestic oil and gas production, wind, hydrogen, and carbon capture technologies, according to OEUK. David Whitehouse, Chief Executive of OEUK, stated: “These policies, if poorly managed, and without industry input will threaten jobs and undermine the decarbonisation of the UK economy. The details matter.” Whitehouse also added: “We need the new Labour government to follow through on assurances to work in partnership with the sector, listen to our skilled people, and ensure no one is left behind in the UK’s energy transition.”
Mobilisation/Rig Moves
After a long journey from the UK North Sea, the 400-ft jackup Valaris 247 has reached Darwin, Australia. Loaded aboard COSCO Heavy Transport’s Xin Yao Hua heavy-lift vessel, the Valaris 247 arrived at Darwin anchorage on Sunday, 30 June 2024, ahead of the startup of the first of two contracts in Australia. The LeTourneau Super Gorilla Class rig left the UK in mid-April and will begin working for Santos in early July for an expected 100-day period. Following this, the rig has a contract with Eni which should keep it busy until early December 2024. The dayrate for each of the two new contracts is $180,000. Currently, there is only one jackup rig operating in Australia, the 400-ft Valaris 107, employed by Santos for a P&A campaign, at a dayrate of $150,000.
Advanced Energy Systems’ (ADES) 375-ft jackup Admarine 691 has started mobilising from Bahrain to Qatar for its new contract. After securing a letter of award from TotalEnergies in April, the two companies signed the firm contract in May. Under the contract, the jackup will stay with TotalEnergies for one year, with the option to extend the contract by 18 months, for a total contract value (firm+option) of around $93.3 million. The rig left the ASRY yard in Bahrain on Sunday, 30 June 2024 and is expected to arrive at the offshore site during the first week of July. Worth noting, the Admarine 691 is one of ADES jackups affected by Saudi Aramco’s recent contract suspensions. As previously reported, the suspensions are for up to 12 months, and the original term of the suspended contracts will automatically be extended for a period equal to the suspension for each rig. If the rigs find alternate work during the suspensions, they may complete firm and optional terms before resuming work with Aramco.
Dolphin Drilling 6,000-ft semisubmersible Blackford Dolphin has begun its journey out of Nigerian waters and will continue onwards to India for its upcoming contract with Oil India. The rig was previously forced to remain in Nigerian waters via a court injunction. Dolphin Drilling and General Hydrocarbons Limited (GHL) had both asked for arbitration regarding the April 2024 termination of a drilling contract, with Dolphin Drilling citing issues with payments and GHL applying for an interim injunction to maintain the rig’s status quo. In mid-June 2024, an arrest order obtained by another business Technova Africa International Limited was lifted. Dolphin Drilling has confirmed the submission of a bank guarantee of $20 million and is currently in the process of negotiating a debt facility underwritten by DNB Markets in order to bridge the funding for the security required. The semisubmersible has a three-well contract with Oil India Limited set to begin in the second half of 2024 with a firm value of $154 million.
Noble 12,000-ft drillship Noble Venturer has arrived in Equatorial Guinea and is now preparing to begin a three-well programme for Trident Energy. Noble Venturer completed work with Tullow Oil at the Jubilee field offshore Ghana in June 2024, around six months ahead of schedule. Tullow brought a production well at Jubilee onstream in April 2024, followed by a water injector well drilled with Noble Venturer. Tullow Oil stated in May that rates from the most recent production wells at Jubilee are lower than pre-drill expectations as work continues to optimise pressure support across the field. Noble Venturer will now begin work with Trident Energy on a three-well contract, drilling infill wells at the Ceiba and Okume fields on Block G and the Akeng Deep exploration well on Block S. These wells were originally planned to be drilled earlier in the year by the 4,000-ft semisub Island Innovator. Following the Equatorial Guinea work, Noble Venturer will move to Namibia to conduct exploration drilling for Rhino Resources.
PV Drilling’s 400-ft jackup PV Drilling VI has left the Kemaman anchorage to start drilling an exploration well for Petronas Carigali offshore Malaysia. The rig had arrived at the anchorage in June, having completed drilling activities at the Bokor-E (BODP-E) platform of Sarawak for Petronas Carigali, 40 days ahead of schedule. Supported by the GH Voyager and SK Pioneer AHTS vessels, the jackup unit left the anchorage on 30 June 2024 on its way to start drilling the Amaryllis-1 exploration well for Petronas Carigali offshore Terengganu. PV Drilling VI, capable of drilling up to 30,000 feet, in water depths of up to 400 feet, is on a long-term contract with Petronas Carigali.
The 10,000-ft semisubmersible drilling rig, SSV Catarina, has completed drilling operations for Eni in Vietnam and has moved to the Vung Tau anchorage. Eni utilised the semisubmersible to drill the Sáo Trúc-1X exploration well in Block 124, offshore Vietnam. The 6th generation rig is now in Vung Tau where it arrived earlier this week. The rig will soon move to Indonesia to start drilling for Eni. It is expected to arrive there in late July. The 2013-built SSV Catarina is managed by Ventura Offshore. Ventura Offshore will soon become the rig’s owner, after recently agreeing to buy it from a group of Norwegian investors. This will increase the company’s fleet to three floaters. The owned fleet currently consists of the 6th generation 10,000-ft semisubmersible SSV Victoria and the 6th generation 10,000-ft drillship Carolina.
Odfjell Drilling-managed 3,900-ft semisub Deepsea Yantai has completed a contract with Vår Energi and is en route to its next contract in the North Sea. The semisub has recently drilled and completed the Cerisa well in the North Sea for Vår Energi, making an oil and gas discovery north of the Duva field. The discovery is important for area development and could have an impact on the lifetime of the Gjøa facility. The rig is now moving to its next location in the North Sea to work for Shell. This contract, fixed in 2022, is for P&A operations at several different well locations across the Knarr and Gaupe fields offshore Norway. Norwegian safety regulator Havtil granted Shell consent for these operations back in December 2023. The rig has several other contracts lined up after Shell, including PGNiG, DNO, and, ConocoPhillips. These could keep the unit busy through the first half of 2025. The rig’s SPS was due in June 2024 but has been postponed until later this year.
Arabian Drilling-owned 400-ft jackup ArabDrill 70 is moving to Ras Al Khair anchorage in Saudi Arabia. In April 2024, Arabian Drilling announced the suspension of three of its jackups for up to 12 months. ArabDrill 70 is understood to be one of the three rigs suspended by Aramco. Arabian Drilling also has the 400-ft ArabDrill 50 idle in Ras Al Khair, waiting to recommence operations with Saudi Aramco. ArabDrill 70 is a KFELS B Class design rig that operates in water depths of 400 ft.
The COSL-owned 300-ft jackup HAIYANGSHIYOU 936 is underway to Ras Al Khair anchorage in Saudi Arabia following the suspension of its contracts with Saudi Aramco in April 2024. On 3 April 2024, China Oilfield Services Limited (COSL) announced the suspension of four of its jackups for up to 12 months. HAIYANGSHIYOU 936 was moved to Ras Tanura in mid-May and is currently being towed by the supply support vessels Valiant Vortex, Lapan 12, and Lapan 18.
A COSCO heavy lift and transportation vessel loaded a 400-ft jackup rig in Saudi Arabia earlier this week and is understood to be taking it to China. The heavy lift vessel Xiang An Kou was in the Persian Gulf, at the Dammam anchorage, next to the COSL-managed Zhenhai 6 jackup rig, with the destination set for Shanghai, China. The vessel presumably loaded the rig and set sail on 2 July 2024. According to AIS data, the heavy lift vessel is expected to reach Shanghai in the last days of July. The ABS-classed Zhenhai 6, of the F&G JU-2000E design, is understood to be one of more than 20 jackup rigs suspended earlier this year by Saudi Aramco. The rig arrived at an anchorage in Saudi Arabia in May. As with other affected jackups, the contract is understood to have been suspended, with an option for the remainder of the contract to continue after the rig completes the suspension period (up to 12 months). COSL said in April it had received a notice of suspension for four jackups in the Middle East and would proactively seek suitable market opportunities for them. Offshore drilling contractors with suspended jackups have the right to market the rigs to other customers and terminate the applicable contracts. If the rigs find alternate work during the suspension period, they may complete firm and optional terms before resuming work with Aramco. It is not yet clear whether COSL has managed to secure an alternate contract for the Zhenhai 6 in China. COSL had nine units working for Saudi Aramco before the suspension. Apart from the Zhenhai 6, the COSL-managed rigs that are understood to have had their contracts in Saudi suspended are the 375-ft SinoOcean Wisdom, the 300-ft HAIYANGSHIYOU 936, and the 375-ft COSLSeeker.
Arabian Drilling’s 250-ft jackup rig, ArabDrill 17, has concluded its contract with Saudi Aramco and is being towed to Ras Al Khair, where it will await further assignment. As previously reported, Saudi Arabian state oil company Saudi Aramco received a directive in January from the country’s Ministry of Energy to maintain its Maximum Sustainable Capacity (MSC) for crude oil production at 12 million barrels per day (MMB/D) and not to increase it to 13 MMB/D. This directive led to Saudi Aramco suspending contracts or allowing them to expire for more than 20 jackup rigs. In addition to ArabDrill 17, the 400-ft ArabDrill 50 jackup had its contract suspended in late May, while the 400-ft ArabDrill 70 is being towed to Ras Al Khair after also being suspended by Saudi Aramco. As with other affected jackups, the remaining contracts can continue once the suspension periods, which can last up to 12 months, are completed. Arabian Drilling manages 11 jackup rigs, all based in Saudi Arabia. Seven of these rigs still have long-term contracts with Saudi Aramco. ArabDrill 70 and ArabDrill 50 could resume working for Saudi Aramco post-suspension next year. ArabDrill 17 has just ended its contract, and the 250-ft ArabDrill 80 is expected to conclude its contract with Saudi Aramco later this month.
Other News
Transocean has completed a previously announced share purchase agreement and now owns all of the issued and outstanding equity interests in the joint venture company which owns the 6th generation 10,000-ft semisubmersible, Transocean Norge. The purchase agreement was entered into on 28 June 2024 by Transocean and certain subsidiaries with funds managed or advised by Hayfin Capital Management. In exchange for Hayfin’s interests, Transocean issued Hayfin 55,513,043 newly issued shares and $130 million in senior notes due 2027. The agreement was announced in early June 2024. Transocean has acquired the remaining 67% interest in the Orion Rigco joint venture which owns the rig. Transocean Norge recently secured a three-well contract extension with Wintershall Dea in Norway. Based on the closing price of Transocean stock on the day of the announcement, the 55,513,043 shares were valued at $295.3 million. Including the $130 million senior notes, the transaction totals $425.3 million for a 67% share of the rig, implying a value of $635 million for 100%. This price reflects the consideration that Transocean Norge has contractual commitments for the rig until Q2 2028, with average day rates of $420,000. Esgian Rig Values estimates Transocean Norge’s value, excluding charter commitments, to range between $412 million and $455 million.
Emperor Energy, the operator of the VIC/P47 exploration permit containing the undeveloped Judith gas field offshore Gippsland, Australia, has extended its Memorandum of Understanding (MOU) with Cooper Energy. Cooper Energy has processing capabilities at the Athena Gas Plant and Orbost Gas Processing Plant. The non-binding MOU aims to facilitate further discussions between the two companies regarding potential cooperation on utilising Cooper Energy’s Orbost Gas Processing Plant and adjacent sites for the processing and transfer of gas from the Judith gas field development. The Judith field is located within the 100% Emperor Energy-owned VIC/P47 exploration permit, 40 km offshore to the south of the Orbost Gas Processing Plant. According to Emperor Energy, the VIC/P47 permit contains a discovered 2C contingent gas resource of 198 billion cubic feet, defined around the Judith-1 gas discovery well drilled by Shell in 1989. In late April, Emperor Energy reported that modelling indicated the Judith-1 well could flow for 8.25 years at a rate of 60 MMscf/day, similar to the nameplate capacity of the currently producing Orbost Gas Plant. Earlier this year, Emperor Energy secured an extension of the VIC/P47 Exploration Permit Year 1-3 work programme commitments, along with a corresponding 24-month extension of the overall permit term. This extension allows it time to complete the NOPSEMA Environment Plan approval process for the planned Judith-2 well and to secure a farm-in partner to participate in the drilling of the Judith-2 exploration and appraisal well. Emperor Energy has previously stated that the plan is to drill the well in 2025.
ExxonMobil subsidiary Esso Exploration International Limited has signed an agreement with Morocco’s Office National des Hydrocarbures et des Mines (ONHYM) for two reconnaissance contracts covering the Safi-Essaouira Offshore and Agadir-Ifni Offshore areas. OHNYM stated that the signing of these contracts marks the first exploration activity pursued in Morocco by ExxonMobil since the merger of Exxon and Mobil in 1999. Energean will drill offshore Morocco later this year with Stena Drilling 10,000-ft drillship Stena Forth, appraising Chariot’s Anchois discovery. Eni drilled the Cinnamon-1 well on the Tarfaya Offshore Shallow licence in late 2023 with the 375-ft jackup Topaz Driller; this exploration well is understood to have been unsuccessful.
Baron Oil, an oil and gas company planning to drill the Chuditch-2 appraisal well offshore Timor-Leste in early 2025, has officially changed its name. The name change to Sunda Energy was proposed in June to reinforce the company’s focus on Southeast Asian energy markets. The new name refers to the vast archipelago of islands in the Southeast Asia region. The company’s name change to Sunda Energy Plc became effective on Friday, 5 July 2024. Notably, Baron Oil’s subsidiary operating the Timor-Leste licence containing the Chuditch gas field is called SundaGas. SundaGas holds a 60% stake in the block, with the state-owned Timor GAP owning the remaining 40%. The licence recently entered Contract Year Three, which includes a commitment to drill an appraisal well (Chuditch-2) on the Chuditch gas field. In June, the company said its board was confident that financing would be in place in time to enable the drilling of the Chuditch well in early 2025. The well site is located 5.1 km (3.1 mi) from the original Chuditch-1 discovery well, in a water depth of 68 m (223 ft), and 286 m east-northeast of the initial location. A jackup rig is planned to be used to drill the well.
Image credit: Noble
