Soumya Mutsuddi, Esgian

This week Equinor exercised further work for the semisub Deepsea Stavanger, while drillship Stena Forth completed operations on the Glaucus-2 prospect off Cyprus. Meanwhile, Santos announced a 'significant' discovery offshore Australia.

Contracts 

Equinor has exercised further work for the 6th generation deepwater and harsh environment semisub Deepsea Stavanger under the continued optionality mechanism provided for in the contract entered with Odfjell Drilling in May 2021. The rig now has six remaining wells to be drilled, which are expected to keep it busy until late Q4 2022. Equinor may still exercise further wells under the continued optionality mechanism. The dayrate is at current contract levels and a performance incentive rate in addition shall apply when wells are delivered safely and ahead of target. Integrated services are provided through the contract and compensated separately.

ARO Drilling has been awarded a 3-year contract for upcoming work with Saudi Aramco. The engagement will be taken up by the jackup Valaris 140, which is leased to ARO Drilling from March 2022 until March 2025.

Greatship jackups Greatdrill Chitra and Greatdrill Chaaya have received new awards which will extend their ongoing engagement with ONGC offshore India. Greatdrill Chitra has received a 3-year award with commencement expected in late December 2022 or early January 2023, following a period of maintenance and repairs. Greatdrill Chaaya also received a 3-year award, which is expected to keep the rig busy until Q1 2025. 

Drilling and discoveries

Neptune Energy and its partners announced presence of hydrocarbons at the Hamlet exploration well in licence PL153 in the North Sea off Norway. Neptune further informed that operations in the reservoir section are still at an early stage and it has yet to be confirmed if commercial volumes are present. A contingent side-track may be drilled to further define the extent of the discovery. Hamlet is being drilled by the Odfjell operated 6th gen semisub Deepsea Yantai. Licence partners include Neptune Energy (operator and 30%), Petoro (30%), Wintershall Dea (28%), and OKEA (12%).

Aquadrill owned 7th gen drillship Vela has completed drilling operations for Equinor in the US GOM. The rig is now expected to undergo a change in commercial management from Seadrill to Diamond Offshore.

Sabah Shell Petroleum Company Limited (SSPC) informed that it has commenced work on Phase 3 of the Gumusut-Kakap development, offshore Sabah, Malaysia. Phase 3 involves the drilling of a four well tie back to the GK-Semi FPS. The project, which involves the drilling of two producer wells and two water injection wells, is expected to achieve first oil this year. 7th gen ultra-deepwater drillship Maersk Viking is currently working on the Gumusut-Kakap development, with the contract including a firm period until about mid-2022, along with additional options.

Energean informed that it has spudded the Athena exploration well offshore Israel and that the first drilling results are expected during Q2 2022. The well was drilled by the 6th gen harsh environment drillship Stena IceMAX. While the firm period of the rig’s contract runs into September 2022, the contract is also understood to have options attached which, if exercised, could extend work until January 2023. 

Santos has announced a significant oil discovery at the Pavo-1 exploration well, 46km east of the Dorado field in the Bedout Sub-basin, offshore Western Australia. The well was drilled on the northern culmination of the greater Pavo structure and encountered a 60m gross hydrocarbon column in the primary Caley member reservoir target. Wireline data has confirmed 46m of net oil pay, with an oil-water contact intersected at 3,004m measured depth (MD). Initial indications from rig site analysis are of a light sweet oil (~52 degrees API) with a low gas-oil ratio. A 2C contingent resource for the northern culmination is assessed at 43 million barrels of oil (mmbbl) gross (Santos 70% interest 30 mmbbl). Santos Managing Director and Chief Executive Officer Kevin Gallagher said that success at Pavo-1 is expected to support a potential low-cost tie-back to the first phase of the proposed Dorado development and is also very encouraging for the next exploration well in the current campaign, Apus-1, which offers another potential nearby low-cost tie-in opportunity to the Dorado development. Pavo-1 is being drilled by the jackup Noble Tom Prosser. Santos informed that once wireline logging operations are completed at final total depth, the well will be plugged and permanently decommissioned as planned, and the rig will move to the Apus-1 well location.

Empyrean Energy announced an update on the company’s preparations to drill the Jade prospect at its Block 29/11 permit, offshore China. The company informed that the COSL owned 4th gen semisub Nan Hai Jiu Hao (also known as Nanhai 9 or NH9) is being handed over within the next few days for safety checks. Rig mobilisation to the Jade well drilling location is expected to be on or around 27th March 2022, with spudding anticipated to be on or around 2nd April depending on prevailing weather conditions to ensure the safe anchorage of rig at the location. From the spud date, the Jade well is anticipated to take approximately 26 days to drill to total depth on a trouble free basis. If the Jade well intercepts a hydrocarbon zone, then testing is planned to take approximately a further 2 weeks. The company informed that it will provide a further update on progress next week. Empyrean is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, CNOOC, may assume a 51% participating interest in the development and production phase.

Demand

Media sources reported that Shell has released an amended plan for the development of the Jackdaw field in the North Sea offshore UK. The initial plan for development of the field was rejected by UK regulators in 2021. As per the new environmental development plan, Shell aims to start production from the field by Q3 or Q4 2025.

JV partners ExxonMobil and Qatar Petroleum have completed drilling operations on the Glaucus-2 well in Block 10 offshore Cyprus, the Ministry of Energy, Trade and Industry for Cyprus has informed. As per the Ministry, drilling operations demonstrated the presence of a gas reservoir with high quality characteristics. The consortium will now proceed with a detailed analysis and evaluation of the collected data, in order to more accurately determine the qualitative and quantitative characteristics of the reservoir, as well as the potential options for development and commercialization of the discovery. The consortium will then notify the Ministry of the results of the data evaluation from the drilling and test works, as soon as the same is completed. Appraisal drilling on the Glaucus-2 prospect started in December 2021 and was carried out by the 6th gen harsh environment drillship Stena Forth. The rig is scheduled to commence its next engagement for Chevron offshore Israel shortly.

The state of Western Australia has invited bids on eight areas for petroleum exploration, comprising one offshore and seven onshore blocks. The blocks are based in the Northern Carnarvon Basin and Amadeus Basin, and vary in size from 390 to 10,282 km2. Successful bidders will be allowed to conduct exploration activities within the specified title for six years.

Petronas has signed Production Sharing Contracts (PSCs) for five offshore exploration blocks, namely SB412, SB-2W and SB-X located off the coast of Sabah, and SK439/SK440 located off the coast of Sarawak. These blocks were awarded in the Malaysia Bid Round (MBR) 2021. The PSC for Block SB412 in Sabah was signed between Petronas, PTTEP HK Offshore Limited and SapuraOMV Upstream (M) Sdn Bhd, while the PSCs for ultra-deepwater Blocks 2W and X were signed between Petronas, Sabah Shell Petroleum Company Ltd., Shell Sabah Selatan Sdn Bhd and Petronas Carigali Sdn Bhd. The PSC for Sarawak’s shallow water blocks SK439/SK440 was signed between Petronas, Sarawak Shell Berhad and Petroleum Sarawak Exploration & Production Sdn Bhd.

Europa Oil and Gas informed that an appraisal well is scheduled to be drilled in the i3 Energy operated Serenity field in the North Sea off UK during late summer 2022. Europa also informed that well planning for the appraisal well has already been completed by i3 Energy. As was previously reported, Europa Oil and Gas is in the process of acquiring a 25% non-operated working interest in a sub-area of UKCS Licence P.2358 Block 13/23c (containing the Serenity discovery) by funding a 46.25% paying interest for one appraisal well on the field, whereafter i3 will retain a 75% operated working interest in the Block.

Mobilisation

1983-built semisub Stena Spey has left the Orkney Islands and is underway to the Janice field offshore UK to commence a P&A job for TotalEnergies. The contract is expected to keep the rig busy until the second half of July 2022.

6th gen drillship Valaris DS-4 has commenced mobilization to Brazil, having undergone reactivation in preparation of its next contract with Petrobras starting later this year. The rig left the Canary islands earlier this week and is headed towards Rio de Janeiro.

Seadrill’s 7th gen drillships West Jupiter and West Carina are currently undergoing reactivation for their next contracts with Petrobras. West Jupiter is expected to depart from the Canary Islands during the second half of this year, with contract commencement expected in December. West Carina is expected to start its contract with Petrobras in Q3 2022.

Japan Drilling owned 3rd gen. semisub Hakuryu-5 has left Singapore and is en-route to commence its next engagement with Inpex, offshore Japan. The contract is scheduled to commence early next month and is understood to be a one-well job.

7th gen ultra-deepwater drillship Deepwater Thalassa is underway to Colombia from the US GOM to drill Shell’s Gorgon-1 exploration well in block COL-5. The Transocean drillship is currently in its 6th year of the 10-year contract with Shell.

Rig Sales

Aban Offshore notified that the company’s board has approved the proposed sale of five jackups—Deep Driller 2, Deep Driller 4, Deep Driller 5, Deep Driller 6, and Deep Driller 8—owned by the company’s step-down subsidiaries to prospective buyers. The company added that the proposal is subject to necessary approval of the shareholders and other relevant authorities as may be required under applicable laws. While Deep Driller 2 is currently stacked off UAE, it is expected to commence a 60-day job for Dana Gas off Sharjah towards end of this month. Deep Driller 6 is currently working for ADNOC off the UAE. Deep Driller 4 and Deep Driller 5 are currently stacked off Singapore, while Deep Driller 8 is stacked off Sri Lanka. 

Other News

BP announced that it has been awarded 100% interest in two offshore exploration blocks—Agung l and Agung ll—as part of the Indonesian government's second round of 2021 Oil and Gas Working Area (WK) Bid Round. The Agung I Block covers an area of 6,656 km² deepwater offshore Bali and East Java, while the Agung II Block is located in deepwater offshore of South Sulawesi, West Nusa Tenggara and East Java covering an area of 7,970 km². The area is underexplored with significant potential of gas resource close to growing gas demand.

Waldorf Production has entered into a binding Sale and Purchase Agreement to acquire MOL’s upstream portfolio in the UK North Sea. The key assets being acquired include non-operated interests of 20% in the Greater Catcher Area, 50% in the Scolty and Crathes fields as well as 21.83% in the Scott and 1.59% in the Telford licences. The transaction has an economic effective date of 1st January 2021, with completion currently expected in the second half of 2022.

Diamond Offshore announced that the company has received approval to relist its unrestricted common stock on the NYSE under the ticker symbol "DO." Diamond expects the common stock to commence trading on or about Wednesday, March 30, 2022. Bernie Wolford, Jr., President and Chief Executive Officer, stated, "We are excited to return to the public markets on the NYSE. The relisting of our common stock is another important step in strengthening our capital structure to position Diamond for long-term success and growth."

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