Hans Jacob Bassoe, Esgian

This week Transocean and Valaris reported several new contracts and extensions, while Maersk Drilling closed the divestment of its drilling and production jackup Maersk Inspirer. Also, in light of recent drillship reactivations, Esgian Rig Analytics released a new market commentary.

Contracts

In its quarterly fleet status report, Transocean announced some new contracts and extensions. In the US Gulf of Mexico, drillship Deepwater Conqueror was awarded a three-well contract with Chevron. Also, drillship Deepwater Asgard won a one-well contract, while drillship Deepwater Invictus secured a one-well contract extension with BHP. Under construction drillship Deepwater Atlas, which is expected to be delivered in December 2021, was awarded a two-phase, four-well contract with Beacon, which includes the use of a 20k psi BOP. Elsewhere, BHP exercised an one-well option for the use of Development Driller III, while Deepwater Nautilus had a one-well option declared with POSCO Myanmar.

Valaris has been awarded a two-year contract with ExxonMobil, offshore Angola, for drillship Valaris DS-9. The drillship is currently preservation stacked in the Canary Islands, where it will be reactivated and then mobilised to Angola ahead of the anticipated contract commencement in June 2022.

Valaris has reported various new contracts and extensions, rig sales and name changes for its semisubs and jackups. Firstly, the company secured several new floater contracts in Q3, including the fresh two-year contract with ExxonMobil offshore Angola for Valaris DS-9, and the 548-days contract with Petrobras for Valaris DS-4. Valaris DS-10 was awarded two one-well contracts with Shell offshore Namibia and Sao Tome and Principe, while semisub Valaris MS-1 was awarded a four-well P&A contract with ENI offshore Australia. For its jackups in the North Sea, Valaris penned two contracts for Valaris 123, one with TAQA offshore the Netherlands and a one-well contract with Cairn Energy in the UK North Sea, while Valaris Norway was awarded a contract for accommodation work with Harbour Energy in the UK. Moving east, the company extended the bareboat charter agreement with ARO Drilling by 211 days for Valaris 36, while Valaris 107 was awarded a two-well contract with Vermilion Oil & Gas offshore Australia, and a one-well contract with Carnarvon Petroleum offshore Timor-Leste. Lastly, Valaris 144 bagged a 30-day contract with an undisclosed operator in the US Gulf of Mexico. Finally, Valaris have renamed the semisubs Valaris 8503, 8505 and 8506 to Valaris DPS-3, DPS-5 and DPS-6, while Valaris JU-290, JU-291 and JU-292 have been renamed Valaris Viking, Stavanger and Norway. Valaris JU-250 has been renamed Valaris 250 and this naming convention applied to the remaining Valaris jackups as well. 

Drilling and discoveries

Neptune Energy has announced that drilling has begun on four production wells on the Fenja field in the Norwegian Sea using the harsh environment semisub Deepsea Yantai. This is the final phase of the Fenja development project and Fenja is scheduled to come online in the first half of 2023 and will produce approx. 28,000 boe per day at plateau.

Neptune Energy has concluded the drilling of wildcat well 33/6-5 S, in PL 882, and the well has been classified as dry. The well was drilled by harsh environment semisub Deepsea Yantai, which will move to drill development wells in PL 586 in the Norwegian North Sea.

Aker BP has been given consent by PSA for exploration drilling in Block 25.2 in the Norwegian North Sea. The two wells, well 25/2-23 S and 25/2-23 A, will be drilled from the semisub Deepsea Nordkapp.

Equinor has made a light oil discovery at the Egyptian Vulture exploration well in PL 939, drilled using semisub West Hercules, the second well in the seven well exploration programme. Longboat energy said that the preliminary estimate of recoverable resources in the Egyptian Vulture discovery is 19-63 mmboe (gross) and the oil-in-place volume has ben estimated at 220 to 440 mmboe (gross).

Mobilisation

Saipem harsh-environment semisub Scarabeo 8 is mobilising to the Norwegian Nova field, where it is lined up to drill 6 wells for Wintershall Dea. The rig will remain working until at least the middle of next year with additional options available thereafter for further wells. Seadrill-managed semisub West Mira initially held the contract with Wintershall Dea but the contract was terminated after a x-mas tree was dropped during a lifting operation. 

Jackup Maersk Resolute has completed its drilling campaign for Dana Petroleum at the Dutch Project Unity project, which covered the drilling of two wells. The rig has moved inshore Esbjerg, Denmark.

Drillship Valaris DS-4 is in transit from UK to the Canary Islands (Spain) where it will begin reactivation ahead of the newly awarded contract with Petrobras. The contract expected commencement date is in April 2022.

Jackup Valaris 249 has commenced mobilisation from the UK to New Zealand, ahead of starting a new contract with OMV in January. The rig will be put to work by the operator until February 2023. The rig has not worked since finishing its last contract in April 2020 which was with Chrysaor in British waters.

Rig sales

Valaris recorded three rig sales this quarter, including jackups Valaris 22 and Valaris 100, which were sold and retired from the offshore drilling fleet, while jackup Valaris 142 was sold to an operator and can only be utilised on specific assets.

Maersk Drilling has closed the divestment of its drilling and production jackup Mærsk Inspirer (now named Inspirer) to Havila Sirius for a price of USD 373m in an all-cash transaction. Per the terms of Maersk Drilling’s term loan agreement, the sale triggers a simultaneous loan repayment of USD 80m. As part of the transaction, Repsol has assumed responsibility for the day-to-day operation of the rig on the Yme field, leasing the rig from Havila Sirius on behalf of the Yme licensees. 60 employees have been transferred from Maersk Drilling to Repsol in a transfer of undertaking, and to ensure operational continuity Maersk Drilling will continue to provide certain systems and logistics services for up to 12 months. In addition, Maersk Drilling will provide drilling management services for a period against payment of a management fee, which is not included in the proceeds. As per the agreement, ownership was transferred after the rig was ready to receive hydrocarbons, which was achieved on 10 October 2021. As a result of the transaction, Maersk Drilling’s contract backlog will be reduced. As of 30 June 2021, Maersk Drilling’s contract backlog was USD 1.6bn of which approximately USD 430m relates to the Inspirer. The rig is an ultra-harsh environment CJ70-150MC jackup, which was delivered in 2004 and converted to a dual drilling and production facility in 2007. In end-2020, it moved offshore to prepare for operations at the Yme field offshore Norway.

Financial news

According to Finansavisen, Dolphin Drilling has secured the rights to purchase the two harsh environment semisubs Nordic Spring and Nordic Winter. The two semis were previously ordered by Awilco Drilling from KeppelFELS in 2018, but the driller terminated the contracts last year. Now, it looks like the two rigs could have found a new owner with Dolphin with expected delivery dates pushed from Spring 2021 and 2022 to Spring 2024 and 2025. Although Dolphin is yet to exercise its rights, the company is actively marketing the rigs for work on the Norwegian Continental Shelf. The CEO of Dolphin, Bjørnar Iversen, said that the company has ambitions to grow and wish to go public within two years. For this to happen, the company needs a larger fleet and modern rigs. Awilco originally agreed to pay a price of $425 million per rig, but Dolphin did not comment on any price.

Other Market news

Seadrill announced that its Plan of Reorganization has been confirmed by the U.S Bankruptcy Court for the Southern District of Texas. Earlier this month, the Plan received "overwhelming support" from the Company's stakeholders. Following the Court's approval of the Plan, Seadrill is targeting an exit of Chapter 11 proceedings in approximately 60 days. This is subject to certain customary conditions, including certain antitrust approvals. The Plan raises $350 million in new financing and reduces the Company's existing liabilities by $4.9 billion, while leaving employee, customer, and trade claims unaffected. Existing shareholders will see their holding in the post emergence entity decrease to 0.25%.

Odfjell Energy and Odfjell Well Services have launched a plug and abandonment (“P&A”) and slot recovery alliance with several companies in Norway. The aim of the Odfjell Collaboration Alliance is to provide a complete service offering of rig, modular rig, jacking unit, wireline, plugs and all other services needed to successfully execute projects within P&A or slot recovery operations. The focus will be initially in the Norwegian market, with ambitions to expand beyond the Norwegian Continental Shelf. The agreement has an initial duration of two years but can be extended.

KeyFacts Energy Industry Directory: Esgian