Hans Jacob Bassoe, Esgian

This week Transocean, Valaris, Maersk, Noble and Borr all announced their Q3 financial results, while Noble completed the sale of four jackups in Saudi Arabia. Meanwhile, Keppel Offshore & Marine says that it is seeing increased interest in bareboat charter enquiries.

Contracts

Maersk Drilling has confirmed a new contract award, this time for jackup Maersk Interceptor which will be put to work with TotalEnergies undertaking accommodation support duties in the Danish North Sea. The rig will be reactivated for the 8-month deal, due to begin in H1 2022, after having been idle since 2019. Meanwhile, the drilling contractor also reports that it is closing in on firming up a new deal for jackup Maersk Resolute in the North Sea. The rig very recently came off hire after completing a contract with Dana in the Dutch North Sea and is currently undergoing some minor repair work. It is expected that the rig will be put out to work with the new operator, rumoured to be ONE-Dyas, before the end of 2021. Maersk is also confident of securing new deals for jackups Maersk Integrator and Maersk Intrepid next year once they roll off current deals in November and January, respectively. Additionally, jackup Maersk Highlander has now completed its contract with TotalEnergies in the UK sector and will shortly be warm stacked. The company will postpone the rigs SPS to preserve cash.

Borr Drilling has secured various new contracts for its jackup fleet over the last quarter. North Sea-based jackup Ran has been awarded a new deal covering accommodation support operations in the UK sector with an unnamed operator from February 2022 to June 2022. Letters of Award have also now been signed for jackups Groa and Idun. The former will be put to work in the Middle East from Q1 2022 to Q1 2024, while the latter will undertake drilling in Southeast Asia from March 2022 to May 2023. The projects and operators are still be confirmed. Meanwhile, previously reported LOA's for jackups Mist and Gunnlod, covering work with IPC Malaysia and PTTEP Thailand, have been firmed up into full contracts. Lastly, the previously reported contract for jackup Frigg, which will cover work off Cameroon with Addax, has been novated to jackup Gerd instead. The deal will run from January 2022 through March 2023.

Drilling and discoveries

Ultra-deepwater drillship Stena DrillMAX has completed drilling operations at the exploration well Sapote-1 on the Canje block. The well was drilled im 2,549 meters of water to a total depth of 6,758 meters, but the well encountered only non-commercial hydrocarbons in one of the deeper exploration targets.

It is understood that mid-water semisub COSLPioneer will commence the first of two new contracts in British waters around early December. The rig will be put out to work with an unconfirmed operator, rumoured to be Repsol Sinopec at the Blake field life extension project, keeping it working Q1 2022 after which time the rig will pass to Ithaca Energy. The rig will undertake work at the Abigail field and Captain fields, as well as some likely plug and abandonment at other locations during the campaign that will run until at least Q2 2024.

Aker BP has made a minor oil discovery at its Mugnetind exploration well in licence PL906 in the Southern North Sea, offshore Norway. However, findings from the discovery were below pre-drill expectations with the operator estimating recoverable resources between 5 and 11 MMboe, which cannot be considered commercial in isolation. The update was shared by Longboat Energy, who along with DNO Norge are 20% licence holders each, while Aker BP is the licence operator with 60% ownership interest. Aker BP started drilling operations on the Mugnetind exploration well during October 2021 using jackup Maersk Integrator. As per Esgian Rig Analytics, the jackup is expected to remain engaged for Aker BP until end of November 2021, and there are options available for further work. 

Demand

Chariot has signed a Memorandum of Understanding (MOU) with a leading energy group relating to the key terms of gas offtake and partnering between the parties in respect of the Anchois Gas Development within the Lixus Licence, offshore Morocco. The key terms of the future gas sales agreements will be for c.40 mmscf/d, for up to 20 years on a take or pay principle, to underpin the development. The parties will continue discussions and sign final agreements to implement the Anchois Gas Development with targeted Final Investment Decision (FID) in 2022 and first gas in 2024. The agreement is expected to help expedite the development of the Anchois project. Previously, Chariot contracted the Stena Drilling semisub Stena Don to spud the Anchois appraisal well in December.

Rig sales

Keppel Corporation hosted a business update where the company stated that Keppel Offshore & Marine (O&M) has received more bareboat charter enquiries for its rig assets, while the sale of rigs is likely to materialise in a few years. National Oil Companies and OPEC continues to extract oil and gas, while there is a lack of investment to build new rigs, which is why rig sales are not likely in the near term. However, CEO of Keppel O&M, Chris Ong, said that the company look at bareboat charters as a good solution to keep its rigs occupied and warm. Then, when the market is ready, these rigs would be in the front of the queue for sale. The CEO of Keppel Corporation, Loh Chin Hua, also added that "enquiries going up on bareboat charters on the back of improving utilisation rates. Dayrates have not started moving yet, although we expect that they will move once utilisation rate goes above 80% or more. Fundamental rig demand is improving with the oil price. Monetisation of rigs will probably happen in the next three to five years.”

Noble Corporation has completed the $292 million sale of four jackups in Saudi Arabia - Noble Roger Lewis, Noble Scott Marks, Noble Joe Knight, and Noble Johnny Whitstine - to a subsidiary of ADES International Holding Ltd. Noble expects to generate approximately $285 million in cash through the sale, net of fees, expenses, and settlement of working capital. Ownership of the jackups and employment of their crews have been transferred, while associated drilling contracts have been novated to ADES. Noble also indicated that it will continue to provide certain customary transition support services for a limited period. As per Esgian Rig Analytics, all four jackups are currently contracted to Saudi Aramco, with the Noble Scott Marks expected to remain engaged until early July 2023, Noble Joe Knight till end of October 2022, while the Noble Roger Lewis and Noble Johnny Whitstine are expected to remain engaged till March 2022. Henceforth, there is no current visibility on future engagements for these jackups.

Rig upgrades

Velesto Drilling has ordered two Chela cranes from NOV's Gusto MSC, to be installed on jackup Naga-6. According to NOV, the GustoMSC Chela series is designed to improve safe handling underneath the cantilever and reduce total time spent on wells. According to NOV, the primary feature of Chela relates to safe and efficient lifting of well-related parts and tools prior before, and after well construction. The cranes are scheduled to be delivered in first half 2022. 

Energy transition

Valaris reports today that its harsh-environment jackup Valaris 123 is being upgraded with a selective catalytic reduction (SCR) system that, when in operation, is designed to eliminate almost all NOX and SOX emissions from the rig. The driller recently reported that its ultra-deepwater drillship Valaris DS-12 recently became the first vessel in the world to receive the ABS Enhanced Electrical System Notation EHS-E. This system is designed to optimize powerplant performance, enabling operations on fewer generators and thereby reducing emissions.

Financial news

For the third quarter of 2021, Noble Corporation reported an increase in its total revenue to $250 million from $219 million reported during the second quarter of 2021. Contract drilling services revenue for the third quarter of 2021 also increased to $231 million from $200 million reported during the previous quarter. Noble attributed the increase in revenue mainly to contract commencements on the Noble Clyde Boudreaux and Noble Faye Kozack (formerly Pacific Khamsin), and higher operating days on the Noble Scott Marks, Noble Tom Prosser, Noble Sam Croft, and Noble Stanley Lafosse (formerly Pacific Sharav). Additionally, contract drilling services revenue included a reduction of $14 million in each of the second and third quarters of 2021 related to the non-cash amortization of favourable customer contract intangibles. The company’s marketed fleet utilisation was 81% in the third quarter of 2021, increasing from 74% as reported in the previous quarter. Contract drilling services costs for the period were $189 million, which were in line with the previous quarter. During the third quarter of 2021, Noble also incurred approximately $10 million in costs related to damages sustained during Hurricane Ida. Adjusted EBITDA for the third quarter of 2021 increased to $47 million from $10 million reported in the previous quarter. As of end September 2021, Noble reported an estimated revenue backlog of $1.5 billion, in addition to total liquidity of $588 million—comprising of $112 million in cash and $476 million available under its revolving credit facility. However, the company also clarified that post application of the net proceeds from sale of its four jackups in Saudi Arabia ($285 million in cash net of fees, expenses, and the settlement of working capital) on a pro forma basis, liquidity as at end of September would have been $873 million, while the backlog would be approximately $1.4 billion following exclusion of backlog related to the jackups sold. Noble also reported an updated guidance for full year 2021, with adjusted revenue in the range of $870 – 900 million, adjusted EBITDA in the range of $95 – 115 million, and capital expenditures in the range of $175 – 195 million. For full year 2022, the guidance for adjusted revenue is in the range of $1,050 – 1,125 million, adjusted EBITDA in the range of $300 – 335 million, and capital expenditures in the range of $115 – 130 million.

Transocean reported a net loss attributable to controlling interest of $130 million for the three months ended September 30, 2021. Contract drilling revenues for the third quarter was $626 million, a decrease of $30 million compared to the $656 million in Q2 2021. The decrease in revenue was primarily due to reduced activity for two rigs that went idle and one rig that commenced a planned shipyard stay during during this quarter, partially offset by higher revenue efficiency, and one rig that returned to work following a shipyard stay. The adjusted EBITDA was $245, compared to $255 million in the prior quarter, while the contract backlog was $7.1 billion as of the October 2021 Fleet Status Report.

For the third quarter of 2021, Valaris reported an increase in revenues to $327 million from $293 million in the combined second quarter. Excluding reimbursable items, revenues increased to $293 million in the third quarter from $261 in the combined second quarter primarily due to higher utilization for the floater fleet as VALARIS DS-12 started a new contract early in the third quarter, and VALARIS DS-15 and MS-1 had a full quarter of revenues after commencing contracts in the latter part of the second quarter. Contract drilling expense increased to $274 million in the third quarter 2021 from $254 million in the combined second quarter 2021. Excluding reimbursable items, contract drilling expense increased to $255 million in the third quarter from $236 million in the combined second quarter primarily due to more operating days for the floater fleet. This was partially offset by rig reactivation costs, which declined to $19 million in the third quarter from $24 million in the Combined second quarter. The driller reported adjusted EBITDA of $30 million in the third quarter 2021 compared to $17 million in the combined second quarter. Valaris added approximately $330 million of backlog in the past three months and more than $2.1 billion year to date.

For the third quarter of 2021, Maersk Drilling reported a decrease in overall revenue to $333 million from $350 million reported during the second quarter of 2021. While the decrease in revenue was attributed to a lower average day rate, Maersk Drilling acknowledged that this was the second highest quarterly revenue that it had reported as a listed company, following the second quarter of 2021. During the quarter, revenue for North Sea jackups decreased to $171 million from $175 million reported in the previous quarter, due to a lower average day rate. Revenue in the international floater segment also decreased to $155 million from $168 million reported in the previous quarter, as the Maersk Explorer remained idle throughout the quarter. As of 30 September 2021, the company’s revenue backlog was $1.5 billion, declining from $1.6 billion reported as of 30 June 2021. During the third quarter of 2021, revenue backlog worth $81 million was added from six new contracts and extensions. Forward contract coverage for the remainder of 2021 is 73%, split 65% for the North Sea jackup segment and 81% for the international floater segment. Resulting from the previously announced divestment of Maersk Inspirer, the company reported that its contract backlog reduced to $1 billion, post exclusion of $420 million worth of contracts related to jackups. However, it expects the sale to result in a net debt reduction of approximately $340 million (subject to final tax payment) and a reduction in its leverage ratio below the target of 2.5x. The company has maintained its full-year guidance for 2021, with EBITDA (before special items) expected to be in the range of $290-330 million, while capital expenditures are expected to be in the range of $110-130 million.

For the third quarter of 2021, Borr Drilling reported total operating revenues of $73.0 million, which is an increase of $18.2 million (33%) compared to the second quarter of 2021. Net loss of $32.6 million was also recorded during the quarter, an improvement of $27.3 million compared to the same period a year earlier. Cash and cash equivalents at the end of the third quarter of 2021 was $68.9 million, an increase of $36.5 million from the end of the second quarter of 2021. Meanwhile, the driller reported adjusted EBITDA of $20.0 million, an increase of $16.3 million (441%) compared to the second quarter of 2021. Lastly, the company has received 32 new contracts, extensions, exercised options and LOA/LOIs year-to-date, representing 7,929 days and $668 million of potential backlog including contracts through its Drilling JVs and mobilization compensation.

Other Market news

The Australian government has invited the public to comment on offshore areas that have been nominated for its 2022 offshore exploration licensing round. Ten areas have been identified for the round and are located in the Bonaparte basin, Browse basin, Northern Carnarvon basin and Gippsland basin. Consultation is now open until 14 December 2021, with submissions possible via the Australian government's website. This year's bidding round is under way, with responses due on 3 March 2022. The 2021 bid round comprises 21 blocks in the Bonaparte and Browse basins, Northern Carnarvon basin, Otway and Sorell basins and Gippsland basin. 

POSCO International has been awarded the Block PM 524 offshore Peninsular Malaysia, with Petronas Carigali the sole partner with a 20% stake. The block spans 4738-square-kilometres and has a water depth range of 50-80m. POSCO has already evaluated several prospects and leads with high potential for natural gas on the block, based on existing 3D seismic and well data. Under the PSC terms, the partners will perform exploration activities for four years.

KeyFacts Energy Industry Directory: Esgian

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