Hans Jacob Bassoe, Esgian

This week Awilco announced that it will scrap its mid-water semisub WilHunter, while Stena Drilling announced a new contract for one of its drillships offshore Canada. Meanwhile, in the Scottish Parliament discussions over sanctioning of the Cambo development heated up.

Contracts

Maersk Drilling has been awarded a contract by ONE-Dyas B.V. for drilling the IJssel and Clover exploration wells in the Dutch North Sea, using jackup Maersk Resolute. The contract is valued at approximately $6.9 million, excluding an agreed fee for the potential use of the rig’s SCR system. The contract is expected to commence in December 2021 with a firm duration of 84 days and includes two additional one-well options. Maersk Resolute is a 350ft, Gusto-engineered MSC CJ50 harsh environment jackup delivered in 2008. On its last engagement, the rig was engaged in development drilling for Dana Petroleum offshore Netherlands and is currently moored in the port of Esbjerg.  

Aban Offshore has received a letter of award from Oil and Natural Gas Corporation Limited (ONGC) for the deployment of jackup Aban VIII for a firm period of three years. The deployment is likely to commence during the second quarter of calendar year 2022.

Stena Drilling 6th generation harsh-environment drillship Stena Forth will commence drilling of one firm exploration well offshore Newfoundland and Labrador for ExxonMobil next year. The rig shall mobilise from the Eastern Mediterranean to Canada after an agreement was reached to accommodate this well for ExxonMobil within the rig’s contractual backlog. It is planned that the rig shall return to the Eastern Mediterranean upon completion of operations in Canada. Stena Forth is currently engaged in exploration drilling for ExxonMobil offshore Cyprus, where it is expected to remain until early 2022. The rig is also expected to commence a P&A engagement offshore Israel for Chevron in early April 2022.

Saipem jackup Perro Negro 8 has been secured by Yamal LNG to drill an exploration well in the shallow-water South Tambey block offshore Russia. Drilling at well #177 is expected to start in July 2022 in 9m of water, and the well will have a planned total depth of 2,850m. It is worth noting that Yamal LNG had planned to drill the well in 2018, but reportedly was unable to secure a suitable rig at the time. The jackup is currently contracted to Novatek, who are the majority shareholder in Yamal LNG, and the contract is understood to include options through to 2023. The jackup arrived at its winter stacking location in Murmansk at the end of October 2021 and will tow out to the new location at beginning of June 2022.

Drilling and discoveries

ExxonMobil has made a discovery on the Tita prospect in the Santos Basin, offshore Brazil, however the operator has not clarified if the discovery is commercial. Seadrill owned drillship West Saturn was used to spud the Tita-1 wildcat in August 2021, and now ExxonMobil plans to engage the rig on a drilling programme in the deep-water section of the Sergipe-Alagoas (SEAL) basin. According to the company’s block partner Murphy Oil, the Cutthroat-1 wildcat will be spudded in Block SEAL-M-428 in the final quarter of 2021. The prospect has already been mapped by ExxonMobil as potential drilling locations in the SEAL basin, along with others including Ceres-1 in Block SEAL-M-351, Chinook-1 and Char-1 in Block SEAL-M-503 and Masu-1 in Block SEAL-M-573. ExxonMobil operates a total of nine deep-water exploration blocks in the SEAL basin with 50% stake and is partnered by Brazilian independent Enauta (30%) and Murphy Oil (20%). It is worth noting that the West Saturn is also expected to commence operations on Equinor’s Bacalhau field offshore Brazil in early April 2022.

In an operational update, Kistos reported that the Borr Drilling owned jackup Prospector-1 has left the Q10-A field offshore Netherlands (where Kistos has a 60% interest) and arrived at the Q11-B discovery, where spudding is expected later this week. Kistos also holds a 60% interest in the Q11-B discovery. The company updated that the Q11-B appraisal well represents the concluding planned activity for its 2021 drilling campaign and is anticipated to take a minimum of 6 weeks to drill and test. Kistos intends the well to be suspended for future use in a Q11-B development. Kistos had previously estimated 2C resources for this accumulation of between 67 - 155 Bcf net. This estimate was independently audited by Sproule and will be refined following review of all the data from the forthcoming well. At the Q10-A field, the completion of the company’s drilling campaign was highlighted by the appraisal of the Vlieland sandstone formation in the Q07 and Q10 blocks. As previously announced, it flowed oil to surface at a maximum stable rate of 3,200 barrels of oil per day (bopd). Pressure-volume-temperature (PVT) analysis of downhole samples has confirmed a light oil of 33° API, with a low sulphur content. Following the completion of drilling and intervention activities on the Q10-A field, gross gas production has reached approximately 2,000,000 Nm3/d (12,700 boe/d). It is worth noting that the Prospector-1 is also expected to commence drilling operations for Neptune Energy offshore Netherlands in December 2021, where it is expected to be remain engaged until end of first quarter 2022.

Far Ltd. has commenced drilling operations on the Bambo-1 exploration well in Block A2, offshore the Gambia. Ultra-deepwater drillship Stena IceMAX arrived on site November 12th after completing preparations and has successfully spudded the well.

TotalEnergies is on track to spud the Venus-1 exploration well offshore Namibia by year-end using ultra-deepwater drillship Maersk Voyager.

Apache has completed flow testing at Sapakara South (SPS-1) appraisal well, which was driller earlier this year by the semisub Maersk Developer. A restricted flow test averaged 4,800 bopd for 48 hours. Without flow restrictions, a development well would produce at a significantly higher sustained rate. Meanwhile, results from the first exploration well in the northern portion of Block 58, the Bonboni-1, proved insufficient to support a commercial development and the well will be plugged and abandoned by the drillship Maersk Valiant. Following completion of operations at Bonboni, the Maersk Valiant will drill the Krabdagu exploration prospect, just 18km east of SPS-1. Success at Krabdagu could materially increase the scope and sacale of a development in the central portion of Block 58. Apache envisions a potential black oil development hub that would accommodate production from Kabdagu, Sapakara and Keskesi. Elsewhere on Block 58, the Maersk Developer is nearing contract completion and TotalEnergies (operator) will release the rig once operations are completed at SPS-1. Apache will then mobilize the ultra-deepwater drillship Noble Gerry de Souza to Block 53 early in 2022. Where it has one committed well and options for two additional wells.

Jackup Valaris 122 has mobilised from the UK Seagull development to the Jaws exploration drilling site ahead of spudding in the coming days. The rig is committed to Shell until at least May 2022.

Demand

The Government of Guyana plans to auction new blocks for offshore oil exploration by the third quarter of 2022 and would be enforcing the ‘relinquishment clause’ in existing oil contracts so that the relinquished areas can be included in the planned auction. Currently, ExxonMobil has operating stakes in the three oil blocks offshore Guyana where exploration activities are underway, and in one case production. Exxon’s affiliate, Esso Exploration and Production Guyana, is the operator of the Stabroek Block with a 45% interest, while its partners Hess and CNOOC hold 30% and 25% interests respectively. Exxon also holds a 35% operating interest in the Canje Block, where its partners are TotalEnergies (35%), JHI (17.5%), and Mid-Atlantic Oil & Gas (12.5%). According to estimates, this block could hold as much as 10 billion barrels of oil in total, and drilling is ongoing there. Exxon recently announced a new 12-well campaign in the block which is set to begin in 2022. Also, Exxon operates the Kaieteur Block, which holds a gross estimated prospective resource of 2.1 billion barrels of oil, with a 35% interest along with its partners Cataleya Energy (25%), Ratio Guyana (25%) and Hess (15%). The joint venture partners in the Orinduik Block, operated by Tullow (60%), renewed their block license in October 2021, with some changes in the Petroleum Agreement. The 25% working interest previously held by TotalEnergies has been transferred to a new company – TOQAP Guyana – jointly owned by Total E&P Guyana (60%) and Qatar Petroleum (40%), and the third partner is Eco Atlantic (15%). With these changes, the current joint venture partners on the Orinduik Petroleum Agreement are Tullow Guyana (60%), Eco Atlantic (15%) and TOQAP (25%).

Africa Energy has re-tendered for a rig to drill the exploration well Gazania-1, on block 2B, before the exploration right expires in November 2022. Previously, midwater semisub Island Innovator was expected to move from the North Sea to South Africa to spud the well, but the spud date got delayed and the rig has now been secured for a different contract in the North Sea.

In an address to the Scottish Parliament, Nicola Sturgeon stated that she does not support the development of new oil and gas fields, including Siccar Point’s planned Cambo project. While the decision on sanctioning the Cambo development rests with the UK government, Sturgeon remarked that she has set out a proposal for a climate assessment with respect to its approval. The Cambo field is located west of Shetland, and operator Siccar Point Energy is looking to develop it in multiple phases, in partnership with Shell.  Cambo Phase 1 will involve drilling of nine producing wells and Siccar Point has been in the market looking for a semisub for the expedition. Cambo was originally due to be sanctioned in the third quarter of 2020 but has been hit by delays. In response to Sturgeon’s comments, the chief executive of Siccar Point Jonathan Roger remarked that Cambo would produce 50% less emissions from the outset than the average UK field and is one of the first to go through the Oil & Gas Authority's “stringent Net Zero Stewardship process”. He also stressed on the importance of Cambo towards ensuring UK’s energy security, given that the country’s production is on a steep decline.  Siccar Point is hoping to produce first oil from Cambo in the fourth quarter of 2025, according to environmental documents submitted earlier this year to the UK authorities. In response to Sturgeon’s remarks, a UK government spokeswoman has said that while the government supports the transition towards green energy, oil and gas cannot be abandoned overnight to ensure energy security, preserve jobs and industry, and reduce dependency on foreign imports. 

Repsol and its partners have plans to drill the Beebei-Potaro prospect in the Kanuku license offshore Guyana, in mid-2022. According to Tullow Oil, one of the partners, this is a commitment well that will target more than 200 MMbbl of resources from two intervals. It is understood that Repsol has requirement for a jackup to drill this well. Tullow also expects to bring onstream a new producer well (J57-P) on the Jubilee field offshore Ghana in December 2021, to boost production above 85,000 b/d. Drillship Maersk Venturer, which is currently engaged in development drilling for Tullow offshore Ghana, will expectedly be involved in the exercise. The rig is expected to remain engaged offshore Ghana until first quarter 2025.

The Bureau of Ocean Energy Management (BOEM) announced that Gulf of Mexico Lease Sale 257 generated $191,688,984 million in high bids for 308 tracts covering 1.7 million acres in federal waters of the Gulf of Mexico. A total of 33 companies participated in the lease sale. Chevron was the biggest spender as the US company acquired 34 blocks for the sum of $47,128,011 million, followed by Andarko (Occidental) and BP. ExxonMobil was the fifth largest spender and acquired a total of 94 blocks.

Mobilisation

Market sources indicate that mid-water semi Stena Don will over the coming days commence its mobilisation from Scapa Flow, in the Scottish Orkney Islands, to Morocco, ahead of a new drilling campaign with Chariot Oil. The rig is scheduled to undertake the drilling of one appraisal well at the Anchois discovery and will keep the rig busy until early next year. Rumours also suggest that a new North Sea contract could also be announced for the rig shortly.

Rig sales 

Awilco Drilling has confirmed that its 1983-built, cold stacked, mid-water semisub WilHunter is to be scrapped. The rig owner is currently pursuing recycling options for the rig.

Financial news

For the third quarter of 2021, Awilco’s contract revenue decreased to $7.4 million from $12 million reported in the second quarter of 2021. Rig operating expenses during the quarter increased to $7.4 million from $6.3 million reported in the previous quarter. EBITDA for the period was a negative $3.1 million compared to $3 million reported for the second quarter of 2021. Net loss for the period was reported at $4.6 million compared to a net profit of $1.6 million reported for the previous quarter. Awilco’s contract backlog at the end of the third quarter was $1 million, decreasing from $7.1 million reported at the end of the second quarter of 2021. Awilco owned semisub WilPhoenix concluded an exploration drilling engagement with Ithaca Energy in October 2021 and is being currently marketed for work. The rig’s Five-Year Class and Flag work was completed in July 2021 and the remaining SPS work (estimated at about $6 million) is scheduled to be carried out prior to commencement of new work. At the end of September, WilPhoenix had a total contract backlog of approximately $1 million and contract utilisation for the rig was estimated at 68.9%. Awilco’s other semisub WilHunter remained cold stacked in Invergordon, with a decision being made to recycle the rig and options being pursed to the effect. Awilco’s arbitration processes with Keppel FELS related to the contract terminations for newbuilds Rig 1 and Rig 2 (Nordic Winter and Nordic Spring) are ongoing. The company estimates claims amounting to $97.7 million as recoverable in relation to payments made for the newbuilds. Tribunal hearing for Rig 1 has been scheduled to commence in October 2022 with the award expected in Q1 2023, while the hearing for Rig 2 is expected after a couple of months from then. Total legal fees for both cases is expected to be approximately $10 million. With respect to a tax dispute with the UK HMRC in relation to the classification of an income booked in 2015 for the WilHunter (UK) Ltd, Awilco expects an outcome imminently. Commenting on the market outlook, Awilco remarked that increased tendering activity in UK during 2021 is resulting in contract awards for work commencing in 2022. Going into 2023 and 2024, the company feels that the North-West European floater market will continue to improve due to higher utilisation and improved dayrates, resulting from increased activity. Awilco says it is awaiting decisions on outstanding tenders, while exploring avenues for financing as well as pursuing opportunities in terms of consolidation, acquisition, and rig management.

KeyFacts Energy Industry Directory: Esgian

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