Hans Jacob Bassoe, Esgian

This week FAR Ltd temporarily halted drilling of the Gambian Bambo-1 exploration well using drillship Stena IceMAX, while semisub Borgland Dolphin drilled a dry well offshore Norway for PGNiG. Meanwhile, Seadrill announced the launch of solicitation of votes in regards to the chapter 11 plan of reorganisation.

Contracts

FAR Ltd and its JV partner Petronas have temporarily halted drilling of the Bambo-1 well offshore The Gambia, after experiencing significant fluid losses. The well is being drilled by the 6th gen, harsh-environment drillship Stena IceMax. FAR also indicated plans to plug and sidetrack the well to continue drilling to the planned total depth of 3,450m. This will extend the period of operations, which are now expected to complete in late December 2021 while the total cost to complete the well will increase from $51.4 million to $61.27 million. On its next engagement, the Stena IceMax is scheduled to commence operations for Energean offshore Israel during first quarter 2022.

Serica Energy has firmed up a rig contract to cover drilling of the high-impact North Eigg exploration well, offshore the UK, in the summer of 2022. North Eigg is a gas prospect located close to Serica’s BKR fields and it is expected that a successful discovery could be tied back to existing infrastructure in a carbon neutral manner. The operator has not yet confirmed the rig to be used during the program. 

Drilling and discoveries

PGNiG Upstream Norway AS, operator of production licence 937, is in the process of concluding the drilling of wildcat well 6306/3-1 S in the Norwegian Sea. The well was drilled to a vertical depth of 2,353m below sea level and was found to be dry with no traces of petroleum. This is the first exploration well in production licence 937, with the licence being awarded in 2017. Drilling was carried out by the 1977-built semisub Borgland Dolphin in a water depth of 241m. The well will now be permanently plugged and abandoned and the rig is next scheduled to undertake exploration drilling for Wellesley Petroleum offshore Norway. 

Demand

Siccar Point has officially paused development of its UK West of Shetlands Cambo oilfield, following the decision last week by partner Shell to exit the licence. The operator has confirmed it cannot continue on the “originally planned timescale” after Shell withdrew from the proposals due to concerns over the economic justification. Jonathan Roger, CEO of Siccar Point Energy, which has a 70 per cent stake in the project, said: “Following Shell’s announcement last week, we are in a position where the Cambo project cannot progress on the originally planned timescale. “We are pausing the development while we evaluate the next steps. “We continue to believe Cambo is a robust project that can play an important part in the UK’s energy security providing homegrown energy supply and reducing carbon intensive imports, whilst supporting a just transition.” The first phase of the development was planned to involve drilling of nine wells from a harsh-environment semisub starting in 2023. 

OMV Petrom CEO Christina Verchere has said that the company could postpone a final investment decision (FID) on its Neptune Deep gas project in the Black Sea until 2023 if Romanian lawmakers do not amend an offshore tax law by year end 2021. A new coalition government in Romania has committed to amending the law involving extra taxes on offshore gas projects, however it remains to be seen if the same can be achieved before end 2021. OMV Petrom owned Neptun Deep along with ExxonMobil, however ExxonMobil selling its stake to Romgaz in a deal which is expected to finalise in the first quarter 2022.

Trinidad and Tobago has launched its 2021 Deep Water Competitive Bid Round for 17 blocks offshore Trinidad and Tobago. Blocks for the Bid Round were selected based on internal technical evaluation, nominations as well as proximity to the current Deep Water development. The offshore blocks on offer are, namely, Blocks 23 (b), 24, 25 (a), 25 (b), 26, 27, TTDAA 1, TTDAA 2, TTDAA 4, TTDAA 8, TTDAA 9, TTDAA 11, TTDAA 15, TTDAA 25, TTDAA 26, TTDAA 28 and TTDAA 29, located off the northern and eastern coasts of Trinidad and Tobago. The Bid Round will be open for six months, with the deadline for submission being June 2nd, 2022 and successful bidders would be announced three months from the close.

ONGC has indicated that it is looking to collaborate with international partners to carry out joint exploration in deep water and other blocks offshore India. ONGC managing director Subhash Kumar has been quoted indicating that the company is in advanced discussions with ‘two or three major international companies’ in carrying out joint exploration in Indian waters. He also indicated that as part of a revamped strategy, international partners are being approached with “very specific kind of proposals and only for the areas where they have succeeded in the past". With respect to capex allocation, ONGC is understood to have plans to spend up to $4 billion during the current fiscal year (2021-22), while earmarking a similar allocation for the next financial year. As per Kumar, up to $1.5 billion of the capex allocation is likely to be spent on exploration activities, including drilling, in the current fiscal year. In addition, about $1 billion would be spent on development drilling, while the rest would be allocated towards project developments.

Prior to its Annual General Meeting, Europa Oil & Gas issued an update on its global operations. With respect to its interests offshore Ireland, the company is awaiting approval from the Irish regulators for its proposed acquisition of a 100% interest in the Frontier Exploration Licence (‘FEL’) 3/19 in the Slyne Basin. As per Europa, this acquisition will help build its gas portfolio in Ireland, which already includes the flagship 1.5 tcf Inishkea gas prospect, also in the Slyne Basin. Subject to receiving regulatory approval, Europa intends to offer farmout opportunities on this licence. Further, Europa has a 75% interest in the Inezgane licence, located in the Agadir Basin, offshore Morocco. The company has indicated that technical work on the project has been completed, which has helped identify a significant resource potential in excess of one billion barrels of oil equivalent. On 3rd August 2021, Europa had informed its shareholders that a farm-out process for this asset has been launched and the company indicated that it has received an encouraging interest in the project till date.

Rockhopper Petroleum along with Harbour Energy and Navitas Petroleum have signed detailed heads of terms under which Harbour will divest its current licence interests in the Sea Lion development offshore Falkland Islands, while Rockhopper and Navitas will align their working interests with Rockhopper holding 35% and Navitas holding 65%. Rockhopper and Navitas will jointly commence technical work in relation to a lower-cost, alternative development for the Sea Lion development utilising the existing design and engineering work undertaken for the project in recent years. Rockhopper's share of Sea Lion costs from transaction completion up to Final Investment Decision (FID) will be funded through a loan from Navitas with interest charged at 8% per annum (the "Pre-FID Loan"). In the event of a positive FID, Navitas will provide an interest free loan to Rockhopper to fund two-thirds of Rockhopper's share of development costs (for any costs not met by third party debt financing). In the event that FID has not occurred within five years of completion of the proposed transaction, Rockhopper can elect to remove Navitas from the licences (should the licences still be in effect at that time) by repaying the Pre-FID Loan. Finalisation of definitive documentation for the project plan is expected in Q1 2022 with completion subject to satisfaction of certain conditions including regulatory approval. Navitas will become the operator of Sea Lion upon completion. Also, there is potential for roping in an additional project partner dependent upon funding requirements, and should an additional partner be required, Rockhopper does not intend to reduce its working interest.

Mobilisations

Semisub Valaris DPS-5 has completed its contract with ENI in Mexico and is now mobilising to US Gulf of Mexico. The rig's SPS is due at the end of January and it is expected to move to the US for the renewal.

Borr Drilling jackup Groa has commenced mobilisation to the Middle East. The jackup has been warm stacked in Cameroon since Q2 2020 but secured a 2-year contract with an undisclosed operator in the Middle East last month.

Mid-water semisub Stena Spey has completed its 10-well plug and abandonment campaign for Kinsale Energy offshore Ireland and has now moved to Scapa Flow in the UK Orkney Islands for stacking. Rumours indicate that a new deal could soon be in place for the rig to return to work in 2022. 

Market sources indicate that jackup Maersk Resolute has commenced mobilisation from Esbjerg, Denmark, to the Dutch sector to commence a new drilling campaign for ONE-Dyas. The rig will drill the Ijssel and Clover wildcat wells over an estimated period of 84 days and the operator also has two one-well options available thereafter. 

Jackup Noble Hans Deul has now returned to the UK Southwark field for Independent Oil and Gas to resume drilling operations as part of the Core Project Phase 1. Work was halted on the rig in November due to problems with one of the rig’s legs and it was moved inshore for inspection. The unit is committed until Q3 2022. 

Incidents

Shell has confirmed that Transocean drillship Deepwater Pontus has been forced to stop working since losing a blowout preventer (BOP) when completing a well late last month. A Shell spokesperson confirmed that a BOP had been dropped to the ocean floor while the drillship was preparing to move off a well located in the Mars Corridor in the Mississippi Canyon area in the Gulf of Mexico. It has been reported that the wellhead remains secure, no leaks have been detected, and there were no injuries.It is understood that the riser broke above its flex joint which resulted in the dropped 15K BOP. Reports suggest that the rig is being used to retrieve the BOP.

Energy transition

The Australian government has announced five new areas in Commonwealth waters are now available to explore for greenhouse gas storage opportunities. The 2021 Offshore Greenhouse Gas Storage Acreage Release bidding round, which opened December 6th, is centred around prospective locations offshore Northern Territory and Western Australia. Work program bids are to be submitted to the National Offshore Petroleum Titles Administration by March 3th to March 10th 2022.

Financial news

Earlier this year, Borr Drilling was given a notice from New York Stock Exchange (NYSE) that the Company was not in compliance with the NYSE continued listing standards as the average closing price of its common shares had fallen below $1 per share over a period of 30 consecutive trading days. In result, Borr Drilling's Board of Directors has approved a 2-to-1 reverse share split of the Company's shares. Post share split, every two shares of the Company's issued and outstanding common shares will be combined into one issued and outstanding common share, which will adjust the par value share price of $0.05 per share to $0.10 per share. The last trading day before the effective date is December 13th.

Seadrill Limited and the Issuer announce, further to previous announcements made by Seadrill and the Issuer including on July 2, 2021, the launch of solicitation of votes in respect of the Issuer’s chapter 11 plan of reorganisation (the “Plan”). Following solicitation, the Issuer and certain of its subsidiaries intend to file pre-packaged chapter 11 cases in the US Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) and seek approval of the Plan.

Other Market news

Chevron's Angolan affiliate, Cabinda Gulf Oil Company Ltd (CABGOC), announced the extension of the Block 0 concession, offshore Angola. The agreement extends the concession for 20 years, through 2050. Under the agreement, CABGOC will remain the operator with 39.2% interest with its partners Sonangol EP (41%), TotalEnergies (10%) and ENI (9.8%).

In September 2021, United Oil & Gas had entered into a binding sale and purchase agreement ('SPA') with Quattro Energy Ltd to sell its Central North Sea Licences P2480 and P2519, offshore UK. As per the original agreement, the long stop date for satisfaction of the SPA conditions was 6th December 2021, which has now been extended to 28th February 2022 to allow additional time for the SPA conditions required for completion. United Oil & Gas indicated that a further update will be provided in due course. The company holds 100% equity interest in the two licences.

Global Oil & Gas has announced that Western Gas and Prominence Energy Ltd have executed a binding Term Sheet for a 12.5% interest in the Sasanof-1 Prospect. As a result, stakeholders in the prospect now include Western Gas (62.5%), Global Oil & Gas (25%), and Prominence Energy (12.5%). The Sasanof-1 exploration well is in permit WA-519-P offshore Western Australia and will be a vertical well drilled to a total depth of approximately 2,500 m in 1,070 m of water. Drilling costs are estimated to be in the range of $20-25 million. In November 2021, Western Gas and Valaris had executed a formal contract which would involve the ultra-deepwater 6th gen. semisub Valaris MS-1 to commence drilling the well in March/April of 2022, following completion of its current engagement for Eni, also in Australian waters.

Sval Energi has entered a deal to acquire Spirit Energy’s Norwegian assets, excluding its interests in the Statfjord area, which will be acquired by Equinor under a separate agreement. According to Sval Energi, the transaction is worth $1,026 million and includes 45 licenses (6 operated), including 7 producing fields (2 operated) and several development and exploration opportunities. Following the acquisition, Sval’s portfolio will comprise of material producing assets as well as ongoing and planned development projects, in addition to discoveries and exploration licenses. Through this transaction, Sval becomes the operator of two producing subsea fields. The acquisition has an effective date of 1st January 2021 and is expected to be completed in the second quarter of 2022, subject to standard conditions, including customary approvals from regulatory authorities. Following completion of the sale of its Norwegian assets, Spirit Energy will only hold licences offshore UK and Netherlands. In a separate transaction, Equinor has entered into an agreement to acquire all of Spirit Energy’s production licenses in the Statfjord area, which spreads across the Norwegian and UK continental shelves, for a total consideration of USD 50 million plus a contingent payment linked to commodity prices for the period between October 2021 to December 2022. The transaction has a commercial effective date from 1 January 2021 and is expected to be completed by the first half of 2022, subject to certain conditions, including customary government approval.

Valaris Limited has appointed Mr. Anton Dibowitz as President and Chief Executive Officer, effective immediately. Mr. Dibowitz, who has been serving as interim President and Chief Executive Officer of Valaris since September 3, 2021, is also a member of the Company’s Board of Directors.

Valaris has announced that Famatown Finance Limited, a company indirectly controlled by trusts settled by John Fredriksen and a member of The Seatankers Group, has accumulated approximately 5% of the company’s common shares. Valaris has also entered into a support agreement with Famatown, granting Board observer rights to a Famatown designee upon the satisfaction of certain conditions specified in the support agreement. The support agreement also provides Famatown with the potential to designate a member of the Valaris Board should Famatown increase its ownership of Valaris shares in an amount that the Board deems sufficient.

NEO Energy has completed the acquisition of a portfolio of non-operated oil and gas assets in the central and northern North Sea from ExxonMobil. The deal was first announced in February 2021 and is worth $1 billion. In a separate statement, ExxonMobil also confirmed the completion while noting that the sale price has an additional upside of approximately $300 million in contingent payments based on potential for increase in commodity prices. The sale includes ownership interests in 13 fields operated mostly by Shell, including Penguins, Starling, Fram, the Gannet Cluster and Shearwater; Elgin Franklin fields operated by Total; and interests in the associated infrastructure. ExxonMobil’s share of production from these fields was 38,000 oil-equivalent barrels per day in 2020. ExxonMobil retains its non-operated share in upstream assets in the southern North Sea, and its share in the Shell Esso gas and liquids (SEGAL) infrastructure that supplies ethane to the company’s Fife Ethylene Plant.

KeyFacts Energy Industry Directory: Esgian

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