Hans Jacob Bassoe, Esgian

This week Japan Drilling Company secured a new contract for drilling operations offshore Japan, while Vantage confirmed that it will take over commercial management for semisub Aquarius from Seadrill. Meanwhile, Hess Corp announced its exploration budget for 2022 with large allocations for offshore drilling off Guyana.

Contracts 

Japan Drilling has been awarded a new drilling contract from INPEX Offshore San-in Co., Ltd involving the 3rd gen. semisub Hakuryu-5. Operations are planned for March to July 2022 in the Offshore San-in, Japan. The rig is understood to have recently completed an engagement with PTTEP offshore Myanmar and is currently en route to Singapore.

Aquadrill and a subsidiary of Vantage Holdings International have reached an agreement for Vantage to manage and market the harsh environment semisub Aquarius. Vantage Drilling is also the commercial manager of ultra-deepwater drillship Capella and Polaris.

Drilling and discoveries

Carnarvon Energy has updated that wireline logging operations have been completed at the Buffalo-10 well offshore Australia, with the previously discovered oil column determined to be residual and uncommercial. Jackup Valaris 107 is currently engaged at the well and Carnarvon has said that it would carry out work to leave the well ‘in a safe condition’ before the rig is demobilised. On its next engagement, Valaris 107 is expected to commence operations for Vermilion Energy offshore Australia in early April 2022.

IOG says that it along with its drilling contractors, assisted by technical experts, have been working to urgently investigate a range of potential solutions to recommence drilling operations at Southwark after jackup Noble Hans Deul was forced to suspend drilling earlier in January due to unfavourable seabed conditions. IOG added that data from a new Southwark seabed survey is now being analysed to inform relocation and remediation options. The optimal plan would potentially enable the rig to safely resume Southwark drilling in the next 4-6 weeks, with scour protection applied after arrival. However, this remains subject to further investigation and an alternative plan may be required. The company clarified that next steps and timing are likely to be clearer once survey data analysis is completed this week.

Ultra-deepwater drillship Stena DrillMAX has completed the drilling of Fangtooth-1 well off Guyana, which encountered approximately 164 feet of high quality oil bearing sandstone reservoirs. The operations also confirms the deeper exploration potential of the Stabroek Block. The Stena drillship has since moved to the Tarpon prospect and have commenced drilling of the Tarpo-1 exploration well this week. Elsewhere on the Stabroek Block, the Lau Lau-1 exploration well was drilled by Noble drillship Noble Don Taylor. The well encountered approximately 315 feet of high quality hydrocarbon bearing sandstone reservoirs. Noble Don Taylor has now moved and commenced drilling at the Barreley prospect.

The Petroleum Safety Authority Norway has given Norske Shell consent for exploration drilling in block 6305/5 in the Norwegian sea. Well 6305/5-C-3 H will be drilled by the 6th gen harsh environment ultra-deepwater semisub Transocean Barents. The rig is expected to commence operations in early Feb 2022.

The Petroleum Safety Authority Norway has given Equinor consent to drill exploration well 7220/8-2 in the Barents Sea. The well will be drilled by the 6th gen harsh environment semisub Transocean Enabler, which has been working for Equinor offshore Norway since 2016.

Wellesley Petroleum has concluded drilling of the exploration well 36/1-4 S on PL 885 in the Norwegian North Sea. The well encountered the Krossfjord Formation with water-bearing sandstone rocks at about 33 metres, with poor to moderate reservoir quality. The well has been classified as dry and will be permanently plugged and abandoned. The well was drilled by the harsh environment semisub Borgland Dolphin which will now move to Fedafjorden before it will recommence operations for Wellelsey offshore Norway in early February 2022.

Financial 

Borr Drilling announced that it has received consents from its creditors to enter into the agreements with the shipyards as per the terms agreed in December 2021. Borr has agreed to enter into negotiations with the lenders of the Facilities and certain holders of the 3.875% Senior Unsecured Convertible Bonds due 2023 (the "Convertible Bonds") and will make efforts to reach a binding refinancing of the Facilities and the Convertible Bonds by 31 March 2022 and complete such refinancing by 30 June 2022. The company has also agreed with the lenders of the Facilities an amendment to one of its financial covenants such that its book value to equity ratio requirement will remain 25% until 30 June 2022. The date of settlement of the Offer Shares is expected to be on or about 28 January 2022, subject to satisfaction of the other closing conditions referred to in the announcement made on 28 December 2021. The Offer Shares will be listed on the Oslo Stock Exchange upon delivery.

Other Market news

Kuwait Foreign Petroleum Exploration Company (Kufpec) has announced that that its wholly-owned subsidiary Kufpec Indonesia has made a commercial discovery of gas and condensate following the successful drilling of the Anambas-2X well in the Anambas Block, offshore Indonesia. The well was understood to have been drilled by Vantage Drilling owned jackup Soehanah. The jackup is likely to remain engaged with Kupec during January 2022 and expected to commence its next engagement with Medco Energy offshore Thailand in February 2022. Kufpec said the “discovery marks the first operated offshore exploration discovery,” for the company and showcases its “potential as an operator of offshore oil and gas projects.”

Capricorn Energy reported that following the completion of the sale of its UK North Sea interests (Catcher and Kraken) to Waldorf Production, the company expects to receive an earn-out consideration of ~$76 million from Waldorf in Q2 2022. Uncapped further earn-out consideration will be payable in respect of calendar years 2022 to 2025, based on meeting minimum production volumes and average oil prices. Meanwhile, in Mexico, Block 10 (Capricorn 15% working interest) operations were completed in Q4 2021 on the Eni-operated Saasken-2DEL appraisal well. The well has been temporarily plugged and abandoned with the acquired data being evaluated as part of the ongoing Saasken Evaluation Programme. The Eni-operated Yatzil exploration well in Block 7 offshore Mexico (Capricorn 30% working interest) is planned for H2 2022. Offshore UK, the Jaws exploration well (Capricorn 50% working interest) was spudded in November 2021. Drilling operations on the Jaws well continue with well results expected later in Q1 2022. In the Southern North Sea, the acquisition of 3D seismic data over licence P2428 (60% Capricorn working interest) has concluded. Final processed data due in Q2 2022 will enable Capricorn and its JV partner Deltic Energy to fast-track an assessment of prospectivity in the licence area. In addition, the company added that preparations continue on the Capricorn operated licence P2379 offshore UK (Capricorn 50% working interest) where jackup Valaris 123 has been contracted to drill the Diadem exploration well in Q2 2022.

Hibiscus Petroleum has announced completion of the acquisition of oil and gas assets from Reposl. The company indicated that the completion came after all conditions were fulfilled as announced on 20 January 2022. The asset portfolio comprises interests and operatorship in the following production sharing contracts (“PSCs”) in Malaysia and Vietnam: 60% interest in the 2012 Kinabalu Oil production sharing contract off the coast of Sabah, Malaysia; 35% interest in the PM3 CAA PSC located in the Northeast Malay Basin, within the Commercial Arrangement Area between Malaysia and Vietnam; 60% interest in each of the PM305 and PM314 PSCs located in the Southwest Malay Basin, offshore Peninsular Malaysia; and 70% interest in Block 46 (Cai Nuoc) located in Northeast Malay Basin, in Vietnamese waters. Hibiscus’ joint venture partners are Petronas Carigali in the Kinabalu, PM305 and PM314 PSCs; Petronas Carigali and PetroVietnam Exploration & Production (PVEP) in the PM3 CAA PSC; and PVEP in Block 46. Hibiscus said that out of the purchase price of $212.50 million, the net amount paid at completion is $123.65 million after taking into account various adjustments including the deposit paid of $15.00 million.

Hess Corporation announced E&P capital and exploratory budget of $2.6 billion, of which approximately 80% will be allocated to offshore Guyana and the Bakken (onshore). In Guyana, the company will focus on the oil developments on the Stabroek Block, which have a Brent breakeven oil price of $25-$35, and continue the exploration and appraisal programme. Approximately $450 million have been allocated to the exploration programme which includes the drilling of 12 exploration and appraisal wells on the Stabroek Block, the Huron-1 well in the Green Canyon area of the Gulf of Mexico, and the Zanderij-1 on Block 42 in Suriname.

Murphy Oil Corp announced planned capex in the range of $840 - 890 million for 2022, an increase from the capex guidance of $675 – 725 million announced for 2021. The capex guidance excludes Gulf of Mexico non-controlling interest. The company plans to spend approximately $330 million, or 38% of 2022 capex on Gulf of Mexico development drilling and field development projects. This includes bringing the major Khaleesi, Mormont, Samurai projects online as well as advancing the non-operated St. Malo waterflood project prior to its completion in 2023. Other plans include drilling an operated development well at Dalmatian with production scheduled to come online in 2023 and executing subsea tiebacks at non-operated Lucius. Approximately 8% of capex or $70 million has been allocated for offshore acreage in Canada, with $55 million earmarked to support the sanctioned asset life extension project for the non-operated Terra Nova FPSO and the remaining $15 million to support development drilling and field development at the non-operated Hibernia. For its 2022 exploration program, the company has earmarked 9% of its capex budget or $75 million, with the majority of spending designated for drilling exploration wells in Brazil, offshore Mexico and Brunei. Quoting Murphy Oil CEO Roger W. Jenkins, Upstream indicated that Murphy along with its JV partners have plans to drill a new exploration well in Block CA-1 offshore Brunei, with the partners ‘currently finalizing well objective plans and evaluating prospectivity ahead of the final location selection’.

ONGC Videsh Limited (OVL), a wholly owned subsidiary of ONGC, announced that after detailed evaluation, it has entered a development stage with the submission of Declaration of Commerciality (DoC) for the block BM-SEAL-4. The company had registered a major gas discovery in 2019 in its deepwater block BM-SEAL-4 offshore Brazil, where Petrobras is the operator with 75% Participating Interest (PI) while OVL holds 25%. The block development module of Petrobras envisages the installation of a shared FPSO and a gas pipeline. The name suggested to the Brazilian regulator for the field is Budião. The development module is presently in the contract planning phase and is expected to start production after 2026. The Consortium plans to continue all operational activities for submission of the Development Plan to the regulator and meeting the target for the first oil.

COSL has estimated that capex for the company in 2022 will be RMB4.16 billion ($656 million). The company indicated that 2022 capex will be mainly used for construction of production bases, renovation of the facilities, machinery and equipment as well as investment in technology research and development. Based on the current domestic and international orders secured by the company, it expects that workload of the four major segments, the geophysical acquisition and surveying services, the drilling services, the well services and the marine support services, will remain on a steady rise throughout 2022.  COSL also indicated that the strategic guidance is based on the current operations of the company and current market conditions.

Petronas is offering 14 exploration blocks, six clusters of Discovered Resource Opportunities (DRO) and one cluster of Late Life Assets (LLA) as part of the Malaysia Bid Round 2022 (MBR 2022). The 14 exploration blocks on offer are located in prolific geological provinces within the Malay, Sabah and Sarawak basins. Most of these blocks contain existing oil and/or gas discoveries that will accelerate monetisation activities. The six DRO clusters featured in the MBR 2022 are Meranti, Ubah, Baram Jr., A, C, and D, mostly in shallow water and are nearby existing production infrastructure. In addition, the single LLA, which includes a cluster of three fields named the Abu Cluster, provides opportunity for the new operator to sweat the remaining oil in place using existing facilities. Petronas is also offering technical study arrangements for two exploration areas in southern Malay Basin and northwest Sabah Basin. Through the study, investors will have an opportunity to better understand the potential of the acreages, prior to submitting a bid proposal.

Woodside has announced plans to withdraw from its interests in Myanmar, where it has been operating since 2013. The company had previously announced that it was placing all Myanmar business decisions under review following the State of Emergency declared in February 2021 and the deteriorating human rights situation in the country. Woodside said that it will now commence arrangements to formally exit Blocks AD-1 and AD-8, the A-6 Joint Venture and the A-6 production sharing contract (PSC) held with the Myanmar Oil and Gas Enterprise (MOGE). The company also said that the non-cash expense associated with the decision to withdraw from Blocks A-6 and AD-1 is expected to impact 2021 net profit after tax (NPAT) by approximately US$138 million.

As Vaar Energi approaches its IPO, the company’s CEO Torger Rod has told Upstream that the company is focused on growth and will continue to explore for more oil and gas. He indicated that the company would drill eight to twelve exploration wells per year, most of them near existing infrastructure, which allows for fast-track developments and quick payback. He added that there are also plans to drill one or two wells per year in search for potential new stand-alone developments. Rod believes that the Norwegian Continental Shelf will remain one of the most attractive regions globally due to low production costs, stable regulatory environment, low emissions from production and still plenty of oil and gas remaining on the shelf. While many operators are branching out into renewable energy, Vaar Energi intends to remain a pure oil and gas player in Norway.

KeyFacts Energy Industry Directory: Esgian