Soumya Mutsuddi, Esgian

This week TotalEnergies signed up semi Stena Spey for work off the UK, while Aker BP exercised an option on its contract for semi Deepsea Nordkapp off Norway. Meanwhile, Noble indicated plans to scrap drillship Noble Clyde Boudreaux, and Transocean's 8th gen. 20,000 psi drillship Deepwater Titan completed drydocking in Singapore.

Contracts 

Stena Drilling has signed a new contract with TotalEnergies for provision of mid-water semisub Stena Spey. The contract will last around 120 days in the UK sector of the North Sea commencing between 16th March 2022 and 15th April 2022. It is understood that this will cover plug and abandonment operations at the Janice field.

Icon Offsore has confirmed that its subsidiary IOSSB has received a letter of award from ConocoPhillips for the provision of 2014-built jackup Icon Caren for ConocoPhillips Sarawak’s 2022 drilling campaign offshore Malaysia. The contract involves drilling of three wells plus one optional well, and is expected to commence in the second quarter of 2022. The contract has an estimated value of $9.6 million.

Aker BP has exercised a new option on its contract for the Odfjell Drilling owned 6th gen harsh environment semisub Deepsea Nordkapp. The option covers the time necessary to complete four development wells at the Kobra East Gekko (KEG) development offshore Norway. Operations on the KEG development wells are expected to commence in January 2023 with a combined duration of approximately 430 days, which will keep the rig working until Q1 2024. The approximate contract value for the exercised optional scope is USD80 million (excluding any integrated services). In addition, a performance bonus will be applicable. An additional option period has been agreed which, if exercised shall follow completion of the KEG development wells.

In its Q4 2021 fleet status report, Noble announced exercised options and new contracts for its rigs in Australia, Norway, the USA and Guyana. The latest contract updates includes jackup Noble Tom Prosser's first three of nine one-well options exercised by Santos for work off Australia, while in Norway Equinor exercised the second and third of twelve one-well options for the HE jackup Noble Lloyd Noble. In the United States, drillship Noble Faye Kozack received an amended contract with QuarterNorth Energy for a total of three firm wells and three one-well options. Also, drillship Noble Stanley Lafosse had the first two (out of five) options exercised by Murphy Oil. Lastly, in Guyana, jackup Noble Regina Allen has been signed with Repsol for one firm exploration well, while Noble Tom Madden, Noble Sam Croft, Noble Bob Douglas and Noble Don Taylor received a conditional award of 7.4 rig years combined and reallocation of term from ExxonMobil under the Commercial Enabling Agreement.

Enterprise Offshore has penned a new contract with Hilcorp for the use of jackup Spartan 151 offshore Alaska. The contract will commence after the winter and includes P&A work and side-track drilling. The drilling campaign will last for approximately 4 months and Esgian estimate the dayrate to be about $85,000 per day.

Trillion Energy has signed an MOU with GSP Offshore for use of 1980-built jackup GSP Uranus at the company’s planned South Akcakoca Sub-Basin (SASB) natural gas project in the Black Sea, offshore Turkey. Trillion said that the rig was selected as it is currently located in the Black Sea, thus, reducing costs of mobilisation and because GSP has successfully drilled wells on the SASB gas field in the past. GSP anticipates that the rig will be able to commence operations during July 2022 subject to a definitive agreement being executed by all parties (GSP, TPAO and Trillion).  The dayrate for the engagement is $95,000, as per Trillion. The MOU anticipates drilling five new wells and two recompletions (the “Initial Program”). The duration of the Initial Project is expected to be 7 months with one new well being put into production every 15-45 days. Trillion also intends to utilise the rig for an additional 7-10 new well drillings /workovers continuously after the completion of the Initial Program, on the same or similar fiscal terms as the Initial Project.  This subsequent project primarily includes low-risk development wells and/or additional wells drilled into producing gas pool reserves. The exact number of wells targeted for the second program will depend on the results of the Initial Program. Trillion plans to drill all 17 wells, more or less continuously, bringing one new well into production every 45 days starting the 3rd quarter of 2022 and then throughout the duration of 2023. The parties have commenced negotiating a drilling services contract for the project which will reflect the principles agreed upon in the MOU. Trillion Energy is the owner of 49% interest in the SASB project while TPAO owns the remaining 51%. 

Drilling and discoveries

The Norwegian Petroleum Directorate has notified that Equinor has concluded the drilling of wildcat well 6407/9-13 in production licence 1060. The well is dry without traces of petroleum and has been permanently plugged and abandoned. Drilling was carried out by Seadrill-operated 6th gen. ultra-deepwater and harsh environment semisub West Hercules. On its next engagement, the rig is scheduled to undertake operations for Equinor offshore Canada in early Q2 2022.

ONGC announced a new discovery with exploration well VGN-1 (VGN-A) in Ratna & R-Series PML area, in the offshore Mumbai Basin. ONGC informed about the new discovery while announcing its financial results for third quarter of FY 2021-22. The company also indicated that this exploratory success has been declared as new Prospect Discovery.

The Norwegian Petroleum Directorate has granted drilling permits to Equinor for well 34/4-18 S located in production licence 057, and well 35/10-8 S located in production licence 293B. Both wells will be drilled during February 2022 using the 6th gen. deepwater and harsh environment semisub Deepsea Stavanger, which is currently working for Equinor offshore Norway.

The Norwegian Petroleum Directorate has granted drilling permit to Neptune Energy for well 35/9-16 S in production licence 153. The well will be drilled during February 2022 using the 6th gen. harsh environment semisub Deepsea Yantai.

JV partner Carnarvon Energy updated that jackup Noble Tom Prosser has spudded the Pavo-1 well in licence WA-438-P offshore Australia. The well has been drilled down to section depth of around 1,009 m with the 13 5/8-inch casing set and cemented in place. The rig is preparing to drill ahead in the 12 ¼-inch hole, as per Carnarvon. Following completion of the Pavo-1 well, the rig will drill the Apus-1 well which is located around 20 km south-west of the Pavo-1 well location. Carnarvon holds 30% interest in licence WA-438-P while Santos is the operator and holds 70%.

Dragon Oil has made an oil discovery in the Gulf of Suez offshore Egypt, its first find in the region. The company termed it as one of the largest discoveries in the region in the past two decades, which could contain about 100 million barrels in reserves. The announcement was made on the sidelines of the presently-running Egypt Petroleum Show (EGYPS) 2022.

Demand

Following the positive results at the Kawa-1 exploration well drilled by the 6th gen. ultra deepwater semisub Maersk Discoverer, JV partners CGX and Frontera will focus on the significant exploration opportunities in the Corentyne block and will not engage in drilling activities on the Demerara block in 2022. The Joint Venture is currently engaged in discussions with the Government of Guyana regarding the Demerara block and will provide an update on such discussions as soon as a conclusion has been reached. Kawa-1 early-stage Wireline Logging results confirm the Logging While Drilling (LWD) indications previously disclosed on January 31, 2022 with a total of 200 feet of net pay encountered at multiple depths.

Melbana Energy has been granted petroleum exploration permit AC/P70, located in the Territory of Ashmore and Cartier Islands, for an initial period of six years. Melbana made an application for this permit under the Australian Government’s 2020 Offshore Petroleum Exploration Acreage Release. Petroleum exploration permit AC/P70 contains the undeveloped Vesta-1 oil discovery drilled in 2005. The Vesta-2 appraisal well drilled in 2007 identified a gas cap. As per the Minimum Work Requirements for the permit Melbana is expected to drill one exploration well during the first three years, and a second exploration well is to be drilled in the 6th year. 

Frontera anticipates its consolidated exploration spending in Guyana for 2022 to be $110-$130 million. The company, through its JV with CGX Energy, will look to drill their second commitment well offshore Guyana, called  Wei-1, during the second half of 2022. The Wei-1 exploration well will be drilled in a water depth of approximately 580 m. Meanwhile, CGX anticipates spending a further $5-$10 million on Guyana infrastructure to advance the Berbice Deepwater Port Project, and is currently assessing several strategic opportunities to obtain additional financing to meet the costs of the drilling and infrastructure program.

CNOOC has signed four production sharing contracts related to four offshore blocks with TotalEnergies, ConocoPhillips, Roc Oil and Sinogeo. Smart Oil Investment, Sinogeo’s upstream arm, has committed to exploring Block 22/05 in the South China Sea. Sinogeo will have a 100% interest in the block during the exploration period lasting six years and will foot the bill for all the exploration activities, including seismic surveys and well drilling. In case of commercial discovery, CNOOC will farm in a 51% stake in the block during the production period, which will last 15 years. Sinogeo will be the operator of the block, and said that it will inject $18 million into its subsidiary to fund the exploration of the block. No details of the contracts CNOOC signed with TotalEnergies, ConocoPhillips and Roc Oil are available. 

Mobilisation

7th gen. ultra-deepwater drillship West Carina is expected to arrive in the Canary Islands shortly, where it will commence reactivation for its upcoming contract with Petrobras. The three-year contract with Petrobras is expected to commence in September 2022. Seadrill also won additional two tenders with Petrobras for the drillships West Tellus and West Jupiter.

Rig sales

Noble will divest the 3rd generation semisub Noble Clyde Boudreaux following the conclusion of its previous contract last year. The semisub is currently cold stacked in Malaysia and it is understood that bids are currently ongoing.

Financial

Borr Drilling reported operating revenue of $69.1 million for the fourth quarter of 2021, a decrease of 5% compared to the previous quarter, which was due to delays in start-up of new contracts from what was previously anticipated. Net loss for the period was $46.1 million, an increase of $13.5 million compared to the loss reported in the third quarter of 2021. The adjusted EBITDA for the period was $25 million, an increase of 25% compared to the previous quarter. As was previously announced, Borr reached an agreement with shipyards to defer $1.4 billion of debt and instalments from 2023 to 2025 subject to certain conditions. The company also completed $30 million equity raise in January 2022 at a price of $2.25 per share.

Noble reported contract drilling services revenue of $192 million for the fourth quarter of 2021, decreasing from $231 million reported in third quarter of 2021. The decrease in revenue was due to the sale of four jackups to ADES, the conclusion of the Noble Gerry de Souza's contract in Mauritania, the conclusion of the Noble Regina Allen's contract in Trinidad and Tobago, repairs on the Noble Hans Deul, and the impact of Hurricane Ida on the Noble Globetrotter II. Contract drilling services costs for the quarter were $183 million, down from $189 million in the previous quarter. Adjusted EBITDA for the fourth quarter of 2021 was $12 million compared to $47 million in the previous quarter. Marketed fleet utilization during the quarter was 77% compared to 81% in the third quarter of 2021. As at December 31, 2021, the Company's estimated revenue backlog totaled approximately $1.2 billion. Additionally, the Company had total liquidity of $860 million and net debt of $22 million as of December 31, 2021.  

Other Market news

Mexico's National Hydrocarbons Commission (CNH) approved the transfer of BP's 33% operating stake and Equinor's 33% stake to TotalEnergies in contract CNH-R01-L04-A1.CS/2016, covering a block known as Area 1 of the Salina Sureste basin. As a result, TotalEnergies’ position in the block has increased to 100%. The block is located offshore the Mexican states of Veracruz and Tabasco at water depths ranging from 200 to 3,100 m.

A fire erupted on the shallow water Octli platform offshore Mexico last weekend, according to domestic media sources. It is reported that no people were injured, and all the workers were evacuated. The incident marks the third major fire incident offshore Mexico within a period of 13 months, including the explosion in a subsea gas pipeline which created the widely shared “eye of fire” and a fire on the PEMEX platform Ku-Maloop Zaap in the Campeche region causing several deaths and injuries.

As per Reuters, Shell is planning to sell its 50% operated stakes in a cluster of fields in the Clipper hub, as well as the Leman Alpha complex, in the UK North Sea. Reuters also indicated the sale of these assets could fetch up to $1 billion in total. The planned sale is understood to be part of Shell’s ongoing effort to divest mature assets with the company having sold multiple ageing assets in the North Sea in recent years.

Aquadrill-owned 6th gen. ultra-deepwater drillship Polaris reportedly caught fire on 15th February 2022 at the Hambantota Port in Sri Lanka. The fire was quickly extinguished with assistance from the Hambantota International Port Emergency Response Unit together with the port’s Quality, Health, Safety & Environment Dept, and Port Control. Port authorities also added that they were able to prevent any serious damage to the rig, or its surrounding area. The  2008-built drillship called at the Hambantota Port for a lay-up in January 2021 and is expected to remain in port until June 2022. The rig is currently being managed by Vantage Drilling.

Transocean reported that that its 8th gen. ultra-deepwater drillship Deepwater Titan has completed drydocking in Singapore. The rig is the first of Transocean’s two 8th gen. newbuild drillship, the other being Deepwater Atlas. Both rigs will be installed with 20,000 psi BOPs, and will be the only two 8th gen drillship in the market when delivered. Upon delivery, both the rigs will be mobilised to the US Gulf of Mexico, where the Deepwater Titan will commence work for Chevron, while the Deepwater Atlas for Beacon.

KeyFacts Energy Industry Directory: Esgian