Soumya Mutsuddi, Esgian

This week Saipem and Maersk Drilling announced new contract awards, while Aker BP and Conoco Phillips received regulatory consent for exploration drilling off Norway. Meanwhile, Stena Drilling announces the forthcoming addition of a newbuild 7th gen ultra-deepwater drillship to its fleet.

Contracts 

Velesto Energy has received a Letter of Award from Petronas for the provision of its Naga suite of jackups in a contract with a firm duration of two years along with extension options for another two years (one year plus one year). The contract is expected to commence in Q1 of 2022. Velesto's Naga suite of jackups include the Naga 2, Naga 3, Naga 4, Naga 5, Naga 6, and Naga 8. Velesto said it will provide its jackups as called out by Petronas during the contract duration, subject to the rig availability and operator suitability.

Maersk Drilling reported a new contract award for the harsh environment jackup Maersk Resolve in the UK North Sea. Contract commencement is expected in April 2022, with an estimated firm duration of 150 days, along with options worth 85 days. The client has not been named and the contract value is approximately $16.9 million, including mobilisation and demobilisation fees. The rig is currently warm-stacked in Esbjerg, Denmark after completing its previous contract for Ineos offshore UK in January 2022.

Aban Offshore jackup Deep Driller 2 is scheduled to commence a new contract for Dana Gas offshore Sharjah, UAE, towards end of March 2022. The contract duration is understood to be 60 days. The rig’s last engagement was with ADNOC off the UAE, which it completed in May 2021.

Market sources indicate that Qatargas has contracted jackups Noble Mick O'Brien and Noble Houston Colbert for 3.5 years each. Noble Mick O'Brien is already contracted to the operator and the new contract is expected to commence in September 2022. Noble Houston Colbert is expected to start its contract with Qatargas in July 2022. The jackup is currently stacked in the United Kingdom and will undergo reactivation before contract commencement.

Saipem received a contract award from Aker BP for its 6th gen harsh environment semisub Scarabeo 8 for a drilling campaign offshore Norway. The operations are expected to commence from end Q4 2022, upon completion of the current engagement for the rig. The contract duration is three years and has an approximate value of $325 million. The contract also includes the option of two one-year extensions and encompasses potential upsides among which a performance bonus scheme and a mechanism of rate adjustment to market rates from the third year onward. The rig is currently working for Wintershall Dea off Norway, with the contract including options to extend work until end 2022. 

Drilling and discoveries

Semisub Valaris DPS-5 has commenced its one-well charter with Kosmos Energy in the US GoM. The 8500-series rig is on location in Mississippi Canyon Block 727 in the Kodiak field, after having recently completed its five-year SPS. Following the job with Kosmos, which has an estimated duration of 105 days, the rig has backlog lined up with Apache and Murphy that will keep it working into the fourth quarter of this year.

Equinor has been granted an exploration drilling permit by the Norwegian Petroleum Directorate for wildcat well 7220/8-3 in production licence 532 offshore Norway. Drilling would be carried out by the 6th gen harsh environment semisub Transocean Enabler during April 2022.

Equinor has been granted an exploration drilling permit for wildcat well 34/9-1 S in licence 1049 offshore Norway. Drilling is expected to be carried out during March 2022 using the 6th gen deepwater and harsh environment semisub Deepsea Stavanger.  

JV partner Horizon Oil informed that development drilling operations have commenced at Weizhou 12-8 East Project of Block 22/12 in Beibu Gulf, offshore China. Jackup COSLStrike has commenced drilling operations, and the campaign involves a seven well drilling programme targeting oil in the WZ12-8 East area. Roc oil is operating the drilling and early production phases of WZ12-8 East Project. The drilling programme is expected to conclude towards the end of July. JV partners in the project are CNOOC Ltd (51%), Horizon Oil (26.95%), Roc Oil (19.6%), and Oil Australia (2.45%).

Demand

Aker BP has received consent from Norway’s Petroleum Safety Authority for exploration drilling in production licence 1085 in the North Sea. Well 2/8-19 in the Overly prospect will be drilled using the ultra-harsh environment jackup Maersk Invincible over a duration of 16 days in case of a dry hole or 21 days in case of a discovery. The rig is currently working for Aker BP off Norway.

Conoco Phillips has received consent from Norway’s Petroleum Safety Authority for exploration drilling in production licence 1064 in the Norwegian Sea. The well 6507/4-3 S in the Peder prospect will be drilled using the 6th gen harsh environment semisub Transocean Norge over a duration of 50.6 days in case of a dry hole or 66.3 days in case of a discovery. The rig is currently working for Conoco Phillips off Norway.

ONGC has launched a tender for 6 jackups (comprising 4 MLT/BMC and 2 F&GL) for 3-years duration each, for work offshore India. Bids are due by late-April and market sources indicate that the entire requirement possibly involves renewal of incumbent rigs. Start is estimated towards late 2022 or early 2023.

Esso Australia, a subsidiary of ExxonMobil, has made a final investment decision to develop additional gas from the Kipper field in Gippsland Basin offshore Australia. The company said that it is also advancing funding decisions to optimize production from the Turrum field. It further added that the estimated investments of A$400 million ($295.4 million) could deliver an additional 200 petajoules of gas over the next five years. 

Eco (Atlantic) Oil & Gas has signed a commercially binding term sheet to acquire 100% of JHI Associates Inc., including JHI's 17.5% working interest in the Canje Block offshore Guyana. The transaction is proposed to be a cashless acquisition, with a value of approximately $52 million at Eco’s current share price. As per Eco, the acquisition adds to Eco's strategic acreage position in Guyana and paves the way for further drilling activity on the company's blocks over the coming years. The acquisition is currently expected to close in Q2 2022 subject, inter alia, to the signing of an Arrangement Agreement and satisfactory completion of due diligence by Eco and any requisite Government of Guyana, Canje Block partners, and stock exchange approvals. Eco said that a further announcement will be issued on the execution of the binding Arrangement Agreement. Gil Holzman, Co-Founder and CEO of Eco Atlantic commented: "Given Eco's strategic investor base and proven access to the public capital markets, the anticipated addition of JHI's interest in the Canje Block and its working capital, will further augment the enlarged Group cash position for its share of all near term exploration programs on its current blocks including: 2B in South Africa where drilling preparations for a late Q3 spud are underway and the Eco Orinduik Block offshore Guyana to follow, Block 3B/4B in Orange basin South Africa and elsewhere in the current and future portfolio of the enlarged entity. Ahead of our planned drilling campaign on Block 2B offshore South Africa in late Q3 2022, we are also looking to finalise drilling targets in Eco's Orinduik Block, offshore Guyana”.

Mobilisation

Following its reactivation in Malaysia, 6th gen semisub Valaris DPS-1 is currently underway to Australia to commence its next engagement with Woodside. The contract is scheduled to start during March 2022 and expected to keep the rig busy until May 2024.

5th gen ultra-deepwater semisub Deepwater Nautilus has completed an engagement for Posco offshore Myanmar and is underway to commence its next engagement. Details relating to the client and location of engagement remain to be confirmed.

6th Gen semisub Maersk Developer has commenced mobilization towards the Bauna field, offshore Brazil. The Maersk semisub was contracted last year by Karoon to perform well-intervention at the Bauna field. The initial contract was for 4 wells, but Karoon exercised an option for additional two development wells at the Patola field.

Rig Sales

New Fortress Energy has reportedly acquired "two marine assets" to be used for operational base for future FLNG assets. News reports indicate that these two marine assets are Seadrill's Sevan 650 semisubs Sevan Driller and Sevan Brasil. 

Newbuild and upgrades

Stena Drilling announced the newest addition to its offshore drilling fleet, the Stena Evolution. As per Stena, the rig will be a technologically advanced 7th gen ultra-deepwater drillship. The company said that more details will be announced in due course.

7th gen ultra-deepwater drillship Maersk Viking has been installed with an integrated MPD system. The rig is currently working for Shell offshore Malaysia and is also scheduled to undertake work for TotalEnergies and Petronas later during the year.

Newbuild 7th gen drillship West Cobalt is expected to arrive in Turkey in about two months, the Turkish minister of energy and natural resources has informed. The rig is understood to have left its yard in South Korea and is en route to Turkey to join TPAO’s current fleet of 6th gen drillships, which include Fatih, Yavuz, and Kanuni, which are operating in the Black Sea and Mediterranean Sea off Turkey.

Market sources indicate that Selective Marine Services jackup Prime Exerter is currently undergoing reactivation in Azerbaijan. The reactivation process is understood to involve repairs and upgrades to the rig and is expected to be completed by September 2022.

KCA Deutag has secured a contract from Equinor to carry out an energy optimisation project on two CAT J rigs in the Norwegian sector of the North Sea. This project is part of Equinor's long-term low emissions strategy for 2050 and is valued at around $12 million. The project would be delivered by KCA Deutag's new business unit, Kenera, through the engineering and installation of a series of carbon-reduction technologies. Project commencement is due this month and completion is expected over a 12-month period, with scope of work including modifications to the main engines and pumps on the rigs and the application of several software upgrades. According to KCA Deutag, the installation of selective catalytic reduction technology will eliminate up to 85-95% of the Nitrogen Oxides (NOx) emissions, auxiliary equipment modifications will ensure only the required fluids are delivered to pumps on the rigs, hence reducing total energy consumption, and several software upgrades will integrate drilling control and power management systems to provide enhanced energy control functionality, drilling optimisation and active monitoring of cost parameters.

Other News

BP and Eni confirmed signing an agreement to form a new 50/50 independent company, Azule Energy, through the combination of the two companies’ Angolan businesses. The agreement follows the memorandum of understanding between the companies agreed in May 2021. Azule Energy will be a new international energy company, independently managed, with more than 200,000 barrels equivalent a day (boe/d) of net oil and gas production and 2 billion barrels equivalent of net resources. It is expected to be Angola’s largest producer, holding stakes in 16 licences, as well as participating in the Angola LNG joint venture.

Media sources reported of a collision involving the 7th gen drillship Valaris DS-16 and another vessel close to a shipyard in Pascagoula, US on 12th March 2022. Citing the US Coast Guard, media reports informed that the rig reportedly broke free of its moorings due to high winds and collided with a bulk carrier ship. In a statement issued on 14th March, Valaris confirmed that the rig was promptly secured and safely returned to its mooring location the same day, and that there were no injuries, no environmental impact, and only minor damage to the rig as a result of the event. Valaris added that it continues to work closely with the relevant authorities and its customer and does not expect any delays to forthcoming contract commencement for the rig as a result of the incident. Valaris DS-16 is currently undergoing reactivation activities at ST Engineering Halter Marine and Offshore shipyard in Pascagoula, US, and is scheduled to commence a two-year campaign in the US GoM with Occidental in May 2022. 

PTTEP informed that it has been nominated as the new operator for the Yadana gas project offshore Myanmar by the remaining partners following TotalEnergies decision to withdraw from the project. As per PTTEP, the transfer of operatorship is expected to complete on 20th July 2022, and requires full support from TotalEnergies to assure seamless transition and production continuity with the safety standard. PTTEP added that under the Production Operating Agreement (POA), TotalEnergies’ share will be allocated proportionately to the remaining joint venture partners with no commercial value. After the effective date of TotalEnergies’ withdrawal, PTTEP will hold 37.0842% participating interest, while a subsidiary of Chevron, Unocal Myanmar Offshore Company Limited will hold 41.1016%, which is the largest participating interest in the project.

FAR Limited informed that it has commenced steps to withdraw from its interests in the Esperanca Blocks 4A & 5A and Sinapa Block 2 offshore Guinea Bissau. FAR has provided its notices of withdrawal to the Government of Guinea Bissau and operator Petronor in accordance with the relevant agreements. Joint efforts by FAR and operator Petronor to collaboratively farm-down have been unsuccessful. FAR also stated that it has already met the minimum financial commitments associated with the license, and there are no 2022 commitments in place, therefore the company does not expect to incur any new material expenses related to these interests. FAR has impaired $2.7 million of capitalised costs associated with the Guinea Bissau project in the year 2021.

The Australian government’s 2021 Offshore Petroleum Exploration Acreage Release has received 10 bids, which are being assessed by the  National Offshore Petroleum Titles Administrator (NOPTA). Australia’s Minister for Resources and Water Keith Pitt said ongoing exploration is critical to ensure an ongoing pipeline of new oil and gas projects and for Australians to have access to reliable and affordable energy. The 2021 release comprised 21 areas across the Bonaparte, Browse, Carnarvon basins off Western Australia, and the Otway, Sorell and Gippsland, off Victoria and Tasmania. Minister Pitt said the areas that received bids have the potential to link with existing infrastructure and supply major liquefied natural gas projects.

FAR has rejected an off-market takeover bid announced by Samuel Terry Asset Management (STAM) earlier this year for all the ordinary shares in FAR Limited. In response to the offer, the FAR Directors unanimously recommended that shareholders should reject the offer. On 15th March 2022, FAR Ltd. reported that the STAM takeover offer has been closed without the offer conditions being satisfied or waived.

Petronas has won the North Ketapang block, located onshore and offshore East Java, during the second round of the Indonesia Petroleum Bid Round 2021. The result was announced by the Ministry of Energy and Mineral Resources, Indonesia. Following this, Petronas will operate and hold a 100% equity in the 3,131.8 km2 block with water depths of up to 100m below sea-level. 

KeyFacts Energy Industry Directory: Esgian