Soumya Mutsuddi, Esgian

This week saw a flurry of announcements as Maersk Drilling, Borr Drilling, Saipem, and Valaris reported new contract awards/extensions for their rigs. Meanwhile, Canada approved Equinor's Bay Du Nord project, and ExxonMobil made a final investment decision for the Yellowtail development.

Contracts 

Maersk Drilling announced that Shell has awarded the 7th gen ultra-deepwater drillship Maersk Voyager a one-year firm scope under a number of contracts for work offshore multiple countries. The contracts are expected to commence in April 2022, and include an additional one-year option. The contract value is approx. $107.5 million including a mobilisation fee, but excluding integrated services expected to be provided and potential performance bonuses. In addition, Maersk Drilling and Shell have agreed to implement the RigFlow solution delivered by Maersk Drilling subsidiary Horizon56 which standardises and digitalises the core workflows involved in well construction. Maersk Voyager recently completed work with TotalEnergies with exploration wells drilled offshore Angola and Namibia including the discovery well Venus-1. 

Borr Drilling announced new contract awards and extensions for five of its jackups, which increase the company’s backlog by approximately 2,530 days, excluding optional periods. Gunnlod secured a contract with an undisclosed operator in Southeast Asia, with commencement in direct continuation of its current engagement. The workscope covers 11 wells over an anticipated duration of 186 days plus options. PTTEP has exercised options on the Mist for a total duration of approx. 3.5 months, which will keep the rig contracted until Q4 2022. Saga secured a contract with an undisclosed operator in Southeast Asia, with commencement in direct continuation of its current engagement. The work will cover a 1-well program over an anticipated duration of 45 days. Further, Borr has secured long-term contracts in the Middle East with an undisclosed operator for two of its premium jackups. The contracts have a firm duration of 3 years plus options each and are expected to commence in the second half of 2022. Borr added that these awards increase the company’s contracted fleet to 20 rigs out of a total of 23 delivered rigs. Borr also informed that it remains in constructive discussions with its lenders in relation to the deferral or refinancing of its debt maturing in 2023 and expects such discussions to be successfully concluded on or before June 30th, 2022.

Saipem announced award of new contracts in the Middle East and West Africa worth over $400 million. The company reported two jackup contracts in the Middle East for drilling and workover operations, for a duration of five years. The contracts will commence in Q4 2022 and includes an option for an additional two years. The Middle East contracts will involve one Saipem jackup and a new high specification jackup chartered from CIMC Group. Saipem has also been awarded a deepwater contract with ENI for drilling operations in West Africa involving the ultra-deepwater drillship Saipem 12000. This contract is expected to commence in April 2022 with a duration of six months and options of up to 10 months.

Valaris announced new contracts and extensions, with an associated backlog worth $181 million added since the release of its previous fleet status report on 21 February 2022. Drillship Valaris DS-15 received a one-well extension from TotalEnergies that will keep the rig working off Brazil for an additional 100 days. ARO Drilling was awarded a three-year contract with Saudi Aramco for jackup Valaris 140, which relates to the previously disclosed three-year bareboat charter between Valaris and ARO. Furthermore, BP agreed to two-year extensions of the rig management contracts for platform rigs Mad Dog and Thunderhorse, both of which are in the US GoM. These extensions have an effective date of 27 January 2022. Meanwhile, the previously announced contract from TotalEnergies for drillship Valaris DS-11 for an eight-well project in the US GoM has now been novated to Equinor. No material changes to the contract resulted from the novation, including with respect to the termination provisions in the event the project does not receive an FID. This follows TotalEnergies’ decision to withdraw from the North Platte project in February 2022, which it operated alongside partner Equinor.

Drilling and discoveries

Petrobras announced discovery of a new oil accumulation in the pre-salt southern portion of the Campos Basin. The discovery was made in a wildcat well in the Alto de Cabo Frio Central block. The well 1-BRSA-1383A-RJS is located in a water depth of 1,833m. Petrobras is the operator of the Block with 50% interest and is partnered by BP (50%). Petrobras said that the consortium will continue drilling the well to the final depth originally planned, in order to assess the dimensions of the new accumulation, and to characterize the quality of the fluids and reservoirs found.

JV partner Longboat Energy announced a ‘significant discovery’ in the Equinor operated Kveikje exploration well (35/10-8S) in licence PL293B offshore Norway, where the company has 10% interest. The preliminary estimate of recoverable resources in Kveikje Main, being the primary target of the exploration well, is 28 to 48 MMboe (gross), above the pre-drill expectation. As per Longboat, the discovery has excellent reservoir quality and is close to existing infrastructure allowing for a simple development through multiple export options. Drilling was undertaken by the 6th gen deepwater and harsh environment semisub Deepsea Stavanger. Longboat also informed that the rig will next move to the nearby Equinor-operated Cambozola well, where it has a 25% working interest.

JV partner Carnarvon Energy informed that jackup Noble Tom Prosser has commenced drilling at the Apus-1 well location in the Santos-operated WA-437-P exploration permit off Australia. Carnarvon expects drilling operations to continue for a duration of one month. The rig recently completed drilling the Pavo-1 which resulted in a material oil discovery.

Neptune Energy has been granted drilling permit for appraisal well 35/9-16 A in production licence 153 off Norway. Drilling will be undertaken by the 6th gen harsh environment semisub Deepsea Yantai during April 2022. 

Demand

Karoon Energy announced that it has committed to the drilling of a control well and, subject to the results of that well, a second control well in the Neon oil discovery, offshore Brazil.  As per Karoon, the drilling strategy has been designed with the specific goal of reducing subsurface uncertainty to a sufficient degree to enable progress towards a potential FID. Subject to the receipt of required environmental licences, the new well or wells, internally named Echidna‐2 and Echidna‐3, are currently planned to be drilled at the conclusion of the Patola development campaign. 6th gen ultra-deepwater semisub Maersk Developer is scheduled to undertake drilling at Karoon’s Bauna and Patola projects off Brazil commencing Q2 2022.

JV partner Carnarvon Energy announced that the National Offshore Petroleum Titles Administrator (“NOPTA”) has offered to grant the joint venture a life-of-field Production Licence (“PL”) in respect of the four blocks containing the Dorado field (“Licence Area”) off Australia. These blocks were previously part of Exploration Permit WA-437-P. As per Carnarvon, the joint venture has accepted the offer, and it is anticipated a PL will be granted by NOPTA shortly. Once granted, the PL enables production of petroleum from the Licence Area, as well continue to explore for, and appraise, any additional petroleum within this area. The PL will also allow the production of petroleum from other areas via the License Area, like the recently discovered Pavo oil field, can potentially be tied-back and produced using the Dorado FPSO vessel. Located in Block WA-437-P, Dorado is operated by Santos (80%) and partnered by Carnarvon (20%). 

Mobilisation

6th gen harsh environment semisub Island Innovator has left Norway and en-route to the UK North Sea to commence an engagement for Dana Petroleum. The firm duration is understood to be until mid-June and the contract has options attached.

Empyrean Energy updated that COSL-owned semisub Nan Hai Jiu Hao (NH9) has arrived on location at the Jade prospect in Block 29/11 permit, offshore China, and operations have commenced to anchor the rig on location. Spudding of LH 17-2-1 well over Jade Prospect is now anticipated to commence on or around 10 April and Empyrean said that a further update will be provided once the well spuds. Empyrean Energy is the operator of Block 29/11 in China and has 100% working interest during the exploration phase. In the event of a commercial discovery, its partner, CNOOC may assume a 51% participating interest in the development and production phase.

Western Gas informed that the 6th gen semisub Valaris MS-1 will commence mobilisation from the Port of Dampier during the window of 9th to 16th May 2022, and  expected to take approximately four days to reach the Sasanof Prospect off Australia. The company added that onshore logistics preparations are underway to support drilling campaign. Sasanof-1 exploartion well will be drilled vertically to a total depth of 2,500m in 1,070m of water. The drilling program is anticipated to take approximately 26 days from the date of rig mobilisation from Dampier port, as per Western Gas. 

Rig Sales

Valaris announced that jackup Valaris 67 has been sold and retired from its offshore drilling fleet. The 1976-built jackup was cold stacked off Indonesia and its last engagement was with Pertamina. Information on the buyer or terms of sale were not disclosed. 

Other News

ExxonMobil has made a final investment decision for its Yellowtail development off Guyana, following receipt of government and regulatory approvals. As per ExxonMobil, Yellowtail is its fourth and largest project in the Stabroek Block, and is expected to produce approximately 250,000 barrels of oil per day starting in 2025. The development project is set to include six drill centres and up to 26 production wells and 25 injection wells. The project cost is estimated at $10 billion.

The Canadian government has approved Equinor’s Bay Du Nord project offshore the province of Newfoundland and Labrador, after an environment assessment concluded it would not cause significant adverse effects. The project would involve building a floating platform to drill an estimated resource of 300 million barrels of light crude oil in the Atlantic Ocean.

Ithaca Energy announced that it has reached an agreement to acquire Siccar Point Energy for an upfront payment of $1.1 billion and a series of contingent payments totalling a maximum of $360 million ($300 million linked to future developments and $60 million linked to short term realised commodity prices). As per Ithaca, the acquisition will accelerate its growth in the UK North Sea through the addition of four large oil and gas fields to its existing portfolio. Ithaca notes the addition of the Schiehallion and Mariner fields will add immediate production and significant room for growth through future drilling, and the acquisition will result in Ithaca holding an increased interest in the Jade gas field, where it is already a partner. Ithaca will also acquire interest in the Cambo and Rosebank fields, which are two of the largest undeveloped discoveries in the UK North Sea. Ithaca says the assets being acquired have a lower carbon intensity than both the UK Continental Shelf and global averages, and advises that the fields will be developed using the latest technology to reduce emissions and operated without the need for routine flaring or venting of hydrocarbons. The Siccar Point team and operatorship of key UK assets will transfer to Ithaca on closing of the transaction. Ithaca further said that a final investment decision is expected on the Cambo and Rosebank fields next year. 

Keppel Corp. and Sembcorp Marine provided an update of the progress towards their proposed combination. The companies said that while significant progress has been made, more time and deliberation are needed to complete due diligence, reach mutual agreement on the transaction terms, and finalize definitive legal documentation. The companies added that they are committed to continue with exclusive negotiations and work towards a definitive agreement by 30th April 2022. Furthermore, Keppel confirmed that significant progress has been made on advancing the sale of Keppel O&M's legacy rigs and associated receivables to a separate company that would be majority owned by external investors. This transaction and the proposed combination with Sembcorp will be inter-conditional and are being pursued concurrently.

Pilot Energy announced that it has increased its interest in the exploration permit WA 481P offshore Australia to 100%, following receipt of final approval from the National Offshore Petroleum Tenures Administrator (NOPTA) of the company’s acquisition of 40% interest previously held by Key Petroleum Limited. The company said that NOPTA’s approval provides it with full control to progress with the petroleum exploration work programme and also seek necessary approvals to pursue CCS potential of the permit area. 

KeyFacts Energy Industry Directory: Esgian