Soumya Mutsuddi, Esgian

This week ADES continued its buying spree, with agreements reached for purchase of four jackups from Aban and one from Maersk. Meanwhile, Maersk announced a one-year contract extension from Inpex for the semisub Maersk Deliverer.

Contracts 

Maersk Drilling announced that Inpex exercised an option to extend the contract for the 6th gen ultra-deepwater semisub Maersk Deliverer at the Ichthys field offshore Western Australia. The contract extension has a duration of one year and is expected to commence in July 2023, in direct continuation of the rig’s current contract. Also, a one one-year option remains on the contract.

Drilling and discoveries

The Marine Department of Malaysia notified that jackup Gunnlod will commence operations for PTTEP at SE-PA platform in Serampang field, off Malaysia starting 16th April 2022. The rig recently completed an engagement with IPC off Malaysia. As per an announcement made earlier this month, Borr Drilling informed that Gunnlod's new contract covers 11 wells over an anticipated duration of 186 days plus options.

JV partner Carnarvon Energy updated that while hydrocarbons were observed in the Apus-1 well, interpretation from the logging while drilling and mud logging equipment indicates that a commercial hydrocarbon pool has not been discovered. The company informed that wireline formation evaluation tools are being run to gain information to support further exploration in the Bedout Sub-basin. Apus-1 well is located in the Santos-operated WA-437-P exploration permit off Australia. The well was drilled by the jackup Noble Tom Prosser, which is on a firm contract with Santos until October 2022, with options attached. Santos said that the Apus-1 well will be plugged and decommissioned.

Empyrean Energy updated that the LH 17-2-1 well at the Jade prospect in Block 29/11 offshore China was drilled to 2,150m measured depth (MD) by the semisub Nan Hai Jiu Hao (NH9). As per the company, the presence of elevated methane levels in the exact depth zones which was earlier interpreted through seismic data supports the company's pre-drill interpretation that the methane is probably coming from light oil in the anticipated reservoir section. Based on the results so far, Empyrean has upgraded its internal Geological Chance of Success ("GCoS") over the Jade prospect from 41% to 65% and Topaz prospect from 35% to 47%. As per Empyrean, the well will now be drilled to a total measured depth of 2,860m. Empyrean has 100% working interest in Block 29/11 during the exploration phase, and in the event of a commercial discovery, its partner CNOOC may assume a 51% participating interest in the development and production phase.

Aker BP has been granted a drilling permit for wildcat well 2/8-19 in production licence 1085 off Norway. Drilling is to be undertaken by the ultra-harsh environment jackup Maersk Invincible during April 2022.

BHP’s Wasabi-2 well in the US GoM encountered sub-commercial hydrocarbons and has been plugged and abandoned. The well was drilled in 764 m (2,507  ft) of water to a total depth of 10,114 m (33,182 ft) by Transocean 7th gen ultra-deepwater drillship Deepwater Invictus. BHP confirms the Wasabi exploration programme is now complete and results are under evaluation to determine the next steps. Deepwater Invictus continues to work with BHP under a rolling options agreement. 

Demand

Rex International Holding announced that its subsidiary Lime Petroleum has signed an agreement to acquire MOL’s 40% interests in licences PL820 S and PL 820 SB in the North Sea off Norway. The transfer of the interests is pending regulatory approval, as per Rex. MOL Norge is the current operator of the two licences, which contain the Iving and Evra discoveries. Lime Petroleum will seek to assume operatorship of the licences, which is subject to regulatory approval. The Iving and Evra discoveries were made in 2019 and appraised in 2021. As per the Norwegian Petroleum Directorate, recoverable resources from the discoveries were worth 1.82 million Sm3 of oil equivalent or some 11.45 mmboe. Rex informed that the licence area includes several sizable exploration prospects and the licences are located adjacent to existing infrastructure. Further, options for development include tie-in of the discoveries, or a standalone field development if larger volumes are encountered. Lime said that it would work to develop the two discoveries as well as other prospects within the licences, resulting in possibility of further drilling within the next 18-24 months.

DNeX announced that its 90% owned subsidiary, Ping Petroleum, has received a “no objection” from the North Sea Transition Authority (NSTA) in relation to the company’s proposed development concept for the Avalon discovery in the Central North Sea, off UK. In 2021, Ping had purchased the remaining 50% interest in UK North Sea Block 21/6b, License P.2006, containing the Avalon discovery from Summit Exploration and Production Limited, bringing its ownership in the licence to 100%. The company said that it will now finalise conceptual development planning and begin FEED works in preparation to submit the Avalon Field Development Plan, with FID anticipated later this year.

Cooper Energy announced that it has been granted 100% equity in exploration permit VIC/P80 located in the Gippsland Basin off Australia. The permit is granted to the company for a six-year term. The primary three-year term is a guaranteed work program consisting of licencing 3D seismic data and geological and geophysical studies. Previous exploration in VIC/P80 discovered the Leatherjack oil field.

Africa Energy reported that JV partner Eco (Atlantic) Oil & Gas Ltd has deposited approximately $20 million in escrow to support its capital expenditure requirements for the Gazania-1 well in Block 2B offshore South Africa after closing the acquisition of Azinam Group Limited. The joint venture plans to spud the well by October with drilling expected to last 30 days. 6th gen harsh environment semisub Island Innovator has been contracted for drilling operations and Africa Energy informed that the rig is expected to mobilize from the North Sea in August. Block 2B is located in the Orange Basin offshore South Africa where both TotalEnergies and Shell recently announced significant oil and gas discoveries offshore Namibia. The block is operated by Eco Atlantic, (50%), with partners being Africa Energy (27.5%), Panoro Energy (12.5%), and Crown Energy (10%). 

Mobilisation

6th gen ultra-deepwater semisub West Hercules has arrived in Canada. The rig is scheduled to commence an exploration campaign for Equinor next month, which will keep it busy until October. 

Rig Sales

Maersk Drilling entered into an agreement with ADES to sell the benign environment jackup Maersk Convincer for $42.5 million in an all-cash transaction. Maersk informed that the transaction is subject to customary closing conditions, and the rig is expected to be transferred to ADES following the completion of its current contract with Brunei Shell Petroleum (BSP). The rig has been operating offshore Brunei Darussalam since 2017, and as per Maersk, its current engagement with BSP is expected to complete in August 2022 and not later than 15th September 2022. Maersk Drilling also said that the transaction will contribute towards fleet optimisation in line with the company’s strategic priorities of maintaining a fleet of modern, high-end assets and concentrating its jack-up activities in the harsh environments of the North Sea. Following the sale, Maersk Drilling’s fleet will have ten harsh environment jackups and eight floaters.

Aban Offshore informed that the company has entered into an agreement with ADES for the sale of four jackups—Deep Driller 2, Deep Driller 4, Deep Driller 5, and Deep Driller 6. This follows an earlier announcement from Aban informing about its Board approval for sale of five jackups—Deep Driller 2, Deep Driller 4, Deep Driller 5, Deep Driller 6 and Deep Driller 8. As per Aban, the agreement was entered into on 13th April 2022 and the expected date for completion of the sale is 31st May 2022. As per the agreement, the sale consideration for Deep Driller 2 and Deep Driller 4 was $26 million each, while the Deep Driller 5 and Deep Driller 6 were agreed to be sold for $27 million each. Deep Driller 2 and Deep Driller 6 are both currently working off UAE, for Dana Gas and ADNOC respectively, while Deep Driller 4 and Deep Driller 5 are both stacked off Singapore. Aban has not informed anything on the Deep Driller 8, which was also approved for sale as per the company’s earlier announcement. The rig was stacked off Sri Lanka and is now understood to be in transit towards UAE. Aban also mentioned that the sale of the above rigs is subject to shareholder approval, which is being sought through postal ballot. 

Technology and upgrades

Maersk Drilling and Weatherford have completed the integration of a deepwater managed pressure drilling (MPD) system on the 7th gen ultra-deepwater drillship Maersk Viking. Maersk informed that the MPD system is powered by the Victus control system and is operated by the joint Maersk Drilling and Weatherford teams. Maersk Viking would be the company’s third rig to have a permanently integrated MPD system, after the 7th gen ultra-deepwater drillship Maersk Valiant was approved by the US Bureau of Safety and Environmental Enforcement to operate in the US Gulf of Mexcio, and the 6th gen ultra-deepwater semisub Maersk Deliverer, which was approved by the NOPSEMA for operations offshore Australia. Maersk Viking is currently engaged in operations for Shell at the Gumusut-Kakap development off Malaysia, following which it is also scheduled to commence engagements for Total and Petronas, both off Malaysia.

Other News

BHP reached an agreement to assign 40% interest in each of its two Barbados exploration licences – the Bimshire and Carlisle Bay Blocks – to Shell. Pending customary regulatory approvals and third-party consents, the transaction is expected to be finalised by the end of June.

Europa Oil and Gas announced that it has signed a farm-in agreement with i3Energy in respect of UK Seaward Production Licence P.2358, Block 13/23c, comprising of the Serenity discovery. Through the agreement, Europa is acquiring a 25% interest in Serenity by paying 46.25% of the appraisal well cost, equating to a 1.85 to 1 carry. The Serenity appraisal well is scheduled to be drilled and formation tested in late Q3 2022 at a gross cost of £14 million ($18 million). Europa informed that Serenity is strategically located near existing infrastructure in the North Sea, however the appraisal well could provide sufficient recoverable volumes for a standalone development. The transaction completion is subject to approval of the North Sea Transition Authority to the creation of a new block within Licence P.2358 (the “New Serenity Block”) and to assignment of an interest in the Licence and New Serenity Block to Europa.

Rockhopper Exploration announced that further to the heads of terms notified on 8 December 2021, Rockhopper, Harbour Energy, and Navitas Petroleum have signed legally binding definitive documentation in relation to Harbour exiting and Navitas entering the North Falkland Basin. The transaction remains subject to completion pending, inter alia, regulatory approvals. Under the transaction, Navitas will acquire Harbour’s Falkland Islands licences following which Rockhopper and Navitas will seek to align working interests across all their North Falkland Basin petroleum licences (Rockhopper 35% and Navitas 65%) subject to all necessary consent. The two companies will jointly develop and agree to a technical and financing plan to enable the development of the Sea Lion project to achieve first oil on a lower cost and expedited basis post sanction. Rockhopper's share of Sea Lion costs from transaction completion up to 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. Navitas will become the operator of Sea Lion upon completion of the transaction. 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.

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