Soumya Mutsuddi, Esgian

This week Seadrill, Transocean, Shelf Drilling, and Maersk Drilling announced new awards/extensions for their rigs. Meanwhile, ADES added two Valaris jackups to its shopping tally.

Contracts 

Sonadrill (50:50 JV between Seadrill and Sonangol) has been awarded a 10-well contract with options for up to eight additional wells offshore Angola, for the 6th generation drillship West Gemini. The name of the client has not been disclosed. The firm period for the charter is approximately 18 months and expected to commence in fourth quarter 2022 in direct continuation of the rig’s current charter with TotalEnergies off Angola. The firm portion of the contract is expected to be worth approx $161 million including mobilisation and additional services.

Seadrill announced that its 7th gen drillship West Neptune secured a four-well extension with two one-well options with LLOG in US Gulf of Mexico. The firm period for the engagement will commence in direct continuation of the rig’s existing contract with the operator and has an estimated duration of 200 days. This is expected to keep the rig busy until August 2023. Total contract value for the firm period is approximately $71 million. Also, 6th gen semisub Sevan Louisiana has secured a three-well extension to its existing contract with Talos in US Gulf of Mexico. The extension has a minimum duration of 105 days and scheduled to commence in August 2022. Seadrill informed that the total contract value for the three-well extension is approximately $34 million.

Shelf Drilling announced that jackup High Island V secured a 3-year contract extension, which would commence in direct continuation of its current contract in the Arabian Gulf. Shelf indicated that the extension will keep the rig busy until May 2025. 

Seadrill announced the award of three contracts by a ‘leading operator’ for its jackups—West Ariel, West Cressida, West Leda—involving work in the Middle East. The firm period for each contract is three years with expected commencement between Q1 2023 and Q2 2023. Total value for the three contracts is approximately $404 million, including mobilization revenue. While the West Leda and West Cressida are currently stacked off Malaysia, the West Ariel is stacked off the UAE. 

Maersk Drilling announced that ONE-Dyas has exercised a one-well extension for the harsh environment jackup Maersk Resolute in the Dutch North Sea. Commencement is expected in May 2022, in direct continuation of the rig’s current engagement with the operator. The extension has a duration of 75 days, with a value of approx. $6.3 million. Following completion of its engagement with ONE-Dyas, the rig will commence a P&A job with TotalEnergies/Petrogas with a firm duration of 19 months along with attached options.  

Transocean reported new backlog addition in Colombia, the US Gulf of Mexico, and Norway. Semisub Development Driller 3 was awarded a one-well charter for work with Petrobras off Colombia at a dayrate of $331,000. The work will run from April until June 2022. In the US GoM, EnVen has exercised a one-well option on drillship Deepwater Inspiration at a dayrate of $300,000. The rig's current assignment with Hess is now scheduled to run into October 2022, after which it will commence work with EnVen. Discoverer Inspiration's first well is contracted at $290,000 per day, followed by the newly exercised option, which should keep the rig working until January 2023. EnVen still has one more one-well option that it can exercise at a pre-priced rate of $310,000 per day. In Norway, Equinor has exercised a one-well option on semisub Transocean Spitsbergen at $305,000 per day. The work is set to run from July 2022 into January 2023. The rig's current dayrate with Equinor is $283,000. Transocean notes the contractual dayrate of $305,000 has been updated to reflect the current effect of the foreign currency component.

Drilling and discoveries

Equinor has received consent from Norway’s Petroleum Safety Authority (PSA) for drilling the exploration well 30/3-11 S in the Poseidon prospect, production licence 1104 in the North Sea, using the 6th gen deepwater and harsh environment semisub Deepsea Stavanger. Drilling is expected to take 76 days in case of a dry hole, or an extra 18 days if a discovery is made. Equinor also received consent from PSA for use of another 6th gen deepwater and harsh environment semisub Deepsea Aberdeen for temporary plugging, drilling and completion of wells on the Breidablikk field in the North Sea.

Aker BP has received consent to drill exploration well 6507/2-6 in block 6507/2, production licence 261, in the Norwegian Sea off Norway. Drilling would be carried out by the 6th gen harsh environment semisub Deepsea Nordkapp and is expected to take a minimum of 47 days. The rig has been working for Aker BP off Norway since May 2019 and the firm period for the current engagement extends to Q1 2024.

Jackup Shelf Drilling Scepter has completed an engagement with Chevron off Thailand, which it commenced in December 2019. The rig has arrived in Singapore, and currently, there is no visibility on any future engagements.

As per a notification issued by the Marine Department of Malaysia, Velesto jackup Naga 2 will be moved from Brunei Bay to Bayan BYDP-C platform to commence drilling for Petronas from early May 2022. The rig commenced its current engagement with Petronas during December 2021, with the present workscope involving drilling of five firm wells along with extensions options for one plus one well. 

PetroRio has received regulatory approval for drilling of new wells at the Frade field off Brazil. Drilling would be undertaken by the Ocyan 6th gen semisub Norbe VI. PetroRio added that it would keep the market informed on the outcome of the campaign.

Empyrean Energy informed that exploration well LH 17-2-1 at the Jade Prospect in Block 29/11 offshore China was drilled to total depth of 2,849m and no hydrocarbons were discovered in the target reservoir. Drilling was undertaken by the COSL semisub Nan Hai Jiu Hao (NH9), which is expected to be demobilised shortly.

Neptune Energy and its partners announced discovery of oil and gas at the Hamlet exploration wells (PL153) in the North Sea off Norway. In-place volumes discovered in the Hamlet structure are estimated to be in the range of 30-70 million barrels of oil equivalent (mmboe). Neptune informed that while work is continuing to confirm potential recoverable resources, the company’s preliminary estimate is 8-24 mmboe. Hamlet was drilled by the Odfjell operated 6th gen semisub Deepsea Yantai. Licence partners include Neptune Energy (operator and 30%), Petoro (30%), Wintershall Dea (28%), and OKEA (12%).

Vaalco Energy has completed the drilling of the Avouma 3H-ST development well that was drilled from the Avouma platform in the Etame field, offshore Gabon. The sidetrack well targeted existing high-quality Gamba hydrocarbons at the top of a structure that have not previously been produced by prior wells. The well marks the second successful well in the company's 2021/2022 drilling campaign.

Hess Corp. announced three new discoveries on the Stabroek Block, which increases the total resource estimate to 11 billion boe. The three new discoveries were made at exploration wells Barreleye, Lukanani and Patwa. Earlier this year, the Stabroek partners also made discoveries at the Fangtooth and Lau Lau exploration wells.

Demand

CNOOC announced that it has commenced production from the Luda 5-2 oilfield north phase I project and Kenli 6-1 oilfield 4-1 block development project, both located in the Bohai Sea off China. For the Luda 5-2 oilfield north phase I project, CNOOC informed that a total of 28 development wells are planned, including 26 production wells and 2 water source wells. The project is expected to reach its peak production of approximately 8,200 barrels of crude oil per day in 2024. For the Kenli 6-1 oilfield 4-1 block development project, a total of 12 development wells are planned, including 7 production wells and 5 water injection wells. The oilfield is expected to reach its peak production of approximately 4,000 barrels of crude oil per day in 2022. CNOOC is the 100% owner and operator for both projects.

PTTEP informed that, as of 24th April 2022, it has become the official operator of the G1/61 block (containing the Erawan, Platong, Satun, and Funan fields) and the G2/61 project (containing the Bongkot field). Both are located offshore Thailand, and Chevron was the previous operator of the Erawan field. With respect to the G1/61 block, PTTEP plans to ramp up the production rate to 800 million standard cubic feet per day (MMSCFD) within April 2024. The execution plan includes the acceleration of 8 wellhead platforms and subsea pipeline installation, drilling campaign of 183 production wells and procurement of additional 2 drilling rigs for another 52 production wells. For the G2/61, the company has plans to produce 700 MMSCFD of natural gas.

ConocoPhillips has been granted a drilling permit for wildcat well 6507/4-3 S in production licence 1064 off Norway. Drilling would be undertaken by the 6th gen harsh environment semisub Transocean Norge during August 2022. While the rig’s firm contract with the operator runs into September, the contract is also understood to have options attached. 

JV partner Deltic Energy informed that plans for drilling the first exploration well on the Pensacola prospect in Shell-operated Licence P2252 offshore UK are rapidly progressing with site survey completed in October 2021. The rig selection and contract process are in advanced stages and the JV partners plan to drill the Pensacola well in late Q3 2022. The JV is in the process of securing environmental permits for drilling activities.

Mobilisation

Japan Drilling semisub Hakuryu-5 has arrived offshore Japan to commence a one-well exploration engagement for Inpex. Market sources indicate that drilling is expected to commence before the end of the month. 

Rig Sales

Valaris announced the sale of two PPL Pacific Class 400 jackups—Valaris 113 and Valaris 114—to ADES for a total consideration of $125 million. Both rigs are 2012-built and have been stacked in the Philippines since they completed their last contracts in late 2015. As such, their reactivation is expected to involve significant investments. Valaris said that it would continue to take a rational approach to fleet management, including regular assessments related to rig retirements and divestitures.

Other News

Petronas signed a Production Sharing Contract (PSC) with SK earthon and Petroleum Sarawak Exploration & Production Sdn. Bhd. (PSEP) for Block SK427 off the coast of Sarawak. SK earthon, a wholly owned subsidiary of SK Innovation, will operate Block SK427 with 85% participating interest, while PSEP will hold the remaining 15%. This marks SK earthon’s entry in Malaysia’s upstream sector. Block SK427 is located within the area of Balingian and Tatau hydrocarbon provinces covering an area of 3,349 sq km. Petronas added that it will collaborate with SK earthon in the carbon capture and storage sector, in line with the company’s aspiration to achieve net zero carbon emissions by 2050.

Timor-Leste’s offshore regulator ANPM awarded five of the six blocks which received bids in the country’s second licensing round. Eni was awarded offshore Block P, while Santos was awarded offshore Block R. In total, there were 18 new blocks on offer in the licensing round consisting of seven new onshore permits and 11 offshore licences.

Shell has informed Egdon Resources and the North Sea Transition Authority (NSTA) of its intention to withdraw from licences P1929 and P2304 off UK containing the Resolution and Endeavour gas discoveries. Egdon said that it will now consider its options for the licences, including its ongoing commitment to them and will discuss the same with the NSTA.

Woodside announced key changes to its permits and licence holdings offshore Myanmar in its first quarter report for 2022. As per the report, a notice to terminate the Production Sharing Contract for Block AD-7 off Myanmar has been sent to Myanmar Oil and Gas Enterprise, while formal arrangements have commenced to exit Blocks AD-1, AD-6, and AD-8. Woodside also informed that no exploration wells were drilled or any seismic activity undertaken during Q1 2022. 

Finder Energy has entered into an agreement with Talon Energy to acquire a 100% interest in Seaward Production Licence P2527 in the North Sea off UK. The agreement is conditional upon obtaining the usual regulatory approvals. Licence P2527 contains the White Bear prospect and is located next to the Buzzard field, in proximity to Finder’s P2528 licence. Finder said that it is mapping analogues of the Buzzard field in its P2528 licence and accelerating technical works to improve farmout potential for its prospects. Also, the company will commence a prospect evaluation in June which is expected to generate risking and resource estimates. This work will kick off farmout efforts later this year to attract partners to fund drilling activity.

The Canadian government has extended the moratorium on oil and gas exploration on Georges Bank until 31 December 2032. It had been set to expire on 31 December 2022. Georges Bank is a large submarine bank at the edge of the Atlantic continental shelf between Cape Cod and Nova Scotia. 

The UK Competition and Markets Authority (CMA) has raised concerns that the merger of Noble and Maersk Drilling could increase operating costs for oil and gas producers in the UK North Sea. The CMA’s investigation primarily focussed on the two companies’ overlapping activities in the supply of jackups used in the North Sea. Following its Phase 1 investigation, the CMA found that the deal raises competition concerns in the supply of jackups in North West Europe (the area comprising the UK, Denmark and the Netherlands). As Noble and Maersk Drilling are two of the four main suppliers in this market, the CMA is concerned that the combined businesses would not face sufficient competition post-merger, which could lead to higher prices and lower quality services for oil and gas producers in the North Sea. The two companies have five working days to offer proposals to the CMA to address the competition concerns identified. The CMA would then have a further five working days to consider whether to accept these in principle instead of referring the case to a Phase 2 investigation. Noble and Maersk Drilling had released an update earlier this month through which they informed plans to divest certain North Sea jackups (referred to as ‘remedy rigs’) to get clearance from the UK regulator. 

Keppel Corporation and Sembcorp Marine have signed definitive agreements for the proposed combination of Keppel O&M and Sembcorp Marine. The combined entity will create a global player servicing offshore renewables, new energy and cleaner solutions in the offshore and marine space. The entity is based on a 50/50 enterprise value ratio between Keppel O&M and Sembcorp marine. After taking into account the respective capital structures of the two companies, the S$500 million (~USD 362 million) cash that Keppel O&M will pay to Keppel and other adjustments, the agreed equity value exchange ratio will result in Keppel and its shareholders owning 56% of the new entity and Sembcorp Marine shareholders will own the remaining 44%. The legacy rigs held by Keppel O&M will not be part of the new entity and will be sold to a separate "Asset Co" that will be 90% owned by other investors, with Keppel holding a 10% stake.

KeyFacts Energy Industry Directory: Esgian