Soumya Mutsuddi, Esgian

This week Borr Drilling announced a multi-year jackup contract in Southeast Asia, and Odfjell Drilling secured additional work in the North Sea. Meanwhile, semisub Valaris MS-1 commenced mobilisation for an exploration gig off Australia.

Contracts 

Equinor exercised further work for the 6th gen deep-water and harsh-environment semisub Deepsea Stavanger offshore Norway under the continued optionality mechanism included in the contract entered into with Odfjell Drilling in May 2021. The rig now has six remaining wells to be drilled, which are expected to keep it working into Q1 2023. Equinor also has the opportunity to exercise further wells under the continued optionality mechanism. The day rate is similar to the current contract and an additional performance incentive rate shall apply when wells are delivered safely and ahead of target. Integrated services are provided through the contract and compensated separately, Odfjell informed.

Borr Drilling received a binding Letter of Award (LOA) for the jackup Saga from an ‘undisclosed operator’ for work in Southeast Asia. The rig is currently contracted to Hess offshore Malaysia until late Q3/early Q4 2022. The new contract is expected to commence in Q4 2022, in direct continuation of the current contract, for a duration of four years plus options.

Drilling and discoveries

Karoon Energy informed that the 6th gen ultra-deepwater semisub Maersk Developer commenced operations on the company’s Bauna field offshore Brazil. The rig is expected to engage in development drilling of four wells as part of  Karoon’s intervention campaign at the field. Following completion, the rig is scheduled to move to the operator’s Patola field during September to drill two development wells. Earlier this month, Karoon exercised options on the rig to drill up to two wells at the company’s Neon field, scheduled to commence in direct continuation of the rig's work at the Patola field.

6th gen deepwater semisub West Hercules spudded the first of two exploration wells for Equinor in the Flemish Pass Basin offshore Canada. As per manager Seadrill, the rig is scheduled to remain on contract until 21st October 2022. After completing the engagement, the rig will return to Norway to undergo a five yearly special periodic survey. Odfjell Drilling will take over as the new rig manager upon its return from Canada. The company has already commenced operational preparations and marketing to secure future work for the rig. 

Semisub Essar Wildcat arrived on location and is being prepared to commence drilling for Pertamina at the North Sumatra Offshore (NSO) block in Indonesian waters. The workscope involves drilling of three development wells over a duration of 225 days, with commencement expected around 25th May. There is also possibility of the rig getting some additional well workover/intervention job post completion of the initial work, subject to requirement. 

Demand

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) invited bids for exploration licences covering 28 parcels in the Eastern Newfoundland region, and 10 parcels in the South Eastern Newfoundland region. Interested parties have until 12 p.m. NST on 2nd November 2022 to submit sealed bids, and exploration licences to successful bidders will be awarded in early 2023. As per C-NLOPB, the sole criterion for selecting a winning bid will be the total amount of money the bidder commits to spend on exploration of the parcel during Period I (the first period of a nine-year licence). The minimum bid for the parcels offered is $10,000,000 in work commitments.

The Canada-Newfoundland and Labrador Offshore Petroleum Board also identified a new sector under its land tenure system–Sector NL06-EN in the Eastern Newfoundland Region. The Call for Bids for this new sector is planned for Spring 2024. Closing is expected in November 2024, followed by successful bidders being awarded exploration licences in early 2025.

Inpex plans to drill two exploration wells in the Browse Basin offshore Australia—one in permit WA-285-P and the other in permit WA-343-P. Both permits are located within Commonwealth waters, in water depths of approximately 290m and 350m respectively. As per the environmental plan submitted to NOPSEMA, pre-drill site surveys are to be conducted in each permit during the first half of 2023 for duration of approximately 10 days per permit. Drilling will be conducted using a semisub (either DP or moored) and expected to commence in the second half of 2023. However, to create contingency for various factors, including rig availability, Inpex has made allowance for these activities to occur anytime between calendar years 2023 and 2025. Drilling activities are expected to last for approximately 95 days at WA-285-P and 150 days at WA-343-P. Worth noting that last month, Inpex exercised a one-year option on the 6th gen ultra-deepwater semisub Maersk Deliverer at the Ichthys field offshore Western Australia. The rig’s firm commitment now extends until July 2024, with a one-year option still remaining on the contract.

EOG plans to drill the Beehive-1 exploration well in permit WA-488-P off Western Australia. The well is situated in water depth of 40m and will be drilled using a jackup, with commencement planned in late Q1 (March) or early Q2 (April) of 2023. However, the exact timing is dependent on the receipt of environmental approvals and rig availability, and may occur at any time during 2023. Drilling activities are estimated to take approximately 55 days, or up to approximately 90 days. EOG indicated that jackups Noble Tom Prosser and Valaris 107, both currently working off Western Australia, are being considered. Noble Tom Prosser is now on firm commitment until November 2022 after Santos exercised three one-well options earlier this year, with six one-well options remaining on the contract. Meanwhile, Valaris 107 is understood to have arrived in Australia after undergoing repairs in Singapore to commence an engagement for Vermilion Energy. Next, the rig has a one-well contract with an ‘undisclosed operator’, who market sources have identified as Jadestone Energy. Then it has work lined up with Eni, which will keep it busy until October 2022.

Mobilisation

6th gen semisub Valaris MS-1 commenced mobilisation to drill the Sasanof-1 exploration well in the Sasanof Prospect (permit WA-519-P) offshore Australia. Operator Western Gas informed that transit time to the drilling location is expected to be approximately four days, dependent on weather and drilling is expected to commence next week.

Rig Sales / Retirals

1982-built semisub Louisiana is understood to have completed its engagement with ONGC offshore India. The rig has been working with the operator since 2018. Market sources indicate that the rig will possibly be scrapped.

Technology and upgrades

7th gen ultra-deepwater drillship Maersk Voyager will be deployed with the RigFlow solution, developed by Maersk subsidiary Horizon56. As per Horizon56, RigFlow digitalises core workflows in drilling operations, and helps increase efficiency and transparency for both onshore and offshore teams. Horizon56 indicated that following implementation of the solution, the company will provide RigFlow coaches on the rig to support with training and adoption by the crew, with the first coach departing to São Tomé this month. The rig is currently engaged in a one-year multi-country drilling campaign off West Africa, with the contract including a one-year option. 

Financials

Vantage Drilling reported a net loss of $14.9 million for the first quarter of 2022 against a net loss of $36 million reported in the first quarter of 2021. The company’s total revenue for the period increased to $58.3 million from $20.1 million reported in the same quarter of 2021. EBITDA for the period was $6.3 million compared to a negative EBITDA of $11.2 million reported in first quarter of 2021. The company’s fleet utilisation improved during the quarter, with jackup utilisation increasing to 60.3% from 30.7% (Q1 2021), and deepwater utilisation increasing to 98.8% from 49.1% (Q1 2021). Vantage also informed that it is making progress towards closing the previously announced sale of three jackups—Emerald Driller, Sapphire Driller, and Aquamarine Driller—to ADES, with the transaction expected to close during the second quarter of 2022.

Other News

Odfjell Drilling signed an agreement with SFL Corporation Ltd to provide marketing and management services for the 6th gen ultra-deepwater and harsh-environment semisub West Hercules. Odfjell said that the agreement is based on terms and conditions customary for similar agreements. The rig is currently contracted to Equinor offshore Canada until the fourth quarter of 2022, following which it will return to Norway to complete a five yearly special periodic survey. Odfjell will take over as the manager once the rig returns from Canada. The company has already commenced operational preparations and marketing to secure future work for the rig. 

Lamprell and International Maritime Industries (IMI) announced completion of the load-out and float-off of the first jackup being constructed for IMI. The rig is scheduled to undergo intensive mechanical completion and commissioning before being transferred to IMI’s yard in Ras Al Khair, Saudi Arabia, for final commissioning before being deployed locally. In January 2020, IMI and Lamprell collaborated to build two jackups, with the second rig scheduled to be completed several months after delivery of the first. The design of the two rigs is based on the Super 116E (enhanced) class and features high specification offshore drilling technology, as well as accommodation for up to 120 people. The rigs are understood to be ARO 2006 and ARO 2005 and would be managed by ARO Drilling.

KeyFacts Energy Industry Directory: Esgian