Soumya Mutsuddi, Esgian

This week Shelf Drilling announced a three-year contract award offshore India, and Keppel signed bareboat charters for another two jackups involving work in the Middle East. Meanwhile, TPAO's newbuild drillship finally arrived in Turkey.

Contracts 

Shelf Drilling announced a three-year contract award for the jackup F.G. McClintock from ONGC for operations in the Mumbai High, offshore India. This award pertains to the operator’s two-jackup requirement, released earlier this year. The rig is currently on contract with ONGC since 2019, with the term running into October 2022, and Shelf informed that the planned start-up of the new contract is in Q1 2023. Market sources indicate that the other award has been made to jackup Jindal Star, also currently contracted to ONGC with the engagement running into November 2022. Following completion, the rig is expected to undergo an SPS before commencing the new term in Q1 2023. Worth noting that ONGC also has an active 6-jackup requirement, for which bids were recently submitted by various contractors.

Velesto jackup Naga 3 secured a new award for drilling of two development wells, along with an option for a third well offshore Vietnam during H2 2022. As per JV partner Pharos Energy, two development wells are planned to be drilled at the Te Giac Trang (TGT) field (Block 16-1), operated by Hoang Long Joint Operating Company (HLJOC), in H2 2022. Also, one well is planned to be drilled at the Ca Ngu Vang (CVN) field (Block 9-2), operated by the Hoan Vu Joint Operating Company (HVJOC), during H2 2022. The Naga 3 is currently warm stacked in Malaysia and expected to transit to Vietnam during August, with the contract expected to keep the rig busy until end 2022/early 2023.

Trillion Energy signed a contract with GSP Offshore to secure jackup GSP Uranus for its 2022-23 drilling program on the SASB natural gas field offshore Turkey. This follows an MoU reached between the parties in February 2022. Rig mobilisation is expected in late July 2022, following completion of the rig’s current engagement with Black Sea Oil & Gas offshore Romania. Trillion intends to drill five wells from existing wellhead production platforms, with the first well likely to be spud by August and each of the subsequent four wells expected to take approximately 40 days, plus completion time. In addition to drilling operations, the rig will be utilized for re-entry and re-completion of two existing wells. The contract provides a dayrate of $95,000 and a minimum of 100 days of drilling time, however, Trillion anticipates the total project time as 8-9 months. Trillion has made an advance payment of $1 million and a mobilization cost of $0.8 million.

Drilling and discoveries

Aker BP received exploration drilling permits for wildcat wells 6507/3-15 and 6507/3-16 in production licence 941, offshore Norway. Drilling is planned to be undertaken during June by the 6th gen harsh-environment semisub Deepsea Nordkapp. The rig is also scheduled to drill wildcat well 6507/2-6 in Aker BP-operated licence 261 during this month. The rig’s firm engagement with Aker BP runs into the first quarter of 2024.

Equinor received exploration drilling permit for wildcat well 30/3-11 S in production licence 1104 offshore Norway. Drilling is planned to be undertaken during June by the 6th gen deepwater and harsh-environment semisub Deepsea Stavanger. The rig’s firm engagement with Equinor runs into the first quarter of 2023. 

7th gen drillship Tungsten Explorer commenced drilling at the Cronos-1 prospect in Block 6 offshore Cyprus, which has Eni and TotalEnergies as consortium partners. The rig’s engagement extends into third quarter 2022. 

Equinor announced a new oil discovery at exploration well 7220/8-2 S in Snøfonn Nord, close to the Johan Castberg field in the Barents Sea off Norway. As per Equinor, preliminary calculations of the discovery indicate between 37 and 50 million barrels of recoverable oil.  The discovery was made in Equinor-operated production licence 532, where the other licence partners are Vår Energi and Petoro. Equnior said it will consider tying the discovery to the Johan Castberg field. The well was drilled by the 6th gen harsh-environment semisub Transocean Enabler and the rig will next move further west in the licence to drill a new exploration well. The rig’s firm contract with Equinor runs into Q1 2024, with a 3-year option attached. 

Demand

Pharos Energy informed that the final 3D seismic processed results for exploration Block 125 in the Phu Khanh Basin, offshore Vietnam are expected in July 2022. Following this, the company will proceed to seismic mapping to identify prospects and expects to seek a funding partner on Blocks 125 and 126 PSC before undertaking drilling work. Pharos Energy has 70% interest in Blocks 125 and 126 in the Phu Khanh Basin, offshore Vietnam.

Beach Energy will prioritise development of Yolla West field offshore Australia and defer FID for the Trefoil discovery in the Bass Basin beyond the previously advised timing of H1 FY23. Beach indicated that Yolla West presents a ‘lower-cost, nearer-term and higher-returning investment opportunity’ against the Trefoil. As per Beach, negotiations are in progress for securing a rig for Yolla West, with drilling targeted over summer 2022/23. Drilling is subject to regulatory and joint venture approvals, and securing a rig. 

Equinor along with its partners, Vår Energi, Spirit Energy, and Petoro, decided to invest about NOK9 billion ($936 million) to develop the Halten East area near the Åsgard field in the Norwegian Sea. The area consists of six gas and condensate discoveries and options on another three prospects. In this regard, the partners submitted a plan for development and operation to Norway’s Ministry of Petroleum and Energy. Halten East is a collective name for several small-size discoveries and prospects, including the Gamma, Harepus, Flyndretind, Nona, Sigrid and Natalia discoveries. A total of up to ten wells are planned to be drilled in the area. The project is planned to be executed in two phases, with the first phase involving the drilling of six wells over the period 2024-2025, and the second phase is planned to be developed in 2029. Recoverable reserves in Halten East are estimated at around 100 million boe. Contracts worth almost NOK 7 billion ($728 million) would be awarded for the project. The contracts are subject to government approval of the plan for development and operation.

Mobilisation

7th gen drillship West Cobalt arrived in Turkey to join Turkish Petroleum’s (TPAO) existing fleet of 6th gen drillships—Fatih, Yavuz, and Kanuni. In November 2021, TPAO had agreed to purchase the West Cobalt from Daewoo Shipbuilding & Marine Engineering (DSME), with delivery scheduled for Q2 2022. The rig was originally ordered by Vantage Drilling in 2013, but was cancelled in 2015. Then, Northern Drilling agreed to acquire the rig in 2019, only to cancel the deal in the same year. The rig will support TPAO’s exploration and development efforts in the Black Sea and East Mediterranean. Turkey’s Minister for Energy and Natural Resources informed that the rig will commence its first drilling operations after a two-month preparation at the Taşucu Port. 

Rig Sales / Charter

Keppel O&M signed bareboat charter contracts for another two KFELS B Class jackups for deployment in the Middle East. This follows an announcement by Keppel earlier this month on the bareboat charter of two jackups to ADES for five years each in Saudi Arabia. As per the latest announcement, the two jackups will be chartered to ‘an established drilling company in the Middle East’ for deployment in Q4 2022 for a period of three years, with options for a one-year extension. Total revenue from the charters, including options and modification works, is expected to be up to S$120 million ($87 million). Keppel also informed that the rigs to be used for these charters will be from the terminated newbuild contracts announced in April 2022.

Seadrill informed that it sold the 6th gen harsh-environment semisub West Venture for recycling to Rota shipping during Q1 2022. The rig had been cold stacked for several years. As was earlier reported, Seadrill also sold semisubs Sevan Driller and Sevan Brasil during the quarter. Excluding units that the company plans to sell or recycle as part of its rig disposal program, Seadrill currently has two cold stacked units which are being actively marketed. The 6th gen semisub West Eclipse completed its last job with ExxonMobil offshore Angola and has remained stacked since, while jackup West Prospero remains cold stacked in Malaysia. Seadrill informed that it would only consider reactivating cold stacked units ‘where suitable work is secured and appropriate investment returns can be achieved’.  

Technology and upgrades

Seadrill informed that the 7th gen ultra-deepwater drillship West Saturn received multiple upgrades, with the most significant being the installation of a methanol injection system. As per Seadrill, the solution will help in reducing the rig’s fuel consumption by 10-15%, plus reduce carbon dioxide (CO2) and nitrogen oxide (NOx) emissions. The rig is scheduled to commence a long-term charter with Equinor off Brazil in July, with the firm period extending into mid-2026 along with four one-year options. 

Financials

Seadrill reported total operating revenue of $293 million for Q1 2022, decreasing from $305 million reported during the quarter ended December 2021. The decrease was primarily due to idle time between contracts for the semisubs West Hercules and Sevan Louisiana and early completion of the contract for semisub West Bollsta. Adjusted EBITDA for the period was $78 million against $98 million reported in the earlier quarter. The company’s operating profit for the period decreased to $42 million from $96 million reported in the previous quarter. Seadrill’s order backlog was approximately $2.4 billion at the end of Q1 2022. Post Q1 2022, Seadrill added $410 million in backlog related to contract awards involving jackups West Ariel, West Cressida, and West Leda in the Middle East, and drillship West Neptune, and semisub Sevan Louisiana in the US Gulf of Mexico. The company’s order backlog as of May 25, 2022 stood at $2.8 billion. 

Awilco Drilling reported a net loss of $6.6 million and an EBITDA loss of $6.2 million for Q1 2022. The company reported no contract revenue as it had no rig operating during the quarter. As reported earlier this month, Awilco reached an agreement with Well-Safe Solutions to sell the semisub WilPhoenix. The rig has remained stacked since completing its last engagement with Ithaca Energy off UK last October. As part of the sale announcement, Awilco had also informed that it is in the process of selling its other semisub WilHunter for recycling. The 2011-built rig has been cold-stacked since 2018 and following its sale, Awilco will have no rigs left in its fleet. 

Velesto Energy reported revenue of RM77.4 million ($17.6 million) from continuing operations for Q1 2022, deceasing from RM158.5 million ($36 million) reported in the preceding quarter. The decrease was mainly due to lower revenue from the company’s Drilling Services segment as a result of lower average jackup utilisation of 39% during the quarter, compared to 78% in the preceding quarter. The company reported a loss before tax of RM45.8 million ($10.4 million) against profit before tax of RM5.2 million ($1.2 million) in the previous quarter. 

Other News

Maersk Decom, a JV between Maersk Drilling and Maersk Supply Service launched in 2018, will close down following the transfer of responsibility for the Banda Tiof project in Mauritania to Petrofac. Maersk Decom informed that following the transfer, the company will have no further work commitments. The company’s website and social media channels will close down effective 1st June. Going forward, Maersk Drilling and Maersk Supply Service will continue to pursue decommissioning projects independently.

OKEA agreed to acquire Wintershall Dea’s 35.2% share in the Brage field, 6.46% share in the Ivar Aasen field, and 6% of the Nova development, all located in the North Sea offshore Norway, for an initial post-tax cash consideration of $117.5 million. In addition, payments linked to the fulfilment of certain conditions are part of the transaction. The transaction is conditional upon Norwegian governmental approval and is expected to be completed in Q4 2022. Following completion of the transaction, OKEA will take over operatorship of the Brage field from Wintershall. Also, Wintershall will retain responsibility for 80% of OKEA’s share of total decommissioning costs related to the Brage field.

Karoon Energy terminated the exclusivity agreement entered into with Enauta Energia in March 2022, relating to the potential acquisition of a 50% non-operated interest in the Atlanta field, offshore Brazil. The company was unable to complete the necessary due diligence and conclude negotiation of acceptable terms in respect of the potential transaction during the agreed exclusivity period. Karoon said that it will continue to evaluate opportunities in line with its announced strategy of seeking value accretive, inorganic growth opportunities in the normal course of business.