Soumya Mutsuddi, Esgian

This week Borr Drilling announced a new award off Thailand, and Odfjell Drilling secured additional work off Norway. Meanwhile, semisub Valaris MS-1 commenced a new charter off Australia.

Borr Drilling announced a binding Letter of Award (LOA) from Mubadala Petroleum for jackup Mist involving work off Thailand. The contract has an estimated duration of 210 days with an expected commencement in January 2023. Borr added that estimated value for the contract is $25.2 million. Mist is currently contracted to PTTEP off Thailand, with the work expected to run into Q4 2022. 

Odfjell Drilling was awarded additional work by Equinor for the harsh-environment semisub Deepsea Stavanger under the continued optionality mechanism included in the contract entered in May 2021. As a result, the rig now has eight remaining wells to be drilled which are expected to keep it working into Q3 2023. Equinor also has the opportunity to exercise further wells under the continued optionality mechanism. Odfjell informed that the day rate is similar to the current contract up to 1st May 2023, following which there will be an increase in dayrate if certain CO2 targets have been achieved. In addition, a performance incentive rate shall apply when wells are delivered safely and ahead of target. Integrated services are provided through the contract and compensated separately.

Well-Safe Solutions secured a contract involving P&A of 14 wells on the UK continental shelf using the semisub Well-Safe Defender (formerly WilPhoenix). This would be the first contract for the rig since Well-Safe took delivery in June 2022. Well-Safe indicated that the client is a ‘leading European operator’ and did not disclose the contract value. However, it informed that mobilisation will commence in March 2023 and contract duration is approx. 250 days. Well-Safe added that the rig is currently undergoing efficiency enhancements as part of integration into its business as well as completing its recertification before mobilising on the new contract. 

Drilling and discoveries

Semisub Valaris MS-1 completed the tow from Port of Dampier to the Barossa field off Australia to commence a new charter with Santos. The firm period for the charter runs into October 2023, following which the rig is scheduled to commence a new contract with an ‘undisclosed operator’. Market sources indicate that the operator is Shell and the work is related to the Crux field off Australia. 

Ultra-deepwater drillship Capella completed operations for Harbour Energy at the Timpan-1 exploration well off Indonesia and commenced work at Repsol’s Rencong-1X exploration well, also off Indonesia. As per Vantage Drilling’s latest fleet status update, Harbour Energy has options on the rig during 2023 and 2024.

Wintershall completed drilling operations on the Nova field off Norway, with six wells having been drilled by the harsh-environment semisub Scarabeo 8 ahead of first oil. The rig is expected to remain contracted with Wintershall until December 2022, with the remaining work involving development drilling off Norway.

Equinor received drilling permit for wildcat well 31/1-3 S and appraisal well 31/1-3 A, both located in its operated production licence 923 off Norway. Drilling is planned to be undertaken during September 2022 by the harsh-environment and ultra-deepwater semisub Transocean Spitsbergen.     

Demand

CNOOC offered 13 exploration blocks off China, covering a total area of 17,205km², in its latest offshore licensing round for 2022. With respect to the blocks offered, one is located in the Bohai Bay covering an area of 330km², eleven blocks are located in Pearl River Mouth Basin covering 16,235km2, and one block is located in Yinggehai Basin with an area covering 640km². CNOOC said that it will look to create ‘innovative cooperation models’ with foreign enterprises to expand the scope for its partners. For deep water blocks, CNOOC said it will adopt flexible and preferential business arrangements in terms of exploration period, relinquishment, signature fee, participating interest, etc to expand cooperation with foreign enterprises and enhance foreign investments in China’s offshore oil and gas exploration and development. The data room will be open until 31st December 2022 and the deadline for submission of bids is 28th February, 2023.

Indonesia offered six oil and gas blocks as part of its first licensing round in 2022. The offering includes five exploration blocks and one exploitation block. The blocks are understood to have total potential resources worth 3.94 billion barrels of oil and 14.08 trillion cubic feet of gas. The exploration blocks offered include acreage offshore Northwest Aceh, offshore Southwest Aceh, Arakundo (mainland and offshore Aceh), Bengara 1 in North Kalimantan, and Maratua II offshore Makassar Strait. The single exploitation block offered includes the Baewan acreage offshore East Java. Indonesia’s Ministry of Energy and Mineral Resources said that ‘attractive terms & conditions’ have been offered as part of the auction, including provisions to improve the operator's profit split by taking into account the risk factors of the working area, lowering of First Tranche Petroleum (FTP) to 10% from 20% et al. 

JV partner Pharos Energy informed that two development wells are planned to be drilled at the TGT field (Block 16-1) off Vietnam, operated by Hoang Long Joint Operating Company (HLJOC), in H2 2022. For the CVN field (Block 9-2) off Vietnam, operated by the Hoan Vu Joint Operating Company (HVJOC), Pharos indicated that one development well is planned to be drilled in H2 2022. The revised field development plan, including the additional well, has been approved by the Vietnam Ministry of Industry and Trade. Pharos added that a letter of award has been signed with Velesto energy for jackup Naga 3. Contract negotiations for the rig are in advanced stages with drilling due to commence in September 2022. Pharos has a 30.5% working interest in Block 16-1 and a 25% working interest in Block 9-2. For exploration Block 125 located in the Phu Khanh Basin off Vietnam, Pharos indicated that it is working to identify prospects of securing a funding partner before drilling the commitment well in 2023. Pharos Energy has 70% interest in Blocks 125 and 126 in the Phu Khanh Basin, off Vietnam.  

Mobilisation

Ultra-deepwater drillship West Carina completed its reactivation in Tenerife and got underway to Brazil to commence a charter for Petrobras. The work is expected to commence during Q3 2022 with the firm period of charter being 3 years. 

Other News

Borr Drilling informed that it reached agreements in principle with most of its secured creditors to extend the majority of the secured debt to 2025. The company is seeking the required consents and waiver extensions from lenders to complete the transaction. Once these agreements are in place, Borr will have long term financing on approximately $1.4 billion. The refinancing is to be largely enabled by the sale of some select assets, and additional equity. With respect to asset sale, Borr had earlier announced signing a binding LOI with an undisclosed third party for the sale of three under-construction jackups—Tivar, Huldra, and Heidrun. Borr added that it is targeting the sale of another jackup in Q4 2022, without naming the rig. Following the prospective sale, Borr’s fleet would consist of 22 delivered rigs plus 2 rigs under construction. Further, Borr informed that it intends to raise up to $250 million through a potential equity offering to partially paydown certain secured facilities. The company plans to raise the equity offering after 11th August 2022, when it is expected to report its Q2 financials. 

KeyFacts Energy Industry Directory: Esgian