Rig Contracts

Beach Energy has signed a new agreement for provision of Diamond Offshore semisub Ocean Onyx to work offshore Australia after terminating the original agreement in April 2020. The rig will undertake a six-well (plus three one-well options) contract covering Beach’s Victorian Otway offshore drilling program that is now due to start between December 2020 and March 2021. The campaign will kick-off with the Artisan-1 exploration well and will be followed by development drilling at the Geographe and Thylacine gas fields. The Agreement, which is at a «globally competitive rig rate for deep water semi-submersible rigs“, includes provisions for COVID-19 related costs and delays.

North Oil Company has declared one-year options on contracts for Japan Drilling Company jackups Hakuryu-10 and Hakuryu-12. The options are the second of two available on the rig deals and will see the units occupied until February 2022 and September 2021, respectively. Both units are operating at the Al Shaheen oil field offshore Qatar.

Equinor has exercised three new one-well options on its contract for Odfjell Drilling semisub Deepsea Atlantic. The wells have been exercised under the Continued Optionality mechanism in the contract entered into between the parties in May 2018, as part of the overall Master Frame Agreement. The work shall commence after the completion of the current scope estimated to be in Q4 2020. The commercial terms are materially the same as for the recently announced Johan Sverdrup Phase 2 letter of intent that is set to commence in Q1 2022.

Under its jackup alliance with Maersk Drilling and Halliburton, Aker BP will use low-emission jackup Maersk Integrator for one more well in Norwegian waters. The new term will cover drilling of the Ula F – Producer 1 well at the Ula field, will commence around April 2021 and last for 85 days. The contract value is approximately USD 21.6 million, excluding integrated services provided and a potential performance bonus. The rig is undergoing a series of upgrades to turn it into a hybrid, low-emission rig before expectedly moving to the Ivar Aasen field for Aker BP this month.

It is now confirmed that Chrysaor is behind the recent contract awarded to COSL for its mid-water semisub COSLInnovator. The rig will undertake drilling of two exploration wells targeting the Jerv and Ildler prospects in Norwegian licence PL 973 from early 2021. Operations will be run out of Stavanger. COSL says that it has been proactive in making the rig even more attractive for future contracts by installing an advanced system for energy control, which results in an «emission reduction of up to 25% based on already low levels“.

Grup Servici Petroliere (GSP) has had to suspend operations on all of its current rig contracts due to the Covid pandemic with no planned dates yet for the contracts to be reinstated.

 

Rig Demand

 

Masirah Oil should start drilling the Yumna 2 well on block 50, offshore Oman, early next year, according to majority owner Rex International Holding. Jackup Foresight Driller IX was the last unit to drill at the field, between November 2019 and April 2020.

Foxtrot International is still planning to drill three new wells at its Block CI-27 offshore Cote d’Ivoire during 2021/2022 at an estimated cost of USD 215 million. It is understood that the operator has been in search of a tender-assist semisub for work at the Marlin field, lasting for a minimum of 260 days.

Medco Energi has received notification of the approval of the development and independent resource certification of the Paus Biru gas field in the Sampang PSC, Indonesia. The project will include drilling of a single horizontal well. FID is expected to be taken by mid-2021. The original discovery well, Paus Biru-1, was drilled using COSL jackup Haiyangshiyou 937 in late 2018.

Premier is preparing for a 2021 Indonesian jackup campaign, which will include an Anoa well workover, an Anoa infill well and a Gajah Baru well workover. Premier continues to evaluate additional incremental investment opportunities, including the potential to drill a well to test the northern flank of Anoa, to support deliverability from its Natuna Sea Block A fields and to backfill its existing gas sales contracts into Singapore which extend to 2028. The operator is also planning a two-well appraisal campaign at the Indonesian Tuna PSC during 2021 in which it will likely require a semisub. Additionally, Premier has delayed its planned exploration well at the Andaman II licence in the Andaman Sea until first half of 2022. The campaign is expected to consist of one or two wells using an ultra-deepwater floating rig.

The planned Vietnamese Chim Sáo infill drilling campaign originally scheduled for 2021, has been deferred to 2022. Operator, Premier Oil, is still planning two infill wells using a jackup and is currently in the process of seeking regulatory approvals for this programme. However, preparations are underway for further well intervention work at the field later in 2020 and 2021 to mitigate natural decline and optimise offtake.

Exploration drilling at the Mexican Block 30, also operated by Premier Oil, is now scheduled to begin in the second half of 2022. The operator will target the Wahoo and Cabrilla prospects.

Eco Atlantic says that it and operator Tullow Oil expect to commence a new drilling programme at the Orinduik Block off Guyana and, subject to JV partner approval, anticipates drilling at least two exploration wells into light oil cretaceous targets in 2021. Ultra-deepwater drillship Stena Forth has previously been used at the block.

 

Drilling Activities & Discoveries

Jackup Noble Sam Hartley has commenced its three-well plus options campaign with CNOOC International at the UK Golden Eagle and Cragganmore fields.

Dana Petroleum has commenced a new drilling campaign using mid-water semisub Stena Spey at the UK Bittern field. The one-well drilling campaign is expected to take around 60 days to complete.

Total now also plans to restart drilling operations with Seadrill ultra-deepwater drillship West Gemini offshore Angola in the coming weeks. As already reported, the operator has restarted operations with Transocean drillship Deepwater Skyros off Angola, while drillship Maersk Voyager is planned to re-start exploration off the country at the end of August.

Rosneft has started drilling two wells in the Russian Arctic Kara Sea, its Chief Executive Igor Sechin said on Tuesday. The wells are being drilled at the Vostochno-Prinovozemelskiy 1 and 2 blocks near the Novaya Zemlya archipelago in Russia’s Arctic and which may contain up to 2 billion tonnes of oil (14.7 billion barrels).

Seadrill deepwater semisub West Phoenix has resumed drilling operations offshore Norway with Neptune Energy, following a suspension in early August due to a member of personnel testing positive for Covid-19.

Odfjell Drilling harsh-environment semisub Deepsea Stavanger has moved from Cape Town anchorage out to its first drilling location at Block 11B/12B offshore South Africa where it will shortly spud the Luiperd-1 wildcat for Total. This is the first well of Total’s exploration and appraisal campaign off the country that is expected to last up to one year.

News reports indicate that TPAO has made a „significant“ gas discovery in the Turkish Black Sea while drilling the Tuna-1 exploration well using its own ultra-deepwater drillship Fatih. Further details are expected to be released on Friday.

 

Newbuilds & Sales

Jackup Valaris JU-87 has arrived at the M.A.R.S. shipyard facility in Pascagoula where it is to be recycled.

Selective Marine Services has taken delivery of a newbuild jackup Dynamic Momentum from the Cosco Shipping Heavy Industry yard in China. The rig will operate on a long-term contract for Abu Dhabi National Oil Company (ADNOC) in the Middle East. The LeTourneau Super 116E unit has been bareboat chartered by Chinese rig manger SinoOcean.

Market reports indicate that Equinor has shelved plans for its prospective harsh-environment newbuild semisub «Rig of the Future“. The Norwegian operator was looking to develop a highly automated rig concept with reduced fuel consumption to cut both operating costs and CO2 emissions.

The Administrative Council for Economic Defense (Cade) has approved the acquisition by Magni Partners and MIC Capital Partners (part of the Mubadala group) of companies with the specific purpose to own and manage the four Sete Brasil floaters. The four under-construction rigs include drillships Deepsea Guarapari and Arpoador, and semisubs Urca and Frade. In order to make the project viable, the operation was divided into three stages: first, Magni and Mubadala will create a joint venture, Knarr Drilling, for the acquisition of the rigs, which will remain chartered by Petrobras. Etesco will then set up a company to operate the four units. Petrobras must assign the drilling service contracts to the operating company and the foreign affiliate for international procurement and the performance of other activities abroad. Finally, as soon as the rigs are delivered and come into operation, Knarr must acquire Etesco shares, including the operating company.

 

Financial Information

Valaris plc has entered into a binding Restructuring Support Agreement and Backstop Commitment Agreement with around 50% of its noteholders. Valaris will undergo a financial restructuring that is intended to reduce its debt load substantially, support continued operations during the current lower demand environment and provide a robust financial platform to take advantage of market recovery over the long term. To implement the terms of the RSA and the BCA, Valaris voluntarily filed for a Chapter 11 financial restructuring in the United States Bankruptcy Court for the Southern District of Texas. Valaris aims to pursue an efficient restructuring process and exit Chapter 11 as soon as possible and is confident that a comprehensive financial restructuring is in the best interest of the Company and its stakeholders in the long-term.

 

Oil Price 

Futures fell 0.8% to below $43 a barrel for Brent Crude on Thursday amid a broader slide in equities after minutes from the US Federal Reserve said the pandemic would weigh heavily on economic activity, repeating its view that the recovery would depend on containment of the virus. OPEC+ also warned at a meeting on Wednesday that the pace of the demand rebound was slower than expected and at risk from a prolonged second wave of the outbreak, while also urging others to adhere to their output pledges. 

Other 

Brazil’s Mines & Energy Ministry has pushed back the 17th and 18th round of auctions for oil exploration blocks to 2021 and 2022, respectively, due to the coronavirus pandemic.