This week Borr Drilling jackup Norve commenced drilling offshore Gabon, while drillship Valaris DS-16 began transit to Pascagoula for further reactivation activities ahead of a new contract with Oxy. Meanwhile, sources suggest LLOG may look to add some work in the US Gulf of Mexico.

Contracts 

JV partner Sacgasco Limited has reported that a non-binding LOI has been issued for the jackup Murmanskaya for undertaking a drilling and Extended Well Test (EWT) program at Cadlao oilfield offshore Philippines during the first half of 2022. The rig is currently engaged in operations for Vietsovpetro offshore Vietnam. JV partner for Cadlao, Sacgasco Limited, also indicated the possible opportunity for exploration drilling on the nearby East Cadlao Prospect.

Borr Drilling announced it has secured a contract Offshore Gabon for the premium jack up Norve with BW Energy. The contract is expected to commence in the second half of 2022 after the rig's current contract. The contract includes 4 firm wells with an anticipated duration of 240 days with options to extend thereafter. Borr also secured a LOA for the premium jack up Thor with an undisclosed operator in Southeast Asia. The contract is expected to commence in June 2022 for a duration of one year plus options.

Shelf Drilling announced that it has secured an 18-month contract extension with ENI on the jackup Key Manhattan. The contract is in direct continuation of its current contract for drilling operations in the Adriatic Sea, offshore Italy. The Key Manhattan is now expected to work until August 2023.

Drilling and discoveries

Jackup Valaris 107 is now expected to remain with Jadestone Energy off Australia until around late December and therefore the one-well, follow-on commitment with Carnarvon at the Buffalo-1 well off Timor Leste has been delayed by a couple of weeks. The delays are not related to the performance of the rig or preparation by Carnarvon. 

Lundin Energy has received consent from the Norwegian authorities to drill the Melstein prospect in Block 6306/9 in the Norwegian Sea using Odfjell Drilling semisub Deepsea Stavanger. The well will be drilled in a water depth of 751ft.

Vaalco announced commencement of its 2021-2022 drilling campaign offshore Gabon with the Etame 8H-ST development well. Borr Drilling owned high-spec jackup Norve is currently drilling the well, which is expected to be completed in January 2022 with production expected in the first quarter of 2022. Vaalco said that this sidetrack of an existing well is targeting existing Gamba hydrocarbons in the Etame field that have not previously been produced by prior wells. This well is the first of a four-well campaign, involving two development wells and two appraisal wells to be drilled by the rig over the firm period of contract. The contract is also understood to include options worth 210 days.

Namcor has announced the spudding of the Graff-1 exploration well in Block 2913A, Orange Basin, offshore Namibia. The Namibian NOC and its partners Shell (operator) and QatarEnergy contracted ultra-deepwater drillship Valaris DS-10 to drill the exploration well earlier this year.

Chariot announced that mid-water, harsh-environment semisub Stena Don has arrived on location in the Lixus licence offshore Morocco to commence drilling on the Anchois gas development project. The rig will drill the Anchois-2 appraisal well and re-enter the previously drilled Anchois-1 discovery well, with operations expected to take up to 40 days to complete.

In its latest Capital Markets Day presentation, Harbour’s EVP International, Stuart Wheaton, updated that the company achieved positive appraisal results from its drilling campaign in the Tuna block offshore Indonesia and all the pre-drill objectives were met. Comprehensive data acquisition has been carried out, including flow tests, to support development planning for the block. The 3rd gen. semisub Noble Clyde Boudreaux was engaged in the drilling campaign and completed operations last month. Harbour is targeting an FID in 2023 with planned first production in 2026. Wheaton also updated on the Andaman II gas project offshore Indonesia wherein Harbour has a 40% operating interest and is partnered by Mubadala (30%) and BP (30%). The 6th gen. ultra-deepwater drillship Capella is scheduled to spud the Timpan-1 exploration well in the prospect during the second quarter of 2022. In the event of success, Wheaton said there is potential for an accelerated commercialisation by 2026 due to strong gas demand.

CGX Energy says that drilling of the wildcat well Kawa-1 has taken longer than expected and costs are projected to increase. The current cost estimate of the Kawa-1 is now forecasted to be $115-$125 million. Approximately 90% of the planned footage has been drilled and the initial results suggest active hydrocarbon system is present. CGX Energy and partner Frontera Energy contracted Maersk Drilling's semisub Maersk Discoverer to spud the well and the rig is expected to finish operations at the end of December.

Demand

A consortium of ExxonMobil and QatarEnergy has signed an exploration and production sharing contract with the Republic of Cyprus for offshore Block 5 located southwest of the island.  It is worth noting that this is QatarEnergy’s second exploration block in the Republic of Cyprus, in addition to Block 10, which contains the Glaucus gas discovery. Under the terms of the contract, QatarEnergy will hold a 40% working interest while ExxonMobil will be the operator and will hold a 60% working interest in Block 5. Block 5 covers an area of 4,500 km² in water depths of up to 2,500 m and is adjacent to Block 10.

Market rumours indicate that LLOG is looking to add an additional 300 days of work on ultra-deepwater drillship West Neptune. It is understood that the work would commence in Q4 2022, which is when the Seadrill rig completes its current contract with Talos. Given current utilisation and dayrate levels in the region, we estimate dayrates to be over $300,000 per day.

Santos has been awarded a new exploration permit for Block WA-549-P by the National Offshore Petroleum Titles Authority. The block was released as Area W20-14 in the Australian government's 2020 offshore exploration licensing round. Block WA-549-P is a shallow-water permit that contains the small Sage oil discovery. There are plans to drill one exploration well before 12 December 2026.

Equinor’s head of exploration for Norway, Jez Averty, has told Reuters that the company plans to drill 25 exploration well in Norway in 2022, up from 16 wells this year, focusing on areas near its existing fields and platforms. Averty said that Equinor will drill about 80% of its exploration wells in 2022 near existing fields, including in the Arctic Barents Sea, as potential discoveries could be developed in a short time. Averty also said that the planned 25 exploration wells in Norway were estimated to cost between $300 million and $400 million. Reuters also referenced to a spokesperson for Equinor indicating that the company plans to drill around 10-13 exploration wells in 2022, including in the U.S. Gulf of Mexico, offshore Canada, Angola and Brazil, as well as in East Siberia and onshore Russia. 

Mobilisations

Mid-water semisub Borgland Dolphin has completed its drilling campaign for PGNiG offshore Norway and ifollowing a short trip inshore to Floro, Norway, has headed back offshore to begin a new commitment with Wellesley Petroleum. 

Market sources indicate that midwater semisub COSLPioneer will in the coming days begin mobilisation offshore the UK to start a new short-term contract.  Although the charterer has not been disclosed, sources suggest that this is a campaign with Repsol Sinopec covering work at the Blake field life extension project. The rig also has a long-term deal lined up next year with Ithaca, covering drilling of 10 wells at the UK Captain Enhanced Oil Recovery Program Phase II plus one well at the Abigail field, keeping it busy into 2024.

Ultra-deepwater drillship Valaris DS-16 has successfully completed reactivation for transit to the US Gulf of Mexico. The drillship is now en route to Pascagoula, Mississippi, to finish reactivation ahead of the Occidental contract commencing May 2022.

Other Market news

Santos has signed an agreement to sell a 12.5% interest in the Barossa gas/condensate project in the Timor Sea to an Australian subsidiary of JERA. On completion of the transaction, which is expected during the first half of 2022, JERA will reimburse Santos for its share of capex on the project to date, with the total consideration likely to be around $300 million. JERA has a 6.1% stake in the Darwin LNG complex that will receive Barossa’s production. Santos expects first LNG from Barossa in the first half of 2025.

Following up on earlier press releases, Petrobras will receive from Equinor the last contingent instalment in the amount of $950 million related to the sale of its stake in the exploratory block BM-S-8, containing the Bacalhau field. Petrobras sold its total stake (equivalent to 66%) in block BM-S-08 to Equinor for $2.5 billion, with the first instalment of $1.25 billion received at the closing of the transaction on 22/11/2016, and the second instalment of $300 million received on 21/03/2018.

Lukoil has signed of amendments to the agreement concluded in October 2021 on the acquisition of a share in the Shah Deniz project offshore Azerbaijan from Petronas. As per the latest amendments, the share to be acquired by Lukoil has been reduced from 15.5% to 9.99% with a proportional decrease in the transaction value from $2.25 billion to $1.45 billion. The deal is expected to be closed in January 2022. According to Lukoil, the conclusion of the amendments resulted from negotiations with the Shah Deniz project partners on the implementation of pre-emptive rights.

QatarEnergy has entered into agreements with Shell to acquire working interests in two exploration blocks in the Red Sea offshore Egypt. Under the terms of the agreements, which are subject to customary government approvals, QatarEnergy will hold a 17% working interest in Red Sea Blocks 3 and 4. Commenting on the conclusion of these agreements, Mr. Saad Sherida Al-Kaabi, the President and CEO of QatarEnergy said: “We are pleased with this important development, as it represents QatarEnergy’s entry into the Arab Republic of Egypt’s well-established upstream oil and gas sector and offers an opportunity for the consortium partners to explore this frontier acreage.” Block 3 was awarded to Shell in late 2019 and covers an area of 3,097 km2 in water depths of 100 to 1,000 m, while Block-4 was also awarded to Shell in late 2019 and covers an area of 3,084 km2 in water depths of 150 to 500 m. Upon closing of these agreements, the working interests in the two blocks will be as follows: 1) Block 3: Shell (Operator - 43%), BHP (30%), Tharwa Petroleum Company (10%) and QatarEnergy (17%) and 2) Block 4: Shell (Operator - 21%), Mubadala (27%), BHP (25%), Tharwa Petroleum Company (10%) and QatarEnergy (17%)

Chevron has signed an agreement with the government of Equatorial Guinea for the offshore Block EG09 in the Douala basin, adjacent to the maritime border of Cameroon. Chevron will operate the block with an 80% stake while state-owned GePetrol will hold the remaining 20%. Block EG 09 was previously explored by PetroSA and, according to Equatorial Guinea’s Ministry of Mines & Hydrocarbons, “has the potential to hold sizeable oil and gas reserves owing to its close proximity to other blocks where large-scale discoveries have been made”.

The Petroleum Exploration Permit PEP-11 will not go ahead as the Australian government led by Prime Minister Scott Morrison has refused application for the project. Prime Minister Morrison said the government was taking steps to protect local communities and the environment by putting a stop to the project. Offshore regulator NOPTA will grant the applicant 30 days to respond to the notice of intention to refuse the application. Block PEP-11 is an exploration permit prospective for natural gas located primarily in Commonwealth waters off the New South Wales coast between Newcastle and Wollongong and covers approximately 8,200 m2. Advent Energy, through its wholly owned subsidiary Asset Energy Pty Ltd, holds 85% of PEP 11, while JV partner Bounty Oil & Gas NL holds the remaining 15%. The joint venture planned to drill the Seablue-1 exploration well in 125 m. of water about 26 km. off the coast of New South Wales.

Lime Petroleum has received approval from the Norwegian authorities to acquire Repsol’s 33.8434% stake in the Brage field offshore Norway. As per Rex International, Lime’s parent company, the acquisition is expected to be completed by December 31, 2021. On 15 June 2021, Lime had entered into a conditional sale and purchase agreement with Repsol Norge to acquire Repsol’s 33.8434% interest in the Brage Field, for a post-tax consideration of $42.6 million.

Viaro Energy's subsidiary Rockrose UKCS 10 Ltd has reached a deal to sell its 28% non-operated interest in the Foinaven field offshore UK to BP. The Foinaven oil field is located 190 km west of Shetland in water depths of between 350 and 520 m and is operated by BP. Viaro Energy has not provided financial details for the deal, however said that the sale completion to BP is expected in first quarter of 2022.

KeyFacts Energy Industry Directory: Esgian

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