Soumya Mutsuddi, Esgian

This week Noble and Valaris reported new backlog addition through their latest fleet reports, in addition to their first quarter results. Meanwhile, Well-Safe Solutions supplemented its fleet with the acquisition of semisub WilPhoenix.

Contracts 

Noble reported new backlog addition in its latest fleet status report. Jackup Noble Regina Allen was awarded a six-well charter with an unnamed operator for work off Trinidad and Tobago that will start shortly after the end of the rig's charter with Repsol off Guyana. Jackup Noble Sam Hartley was contracted by TotalEnergies for one firm well plus two one-well options with a target commencement in the third quarter of 2022. Noble has received a binding Letter of Award from Qatargas for jackups Noble Houston Colbert and Noble Mick O'Brien for 3.5 years of firm work per rig. While Noble Mick O'Brien's assignment will be in direct continuation with Qatargas, Noble Houston Colbert is  preparing to mobilise from UK this summer to begin operations in the third quarter. Following completion of its 10-year charter with Shell in the US Gulf of Mexico in the third quarter, drillship Noble Globetrotter I will undergo an out-of-service period before mobilising to Mexico for a one-well charter with CNOOC, followed by a two-well programme with Petronas.

Valaris reported new contracts and extensions in its latest fleet status report. Drillship Valaris DS-12 secured a two-well contract with an undisclosed ‘major operator’ for work offshore Angola and the Republic of Congo. The contract is expected to take place during the first quarter of 2023 and has a total value of $26.2 million. Drillship Valaris DS-15 secured a one-well contract extension with TotalEnergies offshore Brazil. The option well is in direct continuation of the current firm program and has an estimated duration of 100 days. Jackup Valaris 107 has been awarded a one-well contract with an undisclosed operator offshore Australia, with an estimated duration of 37 days and commencement expected in July 2022. Additionally, Valaris 107 also secured a one-well contract with Eni offshore Australia for an estimated duration of 70 days and commencement in August 2022. Jackup Valaris Norway secured a 29-day extension with Harbour Energy as well as a 14-day extension with BP, both in the North Sea off UK.

Maersk Drilling secured a contract with Aker BP involving the drilling of three infill wells by the ultra-harsh environment jackup Maersk Invincible at the Ivar Aasen field offshore Norway. The contract has an estimated duration of 86 days and is expected to commence in September/October 2022. The contract value is approximately $22.4 million, excluding integrated services provided and potential performance bonuses. The rig is contracted under the frame agreement that Maersk Drilling and Aker BP entered into in 2017 when the Aker BP Jack-up Alliance was established, which also includes Halliburton. An alliance incentive arrangement will apply for the work, based on actual delivery and performance. Maersk Drilling informed that the new contract at Ivar Aasen is not part of the agreement to renew the frame agreement that the company announced on 18th December 2021. Prior to commencing this contract, Maersk Invincible is scheduled to complete a special periodic survey as well as implementing hybrid, low-emission upgrades similar to the ones previously installed on Maersk Intrepid and Maersk Integrator.

Petroserv Marine has been awarded a contract by Eni involving work for its 6th gen semisub SSV Catarina off Indonesia. The contract is expected to be signed this month between Eni and and the consortium formed by Universal Energy Resources, Inc. (UER) with two other local partners. UER is the Petroserv Marine entity that operates its drilling rigs outside Brazil. Contract commencement is likely during Q3 2022 and the workscope involves 1 firm well and 1 optional well. The rig completed its last engagement with Eni off Indonesia during May 2021, following which it has remained stacked. 

Drilling and discoveries

Diamond Offshore semisub Ocean Apex has arrived on location to drill the Kanga-1 exploration well in SapuraOMV-operated permit WA-412-P off Australia. Drilling is expected to commence by this weekend, and the Kanga-1 well will take approximately 25 days to reach total depth, JV partner Finder Energy informed. As per the approved drilling plans, the Kanga-1 will be will be plugged and abandoned once drilling is completed. The total duration to drill, plug and abandon, and demobilise the rig will be around 30 days. On its next engagement, the rig is scheduled to undertake P&A operations for Woodside off Australia.

Western Gas informed that 6th gen semisub Valaris MS-1 will commence mobilisation on 16th May to drill the Sasanof-1 exploration well in its operated permit WA-519-P off Australia. Drilling operations are expected to commence on 24th May. On its next engagement, the rig is scheduled to undertake a development drilling campaign for Santos during July 2022. 

Demand

JV partner Carnarvon Energy informed that resource assessment of the Pavo-1 well has proved the existence of a substantial volume of light oil in excellent quality reservoirs. Contingent resources are estimated at 43 million barrels of oil on a gross basis. Additional prospective resources are estimated at 55 million barrels on a gross basis. Carnarvon added that the success of Pavo-1 has also led the joint venture to consider its upcoming appraisal and exploration campaigns in the Bedout Sub-basin. Carnarvon is working closely with the operator, Santos, to define these targets and will provide more information in due course. Pavo-1 well is located in the Santos-operated licence WA-438-P offshore Australia, wherein Carnarvon holds 30% interest, the rest held by Santos. The well was drilled by the jackup Noble Tom Prosser during March 2022.

PetroRio signed an agreement with Petrobras to acquire a 90% operating stake in the Albacora Leste field in the Campos Basin off Brazil. The company informed that the deal is subject to the usual conditions precedent for this type of transaction, including regulatory approvals. PetroRio will make a fixed payment of $1.9 billion, of which $293 million will be paid upon execution of the agreement, and a further $1,658 million upon completion of the acquisition and transfer of operatorship. The company indicated plans for a field redevelopment campaign, involving the connection or drilling of 17 production wells and 5 injection wells over 5 years, with an estimated capex of $70-75 million per well.

BP intends to invest up to £18 billion ($22.5 billion) in the UK’s energy system by the end of 2030. The company is looking to invest in various projects across UK’s energy spectrum, including the development of lower emission oil and gas projects to support near term security of supply, for example, at the Murlach, Kate and Mungo fields around the BP-operated ETAP hub in the central North Sea and the Clair and Schiehallion fields West of Shetland. The company is also looking to invest in exploration around its existing North Sea hubs.

Empyrean Energy intends to proceed with the second phase of exploration at Block 29/11 offshore China, involving the drilling of the Topaz prospect, subject to availability of financing. Empyrean had previously drilled the Jade prospect in the same block, with no hydrocarbons discovered in the target reservoir. Under the production sharing contract in place, Empyrean must elect to enter the second phase of exploration period by 12 June 2022, involving the commitment to drill the Topaz prospect before 12 June 2024. Empyrean is currently considering its alternatives to fund the Topaz drilling and preparing a work program that it believes can see the Topaz well drilled within the next drilling weather window in the first half of 2023. The Jade well was drilled by the COSL semisub Nan Hai Jiu Hao (NH9), with the rig set to be demobilised over the next few days.

Sacgasco Limited formed an alliance with oilfield services company Production Solutions Asia (PSA) to support its drilling plans offshore Philippines. The agreement covers Extended Well Testing and Early Production Systems in the Palawan Basin, off Philippines. Sacgasco through its subsidiary Nido Petroleum plans to drill two wells in the Palawan Basin, including the Nandino-1 exploration well in Block SC54, and the Cadlao drilling and Extended Well Test (EWT) in Block SC6B. Sacgasco informed that planning work will commence in the second half of 2022. The duration for the drilling program is expected to be around 6 weeks. As per an announcement in late 2021, jackup Murmanskaya was identified as a suitable rig for the EWT, however, the rig is no longer in contention due to its work commitments off Vietnam. 

Mobilisation

6th gen drillship Capella departed Malaysia and understood to be underway to Indonesia, where it is scheduled to commence its next engagement with Harbour Energy. The contract involves two wells, with one well subcontracted to Repsol, in addition to options for two additional wells.

COSL 6th gen semisub Shen Lan Tan Suo arrived in Singapore, following completion of an engagement with Medco Energy off Indonesia. Market sources indicate an upcoming engagement for the rig off Myanmar with a prominent Southeast Asian NOC. The contract is understood to involve firm wells plus options over an approximate duration of eight months.

Rig Sales

Noble confirmed that the 1987-bult 3rd gen. semisub Noble Clyde Boudreaux was divested during the first quarter 2022. The rig is understood to have been sold to a ship breaking yard in India for recycling, and is undertaking its final voyage to the yard. 

Well-Safe Solutions reached an agreement with Awilco Drilling to acquire the 1983-built and 2016-upgraded semisub WilPhoenix. This marks Well-Safe’s third asset acquisiton, with its current fleet comprising of a 4th gen semisub Well-Safe Guardian and a jackup Well-Safe Protector. Well-Safe expects to take delivery of the rig in June 2022, and will carry out optimisation and recertification requirements for future P&A work. WilPhoenix will be renamed as Well-Safe Defender and will expectedly enter service under its new owners in late 2022. The rig has remained stacked since completing its last engagement with Ithaca Energy off UK last October. Awilco Drilling informed that the agreed purchase price was $15.5 million, while adding that the company is also in the process of selling its other semisub WilHunter for recycling. The 2011-built rig remains cold-stacked and following its sale, Awilco will have no rigs left in its fleet. 

Technology and upgrades

Velesto jackup Naga 6 is underway to Singapore for upgradation works at yard. In its Annual Report for 2021, Velesto Energy indicated plans to upgrade the Naga 5 and Naga 6 with offline capabilities to improve drilling efficiency. Velesto also indicated plans to upgrade an additional two rigs with offline capabilities in 2023.

Financials

Transocean reported contract drilling revenue of $586 million for the first quarter of 2022, decreasing from $621 million in the fourth quarter of 2021. The company’s net loss attributable to controlling interest was $175 million, compared to $260 million in the previous quarter. Adjusted EBITDA for the period was $163 million, decreasing from $250 million in the prior quarter. Transocean’s contract backlog as of the April 2022 fleet status report was $6.1 billion. The company noted that the backlog was not inclusive of new contracts awarded to drillships Deepwater Skyros and Deepwater Invictus, which add approximately $200 million of backlog.

Valaris reported revenue of $318 million for the first quarter of 2022, increasing from $306 million in the fourth quarter of 2021. This was primarily due to higher utilization for its jackup fleet and higher average day rates for the ‘other’ segment, partially offset by lower utilization for the floater fleet. The company’s contract drilling expense for the quarter increased to $331 million from $286 million in the previous quarter. This was mainly due to higher rig reactivation costs as the company prepares three drillships and one semisub to commence work on long-term contracts. Valaris reported a net loss of $40 million for the period, compared to a net income of $28 million in the previous quarter. The company’s adjusted EBITDA for the period also decreased to negative $31 million from $3 million in the previous quarter.

Noble Corp. reported contract drilling services revenue of $195 million for the first quarter of 2022, compared to $192 million in the fourth quarter of 2021. Marketed fleet utilization was 75% for the period compared to 77% in the previous quarter. Adjusted EBITDA for the period was $27 million compared to $12 million in the prior quarter. Because the company emerged from bankruptcy in February 2021 and adopted fresh-start accounting, financial statements from the predecessor period are not comparable. Regarding the proposed merger with Maersk Drilling, Noble noted that the duration and outcome of the UK CMA review process remains uncertain. If a conditional Phase 1 antitrust clearance is obtained, then the merger is expected to close in mid-2022.

Other News

Aker BP received all necessary regulatory approvals for the completion of its contemplated merger with Lundin Energy's E&P business. Aker BP said that the completion of the merger is expected to occur on 30 June 2022. 

Valeura Energy entered an agreement to acquire KrisEnergy’s interest in two operated licences offshore Thailand for total initial cash consideration of $3.1 million, plus certain contingent payments of up to a further $7 million relating to future development milestones. The transaction marks the entry for Valeura Energy into Thailand. The acquisition involves working interests in in two shallow water Gulf of Thailand licences: G10/48 licence (89% operated WI) presenting a near-term production reactivation opportunity of the Wassana oil field, and the G6/48 licence (43% operated WI) containing the undeveloped but fully appraised Rossukon oil field. Valeura said total proved and probable reserves are worth 4 million barrels of oil. 

KeyFacts Energy Industry Directory: Esgian