Soumya Mutsuddi, Esgian

This week Valaris announced new awards and contract extensions across multiple regions, and Stena Drilling announced a new contract award off Canada. Meanwhile, drillship Stena Forth arrives in Canada to commence an exploration job.

Contracts

Odfjell Drilling secured further work from Equinor for the harsh-environment semisub Deepsea Stavanger under the continued optionality mechanism included in the contract entered into by both parties in May 2021. Resultantly, the rig now has six remaining wells to be drilled off Norway which are expected to keep it working into Q2 2023. Odfjell added that Equinor has the option to exercise further wells under the continued optionality mechanism. In addition to the dayrate, which is similar to the rig’s current contract with Equinor, a performance incentive rate shall apply when wells are delivered safely and ahead of target. The contract also involves provision of Integrated services, which are compensated separately.

Stena Drilling announced a new contract award by BP for its harsh environment drillship Stena IceMax, involving operations off Canada. The one-well program is scheduled to commence in 2023 and has an estimated duration of 80 days. The rig is currently operating on Energean’s Karish project off Israel.

Valaris announced new contracts and extensions in US GOM, Brazil, and UK. Drillship Valaris DS-17 was awarded a 540-day contract by Equinor involving work on its Bacalhau project in Brazil. The total contract value is approximately $327 million and expected to commence in mid-2023. Drillship Valaris DS-15 received a contract extension from TotalEnergies off Brazil, with the extension being in direct continuation of the rig’s current firm program with TotalEnergies. Jackup Valaris 122 secured a one-well contract extension with Shell off UK. The extension has an estimated duration of 150 days and will be in direct continuation of the rig’s existing firm program with Shell. In the US GOM, jackup Valaris 144 was awarded a four-well contract by an undisclosed operator. Contract commencement is expected during Q3 2022 with an estimated duration of 60 days and an estimated value of approx. $5 million. Additionally, Valaris 144 was awarded a 90-day contract by Cantium in the US GOM with expected commencement in Q4 2022, and an operating rate of $80,000 per day.

Valaris also announced new contract awards and extensions in Australia and Southeast Asia. Semisub Valaris DPS-1 secured a two-well extension from Woodside off Australia with an estimated duration of 38 days. The extension will commence in direct continuation of the rig’s existing firm work on Woodside’s Enfield P&A campaign, which now involves 18 wells in total. Valaris DPS-1 also secured a one-well contract extension with Woodside off Australia on the Scarborough development campaign, scheduled to commence after the Enfield campaign. The extension has an estimated duration of 60 days. Jackup Valaris 107 was awarded a one-well contract off Australia by GB Energy with expected commencement either in late Q4 2022 or early Q1 2023. The contract has an estimated duration of 20 days and the operating rate is $118,000 per day. In Southeast Asia, jackup Valaris 115 was awarded a four-year contract by Brunei Shell Petroleum for a total value of approx. $159 million and expected commencement in April 2023. 

Drilling and discoveries

Velesto Energy jackup Naga 5 is scheduled to drill the Paprika-1 exploration well in PTTEP-operated Block SK410B off Sarawak, Malaysia, during July. The duration of the engagement extends into September 2022. This was confirmed as per a notification issued by the Maritime Department of Malaysia. The rig’s last engagement was with Petronas off Malaysia during the second half of 2021. 

Neptune Energy received exploration drilling permit for wildcat well 35/6-3 S in the company-operated licence 929 off Norway. Drilling will be undertaken by the harsh-environment semisub Deepsea Yantai during July 2022. 

OMV received exploration drilling permit for wildcat well 30/5-4 S in the company-operated licence 1100 off Norway. Drilling will be undertaken by the harsh-environment jackup Maersk Intrepid during July 2022. The rig’s firm work with OMV runs into September 2022 and the contract is understood to have an option attached. 

Equinor received regulatory permission to use harsh-environment and ultra-deepwater semisub Transocean Spitsbergen for production drilling and completion on the Visund field in the company-operated licence 120 off Norway.  

Demand

Longboat Energy announced completion of a farm-in agreement with OMV, which was announced during May 2022. Through the agreement, Longboat acquired 20% working interests in the Oswig (PL1100, PL1100B) and Velocette (PL1016) wells off Norway. The Oswig well is expected to spud in July, while the Velocette well is expected to be drilled in Q2 2023. Both the wells are operated by OMV (40% working interest). In addition to the farm-in with OMV, Longboat also informed that the PGNiG-operated Copernicus exploration well (Longboat 10% working interest) in the Norwegian Sea is expected to spud before the end of this quarter. Drilling is planned to be carried out by the harsh-environment semisub Deepsea Yantai, which is currently operating off Norway.

3D Oil executed a farm-out agreement with ConocoPhillips in relation to the exploration permit VIC/P79 located in the Otway Basin off Australia. Under the agreement, ConocoPhillips will acquire an 80% operating interest in the permit in exchange for an upfront payment of $3 million. ConocoPhillips will also undertake to drill an exploration well (as required by the Permit’s Primary Term minimum work commitment) by February 2025. For the same, the company will be carried for up to $35 million in well costs, above which it will contribute 20% of costs in line with its interest in the Permit. The agreement is subject to conditions precedent, including signing of a joint operating agreement between the two parties and regulatory approvals.  

Woodside submitted an environment plan to NOPSEMA involving P&A of four wells in the Minerva field within production licence VIC/L22 off Australia. The planned work involves P&A of two suspended wells (Minerva 3 and Minerva 4) and two non-producing wells (Minerva 1 and Minerva 2A) using a moored semisub. The work is planned to be undertaken between Q3 2023 and end Q2 2025, with the activity required to be completed no later than 30th June 2025. While drilling work is planned to be undertaken within the above mentioned timeframe, the anticipated duration of rig operations is expected to be less than two months. Preparatory operations are anticipated to be undertaken approximately one month prior to the commencement of P&A activities, and are likely to take less than a week to complete. 

Vaalco Energy informed that drilling operations on the South Tchibala 1HB-ST well was completed from the Avouma platform in the Etame field, offshore Gabon. Drilling was carried out by Borr Drilling jackup Norve, which is being mobilised to the Southeast Etame North Tchibala (SEENT) platform to drill the ETBNM 2H-ST well, the fourth development well in the operator’s 2021/2022 program. Vaalco also plans to exercise its options to add two additional wells to the program—the Ebouri 6H development well and a Northeast Avouma well which will be a near-field exploration well. If the options are exercised, the rig’s firm work with Vaalco is likely to extend into October 2022. 

Mobilisation

Harsh-environment drillship Stena Forth arrived in Canada to drill ExxonMobil’s Hampden exploration well in the Flemish Pass Basin offshore Newfoundland. Drilling is expected to commence during this month and following conclusion of the engagement, the rig is scheduled to return to East Mediterranean to undertake drilling campaigns for Chevron off Egypt and Cyprus.  

Other News

Borr Drilling informed that completion of its refinancing process will require a further equity injection combined with debt repayments, extensions and concessions by the creditors. As such, to allow the required time to conclude the process and secure commitments from all creditors, the company’s lenders decided to extend the timeline for completing the refinancing process to 15th July 2022 (against the earlier proposed date of 30th June 2022). Borr added that specific proposals have been received from all creditor groups, some of which have already resulted in agreements in principle. In particular, the company agreed to terms for refinancing of the senior secured bank facility in July 2022 through a mix of a new credit facility and equity/an asset sale. Further, Borr said that it would continue to work with all remaining creditors to arrive at an optimised financing solution by 15th July 2022.

Ithaca Energy completed its acquisition of Siccar Point Energy, informing that all conditions related to the transaction have been met. Through the acquisition, Ithaca picked up stakes in the producing Schiehallion and Mariner fields and increased its interest in the Jade gas field, where it is already a partner. Ithaca will also acquire interests in the Cambo and Rosebank fields, which are two of the largest undeveloped discoveries in the UK North Sea. 

The US Department of the Interior announced availability of the Proposed Program for the 2023-2028 National Outer Continental Shelf Oil and Gas Leasing Program (National OCS Program), as well as the Draft Programmatic Environmental Impact Statement for the 2023-2028 Program (Draft PEIS) for public comments. The Proposed Program includes no more than ten potential lease sales in the Gulf of Mexico and an option for one potential lease sale in the northern portion of the Cook Inlet of Alaska. No lease sales have been proposed for the other Alaska planning areas, Atlantic or Pacific planning areas during the five-year period. Also, inclusion of an area in the Proposed Program is not a final indication that it will be included in the approved National OCS Program or offered in a lease sale. The Notice of Availability (NOA) for the Proposed Program and Draft PEIS will be published later this month for a 90-day public comment period.

KeyFacts Energy Industry Directory: Esgian