Soumya Mutsuddi, Esgian

This week ADNOC Drilling added another jackup to its acquisition tally, while 'recycling opportunities' are being explored for a Maersk semisub cold-stacked in the Caspian. Meanwhile, an Odfjell semisub was awarded a five-year contract off Norway.

Contracts

Odfjell Drilling announced a five-year contract award by Aker BP for the harsh-environment semisub Deepsea Stavanger off Norway. The contract is scheduled to commence in early 2025. Odfjell informed that the contract day rates will be market based, within a pre-agreed range and will be set by two brokers nine months prior to each calendar year. The base contract value is in the range of $620 million to $730 million, where the ceiling of the day rate range shall be adjusted based on an inflation adjustment formula starting from June 2023. In addition to the market based rates, Odfjell will also be eligible to receive pay performance and fuel savings incentive bonuses from Aker BP. The contract is subject to license partner approval and Norwegian governmental approval of planned projects. The rig is currently working for Equinor off Norway with the firm work running into Q3 2023. Equinor is also understood to have options on the rig until end 2024. 

Drilling and discoveries

Neptune Energy commenced drilling on the 10th gas well at its operated Cygnus field in the North Sea off UK. Neptune said that upon its completion in Q4 2022, the well has the potential to produce enough gas for approx. 2 million UK households. Drilling is being undertaken by the Borr Drilling jackup Prospector 1. 

Ultra-deepwater drillship Maersk Viking is scheduled to conclude its ongoing engagement with Shell off Malaysia during first half of September 2022. Following that, the rig will commence a one-well engagement with TotalEnergies also off Malaysia, with the contract being a sublet from Shell. Next, the rig is expected to commence a short-term job with Petronas off Malaysia during November 2022 and running into January 2023. Shell also has three one-well options remaining on the rig.

Eni announced a ‘significant’ gas discovery at the Cronos-1 well in Block 6 off Cyprus, in 2,287m of water depth. The Block is operated by Eni, with TotalEnergies as 50% JV partner. Eni informed that preliminary estimates indicate about 2.5 TCF of gas in place, with significant additional upside that will be investigated by a further exploration well in the area. Cronos-1 is Eni’s fourth exploration well drilled off Cyprus and the second well in Block 6, after the Calypso-1 gas discovery in 2018. Drilling was carried out by the ultra-deepwater drillship Tungsten Explorer, with the rig’s current engagement off Cyprus expected to run into September 2022. On its next contract, the rig is scheduled to commence work for TotalEnergies off West Africa during late Q4 2022. 

APA Corp announced an oil discovery at the Baja-1 exploration well in Block 53 off Suriname. The well was drilled to a depth of 5,290m and encountered 34m of net oil pay. APA is the block operator holding 45% working interest, while Petronas holds 30% and CEPSA holds 25%. Drilling was carried out by drillship Noble Gerry de Souza in water depths of approx. 1,140m. Following completion of current operations, the rig is scheduled to mobilise to Block 58 where it will drill the Awari exploration prospect. APA also informed that operations have concluded on the Dikkop exploration well in TotalEnergies operated Block 58 off Suriname. The well encountered water-bearing sandstones in the targeted interval and has been plugged and abandoned. Drilling was carried out using the ultra-deepwater drillship Maersk Valiant, which will commence mobilisation to the Sapakara field to drill a second appraisal well at Sapakara South. 

Trillion Energy informed that jackup GSP Uranus is being prepared for mobilisation to the SASB natural gas field off Turkiye to commence a multi-well drilling program. The rig is expected to arrive on location on 29th August 2022 and the initial program involves drilling of seven production wells. Once on location, the rig will be positioned at the Akcakoca offshore production platform, with the first well expected to spud on or about 1st September 2022.    

Demand

JV partner Deltic Energy informed that planning for the Shell-operated Pensacola exploration well in the UK North Sea is in final stages, with the well expected to spud in October 2022. Deltic added that operations involving seabed preparation have begun ahead of drilling commencement. The well will be drilled by the harsh-environment jackup Maersk Resilient, which is currently undertaking operations in the Dutch North Sea. Deltic also informed that plans for drilling the Shell-operated Selene prospect off UK have been firmed. A well slot for Selene has yet to be confirmed and will be subject to drilling schedules, but the same is expected to be firmed up as well planning progresses. With respect to Deltic’s Syros prospect on Licence P2542 off UK, the company informed that it is working on launching a farm out process to bring onboard a partner to drill the prospect. 

Australian Government launched the country’s 2022 Offshore Petroleum Acreage Release, which offered 10 exploration blocks located across four basins. The acreage offered included three blocks in the Bonaparte Basin (off northern Australia), three blocks in the Browse Basin (off north-western Australia), three blocks in the Northern Carnarvon Basin (off north-western Australia), and one block in the Gippsland Basin (off south-eastern Australia). The Bonaparte Basin includes two blocks in the Malita Graben sub-basin and one in the Vulcan sub-basin; the Browse Basin includes two areas in the Caswell sub-basin and one in the Barcoo sub-basin; the Northern Carnarvon Basin involves two blocks in the Dampier sub-basin and one in the Exmouth sub-basin, and the Gippsland includes one block. Australia’s Department of Industry, Science and Resources said that the nominated areas were determined based on consultations with the public, governments, and stakeholders. The deadline for submission of work-bids for exploration permits related to the offered areas is 02nd March 2023. 

Mobilisation / Upgrades / Technology

Drillship Noble Globetrotter I commenced mobilisation from the US Gulf to Mexico ahead of its upcoming charter with CNOOC off Mexico. The contract is a one-well engagement, following which the rig is scheduled to undertake a two-well job with Petronas, also off Mexico, which is expected to keep the working into Q1 2023. 

Huisman announced that it has designed a harsh-environment semisub which can offer ‘significant’ reduction in costs and emissions. As per Huisman, the rig design includes a low drag electrified robotic drilling system that offers consistent speed of operation, as well as a unique heave compensated drilling floor, able to operate in rough seas. These result in increased productivity and uptime of the rig. The rig is equipped with hybrid power system, including energy storage systems storing regenerated energy, which can help in cutting emissions by 30-40% per well. A 40% reduction of onboard personnel and a large functional deck space also contribute to emission reduction and lowering costs by 25% per well. Huisman added that while ideally the rig is powered by onshore-produced hydroelectricity via a power cable from a nearby platform, alternatively, it can be powered by two floating wind turbines moored next to the rig. Huisman believes that with inclusion of the wind turbines, emissions can be reduced by as much as 86% per well. 

Sale / Scrap

ADNOC Drilling signed a sale and purchase agreement (SPA) for the acquisition of a premium jackup for a consideration of $70 million. This would be the company’s fourth jackup acquired in 2022, with the acquisition being part of its three-year guidance on capital expenditure and strategic plans for business expansion, ADNOC Drilling said. The company added that the four jackups are expected to join its fleet by end 2022, increasing its total fleet size to 28 units. ADNOC Drilling did not disclose the name of the rig being acquired or the company with which the SPA was signed.  

Maersk Drilling indicated in its latest fleet status report that it is ‘investigating recycling opportunities’ for the cold stacked Maersk Explorer. The 2003-built mid-water semisub is currently stacked off Azerbaijan, and has not worked since Q1 2021 when it finished a long-term engagement with BP at the Shah Deniz field. 

Sapura Energy entered into a Memorandum of Agreement (MOA) with NKD Maritime Ltd to sell three tender-assist rigs for a total cash consideration of $8.2 million. The rigs include two tender barges, Sapura T-19 and Sapura T-20, and the 2005-built tender semisub Sapura Setia. As per Sapura, the actual receivable value (based on agreed market steel price/MT) for Sapura Setia was $3.1 million, while it was $2.3 million for Sapura T-19 and $2.8 million for Sapura T-20. The company said that the disposal was carried out through a tender exercise and that a fair market value could not be obtained as the rigs had no potential demand. As such, a demolition valuation of the rigs was conducted, Sapura added. All the three rigs have not worked in many years and remained stacked. Explaining the rationale for the sale, Sapura informed that the rigs were either aging (Sapura Setia) or not technically competitive (Sapura T-19, Sapura T-20) and the company does not foresee any financially viable prospects for reactivation. Moreover, their continued stacking would involve more costs for the company and risk of value deterioration.  The agreement is subject to Sapura’s shareholder approval, and is intended for the sale of these rigs for scrap/demolition and not for engagement/employment in any other activity. 

Financials

Maersk Drilling reported revenues of $284 million for Q2 2022, increasing from $248 million in Q1 2022. Maersk indicated that its fleet utilisation during the quarter increased to 87% from 68% in the previous quarter. During the period, the company secured contracts worth $160 million and the revenue backlog as at 30th June 2022 was $2 billion. With respect to its performance for the first half of 2022, Maersk reported revenues of $532 million, increasing from $614 million reported in the first half of 2021. The company’s EBITDA before special items reduced to $95 million during H1 2022 from $163 million reported in the same period of 2021.

Other News

Sembcorp Marine referred to an announcement dated 28th December 2021 concerning its wholly-owned subsidiary PPL Shipyard Pte Ltd reaching an in-principle agreement with Borr Drilling to defer receivables from Borr from 2023 to 2025. Sembcorp updated that ‘in light of the improving oil and gas drilling market’, it has reached an agreement with Borr to improve terms for the deferment. These terms include earlier and higher amounts of interest payment and partial principal repayment in 2023 and 2024. Further, Sembcorp informed that the two companies expect to proceed with execution of final documentation as soon as practicable.

KeyFacts Energy Industry Directory: Esgian