By Nermina Kulovic, Esgian

This week, several new drilling contracts were announced and one of these will result in another rig leaving the North Sea for a job in Australia. Plenty of new demand also emerged as operators seek to secure assets for their upcoming campaigns.

Contracts

Transocean has announced that six one-well options have been exercised for the Cat D semisub Transocean Encourage in Norway. The rig is working for Equinor. The estimated 370 days of work will contribute approximately $172 million in backlog. The work is expected to begin in direct continuation of the current firm term and now extends through February 2026. As a reminder, Equinor awarded a new contract to the 1,640-ft Transocean Encourage rig in late March 2023 for the drilling of nine firm wells with options to extend by another six wells. These options have now been exercised. The rig is currently under a legacy contract with Equinor which started back in 2015 and is expected to end in late 2023. After that, this nine-well contract is expected to start followed by six new wells.

Trident Energy has exercised two options for Island Drilling’s 4,000-ft semisub Island Innovator, adding another 85 days of work offshore Equatorial Guinea conducting development drilling and workovers. Island Innovator is expected to begin work with Trident Energy offshore Equatorial Guinea in the fourth quarter of 2023, under its original two-well contract fixed in October 2022. The two firm wells plus the two newly-exercised wells will keep the rig working for around 190 days. Trident Energy still has another three options that may be exercised. Island Innovator is currently working for Dana Petroleum in the UK North Sea.

The Valaris-owned 8,500-ft semisub Valaris DPS-5 has scored two new assignments that will see it return to the US Gulf and stay busy into early 2024. The rig is currently working off Mexico for Eni. In November 2022, the rig moved to Mexico from the US Gulf for an assignment with Murphy. Operations with Eni should be wrapping up soon, as Valaris DPS-5 is due to start a new two-well contract with Occidental in the US Gulf later this month. The charter is for a minimum of 60 days and has a value of approximately $22 million. Next, the rig will undertake nine P&As with APA Corp’s Apache. This work is also for the US Gulf and has a minimum duration of 110 days. This should keep the rig working into January 2024. Meanwhile, market sources indicate the rig is being offered into upcoming jobs in both US and Mexican waters.

Valaris has secured new contracts for two of its jackup rigs for operations in Australia. Valaris has been awarded a 180-day (minimum duration) contract with an undisclosed operator offshore Australia for the 400-ft heavy-duty jackup Valaris 107. The contract is expected to start in the first quarter of 2024 with an operating dayrate of $150,000. The rig owner has also won a one-year contract for the same heavy-duty unit with an undisclosed operator offshore Australia. This contract is expected to begin in October 2024. Furthermore, Valaris has secured a two-well contract with an undisclosed, major Australian operator for the 400-ft heavy-duty ultra-harsh environment jackup Valaris 247. The contract is expected to begin in early to mid-2024 and has an estimated duration of 100 days. The operating day rate is $180,000 and Valaris will receive a mobilisation and demobilisation fee that covers operating costs while the rig is in transit. The jackup is currently operating in the UK under a contract with Perenco. The firm part of this contract is expected to end in September and there’s a 60-day option right after. This latest contract award for the Valaris 247 means that another unit is leaving the North Sea amid growing demand and increasing dayrates elsewhere.

Noble’s 10,000-ft semisub Noble Discoverer (ex-Maersk Discoverer) has won a one-well charter with a one-well option with Petronas for work in Block 52 off Suriname. The rig departed Guyana on 5 July after finishing operations with CGX Energy and is heading to Trinidad and Tobago. This new job with Petronas is scheduled to begin in August. The firm well is expected to run about 90 days. The contract value for the firm term is approximately $43 million and includes additional services along with mobilisation and demobilisation fees. The Petronas work fills a gap in the schedule of Noble Discoverer, as in May, Noble secured a one-well contract with Ecopetrol off Colombia. Operations are expected to run about 72 days and will begin between November 2023 and January 2024.

Market sources indicate Pemex has made a selection in its tender for a semisub to work off Mexico. It is understood newbuild North Dragon, which is managed by Bluewhale Offshore, has been selected, although the charter is not yet finalised. Bluewhale is a subsidiary of the CIMC Group. The rig is being built at CIMC Raffles.

Drilling Activity and Discoveries

Norway’s Petroleum Safety Authority (PSA) has given OMV consent for exploration drilling in block 6607/3 and 6607/6 in the Norwegian Sea. The well 6607/3-1 S, targeting the Velocette prospect, is located in production licence 1016, which is operated by OMV with INPEX Idemitsu Norge and Longboat Energy Norge participating as partners. The water depth at the site is 475 meters. The Velocette well is located approximately 47 km southeast of the Aasta Hansteen field and it will be drilled using the 10,000-ft Transocean Norge semisubmersible. Drilling is planned to start at the beginning of August 2023 at the earliest, with an expected maximum duration of 117 days. The rig is operating under a long-term rig share agreement between OMV and Wintershall Dea. OMV’s scope includes three development wells for the Berling project (ex-Iris Hades), two exploration wells (including Velocette in 3Q 2023), and one optional slot.

Guyana’s Environmental Protection Agency (EPA) has approved ExxonMobil’s 35-well exploration and appraisal drilling plan for the Stabroek Block. The Environmental Assessment Board has reviewed and declared the Environmental Impact Assessment of the Cumulative Effects related to this project as acceptable. The EPA says it is “satisfied that the project can be conducted in accordance with good environmental practices, and in a manner that avoids, prevents and minimizes any adverse effects which could result from the activity.” ExxonMobil has six drillships under contract off Guyana. Noble Bob Douglas, Noble Don Taylor, Noble Sam Croft, and Noble Tom Madden operate under a Commercial Enabling Agreement that currently has the rigs committed through the first half of 2027. Meanwhile, drillships Stena Carron and Stena DrillMAX operate under rolling options and are currently committed through the first half of 2024. Stena DrillMAX is undergoing its 5-year SPS in the Canary Islands and will return to work off Guyana upon completion.

Demand

Indian state operator ONGC has launched a tender to contract five jackups for three years with an estimated starting date in Q2 2024. Oil and Natural Gas Corporation Limited (ONGC) is seeking the units under two categories. Under Category I it seeks four units of the MLT/BMC design, and under Category II it seeks one MLT/Slot type, both categories for 300 ft, for operations off the West Coast of India. Bids are due on 9 August 2023. A pre-bid conference will take place on 12 July 2023. The operator also has a tender for two DP drillships capable of drilling in 3,000m (10,000ft) water depth for 21 months.

ONGC launched an expression of interest (EOI) to procure two newbuilds jackup rigs to replace its aging fleet gradually. ONGC, Drilling Services, Mumbai Region built its drilling rig Sagar Samrat for drilling in Mumbai offshore waters in 1974. Drilling operations in Mumbai offshore subsequently grew in leaps and bounds, with ONGC acquiring more rigs till 1990. In connection with its ongoing exploration and production activities, ONGC has launched an EOI to procure two newbuilds jackup rigs, LeTourneau Super 116E Class or equivalent, to replace its aging fleet. The Drilling Services and Deepwater Group operates a mix of jackups and floaters, wherein 8 owned rigs and 28 chartered hire rigs. Responses to the request are due by 10 July 2023.

Finder Energy has announced the results of its interpretation of the new Big Bird 3D reprocessing and interpretation project and the high-grading of a number of appraisal and exploration opportunities within the P2530 Seaward Production Licence located in the UK Central North Sea. Finder holds a 60% interest in P2530 and is the Licence Administrator and the remaining 40% is held by Dana Petroleum who farmed into the licence last year. The licence is located within the North Kittiwake Basin and is surrounded by the Forties and Nelson fields to the north and the Kittiwake and Gannet fields to the south. The area is infrastructure-rich with multiple host facility options for field tie-backs. As a result of the detailed Big Bird 3D interpretation and technical studies, Finder has identified upside potential in the historical Wagtail Discovery and an additional six prospects within the licence. Wagtail, Marsh, and Bancroft are formed from classic “interpod” traps similar in style to the nearby Kittiwake, Goosander, and Grouse oil fields. The remaining four prospects, Tye, Turner, Agar, and Stoinis are combination traps of Fulmar Formation reservoirs deposited within Jurassic mini basins and pinching out onto the basin margin highs. Wagtail discovery has an appraisal potential of 19 MMbbl gross 2C contingent resource and COS of 57%, and the low-risk Bancroft (COS 42%) and Marsh (COS 40%) prospects have gross mean prospective resources of 32 MMbbl and 23 MMbbl, respectively. The joint venture (JV) is progressing with the evaluation of drilling candidates within P2530. In parallel with evaluations, Finder will shortly be initiating a farm-out process to secure an industry partner to fund drilling activity. Having completed the work programme for Phase A of the Licence, the JV will shortly make a decision whether to enter into the next 2-year period of the Licence (Phase B) with a drill-or-drop decision in Q3 2025.

A new licence group has been formed and an extended work period has been granted in the Norwegian licence PL1049, which has been stratigraphically split and renamed PL1049S. This will allow the maturing of two exploration prospects located in the North Sea off Norway. Longboat Energy Norge holds 40% in PL1049S where a new joint venture has been formed with DNO Norge as the operator holding 40% and Petoro holding the remaining 20%. Two prospects, Jasmine and Sjøkreps, have been mapped in PL1049S. Longboat previously held 25% in the Equinor-operated PL1049 where the deep Cambozola prospect was drilled in 2022. The target for further exploration in the licence is the shallower levels and the licence has been stratigraphically split. The new licence group is retaining PL1049S where two prospects have been mapped, both targeting Tertiary play, which has been proven to be successful in the area including in the Equinor-operated Kveikje discovery in PL293B, only 12 km to the east. The area is covered with new seismic data and, combined with new processing techniques, there is significant potential to de-risk the exploration prospects. Sjøkreps is a fault-bounded three-way dip closure at Palaeocene level and has preliminary estimated recoverable volumes ranging between 20 to 300 mmboe (P90-P10) with the main risk being the quality of reservoir. The Jasmine prospect is an injectite target at Eocene level, which is analogous to the Kveikje discovery, and has recoverable volume range preliminarily estimated between 10 to 30 mmboe (P90-P10) with the main risk being the reservoir quality. The work programme consists of seismic studies, potential seismic reprocessing and integration of results from ongoing and near-term wells targeting the same interval in the area, which combined have the potential to significantly improve the Chances of Success ahead of making a drill decision, which has to be made by February 2025. Longboat Norge will shortly become a joint venture between Longboat Energy and JAPEX on completion of the investment into Longboat Norge by JAPEX, which was announced in May 2023 and received key approvals in June.

Argentina’s Ministry of Environment and Sustainable Development has approved Equinor’s drilling permit for the Argerich-1 well in the CAN_100 block in the North Argentina Basin. Equinor’s plan for the Block CAN_100 in the North Argentina Basin was approved in December 2022. The ministry has also approved an operating window between 15 December 2023 and 15 June 2024. The block is about 5,000ft deep and sources indicate Equinor plans to use a drillship for the campaign. It is understood that the rig needs accommodations for up to 200 and ROV services must be included.

Equinor has issued a request for information (RFI) regarding its potential BM-C-33 development in the Campos Basin off Brazil. A DP floating rig will be needed, as water depths in the block are up to 2,900 m (9,514 ft). The scope consists of six wells starting between June and September 2026. The estimated project duration is 23 months. Responses are understood to be due by 30 July 2023. The BM-C-33 block contains the Pão de Açúcar, Gávea, and Seat discoveries. Equinor and partners Repsol Sinopec and Petrobras reached a final investment decision on the project in May 2023. The concept selected for BM-C-33 is based on an FPSO with a production capacity of 16 million cubic meters of gas per day with average exports expected of 14 million cubic meters of gas per day.

Mobilisation/Rig Moves

The Odfjell Drilling-managed harsh environment semisubmersible Hercules has arrived in Canada for a contract with ExxonMobil. The SFL Corporation-owned 10,000-ft semisub started its journey from Norway, where it had been undergoing its special periodic survey and other upgrades since late 2022, to Canada in June 2023. It arrived off Bay Bulls on Monday 3 July 2023. The unit secured its upcoming contract with ExxonMobil in Canada in Q4 2022. This contract is for around 135 days with an extension option of 60 days. Hercules will need to be inspected by local authorities and be given a drilling permit before operations with ExxonMobil begin. Following work offshore Canada, Hercules will relocate to Namibia for a two-well contract with Galp Energia secured in May 2023.

Shelf Drilling North Sea’s 400-ft jackup Noble Hans Deul, to be renamed Shelf Drilling Perseverance, has started its transit from the Blythe field location in the UK North Sea to the Cromarty Firth anchorage. Petrofac, on behalf of IOG, will be undertaking the rig transit from Blythe location block 48/22 to the Cromarty Firth anchorage. The rig is departing the Blythe NUI platform on Thursday 6 July and is scheduled to arrive at Cromarty Firth on 8 July. Tug vessels Loke Viking and BB Worker have been contracted to lead and assist the tow. The rig was released early from its contract with IOG following the completion of the wireline intervention at the Blythe H2 well. It was supposed to work on one of two appraisal wells at Kelham North/Central and Goddard but IOG has recently decided to defer the wells and release the rig after finishing operations at Blythe H2. The unit has no other work lined up and is available for new operations.

Stena Drilling’s 10,000-ft drillship Stena IceMAX is en route to the US Gulf and expected to arrive on or about 14 July. The rig drilled the Ephesus well off Newfoundland and Labrador, Canada for bp ahead of its departure. The well was spudded on 8 May and has been abandoned. While bp has not released any information on the well results, operations had been expected to take about 90 days. Stena IceMAX has a two-year charter with bp for work in the US Gulf.

Operadora Cicsa’s 10,000-ft semisub La Muralla IV has mobilised from The Bahamas to Curacao. Market sources indicate the rig is undergoing mooring system upgrades. The 2012-built GVA 7500 design rig last worked for Shell off Mexico between December 2020 and July 2021. Operadora Cicsa purchased the rig in an auction for $60 million in November 2022. While no forward work has been confirmed for La Muralla IV as yet, it is understood the rig is being made ready for opportunities in Mexico.

Valaris’ heavy-duty jackup Valaris 121 has left the Port of Dundee, where it had been staying since early 2023, and returned to the UK North Sea to conduct drilling operations managed by Petrofac. The 400-ft jackup arrived at the Port of Dundee in January 2023 and conducted its five-year special periodic survey (SPS) while there. Under a contract awarded in January, the rig will drill the Earn-1 exploration well for Dana Petroleum. The contract has an estimated duration of 70-100 days. After that, the rig is scheduled to begin its 210-day contract with Shell, also in the UK North Sea.

Other News

Odfjell Drilling has completed its planned refinancing with secured bonds of $390 million and bank facilities of $497 million, including a revolving credit facility of $175 million. Odfjell raised $390 million by way of a significantly oversubscribed rated bond, secured against the 10,000-ft semisubs Deepsea Aberdeen and Deepsea Atlantic, maturing in May 2028. The company and the bonds have been rated by S&P and Moody’s with ratings of B+/BB and B2/B2, respectively. Furthermore, the company amended and extended the $197 million Deepsea Nordkapp facility to January 2029 with commercial tranche and export credit agency tranche. Following significant interest from existing and new commercial banks, the company secured $300 million bank facility on favourable terms on Deepsea Stavanger maturing in February 2028. Odfjell Drilling achieved several objectives through this refinancing, including prepaid existing bank facilities, removing any significant liabilities until 2028; secured additional flexibility for strategic priorities and growth opportunities; dividend and shareholder distribution clause amended to allow for distributions; and significant free cash flow generation by reduced fixed amortisation.

Paratus, the parent company of SeaMex and SeaBras, has advised the market that it is actively seeking opportunities to acquire additional assets. Paratus confirms it recently participated in a bid to acquire certain unnamed jackups, but the bid did not materialise. SeaMex holds five jackups, all of which are in Mexico. Seadrill has been providing management services for the rigs, but following Seadrill’s announced exit from its stake in Paratus, the management services are set to end in September 2023. Meanwhile, the SeaBras entity holds six pipelay support vessels, all of which are located off Brazil. Paratus also confirmed that it received $65.3 million in June from Pemex, which is the operator of all five of its jackups. SeaMex has a net cash position of about $75 million, comprised of $45.6 million of debt and $120.9 million of cash. The company intends to use its excess cash to fully deleverage SeaMex and support the operations and growth of the company.

PetroNor E&P has entered into a binding agreement to farm out 100% of its participating interest in the Sinapa (Block 2) and Esperança (Blocks 4A and 5A) licences offshore Guinea-Bissau to a special purpose vehicle owned by Petromal subsidiary Apus Energy DMCC. PetroNor will receive a payment of up to $85 million divided into a contribution towards past licence costs of at least $25 million upon completion of the transaction, and a further entitlement to two contingent earnout payments of $30 million each, subject to government approval of a field development plan and achievement of continuous production respectively. The assets will be assigned to Apus Energia Guiné Bissau SA, which is owned by Apus Energy DMCC, a Dubai-based joint venture majority owned by Petromal LLC. Petromal is the largest shareholder of PetroMal. The transaction is expected to be completed in the second half of 2023 pending final government approval of a licence extension, the assignment of interests and operatorship, and satisfaction of other closing conditions. The effective date will be as of 1 January 2023. The combined Sinapa and Esperança licences cover 4,963 square kilometres and include the Atum and Anchova prospects. An exploration well is planned to be drilled during the first half of 2024.

Jersey Oil & Gas has announced that the UK’s North Sea Transition Authority has approved an extension to the Second Term of the P2170 “Verbier” licence located in the UK North Sea. The licence is part of a phased Greater Buchan Area (GBA) development plan for which the licensees have now selected the preferred development solution. Further to the recently announced extension of the P2498 “Buchan” licence, the Second Term of the P2170 licence has been extended by three years to 29 August 2026. The extension was requested in order to provide the licensees with the time required to prepare a Field Development Plan (FDP) for the Verbier discovery, as part of a phased Greater Buchan Area (GBA) development plan. The first phase of the planned GBA work programme involves re-development of the Buchan field, with the start-up of production targeted for 2026. Furthermore, Jersey and NEO Energy, as the incoming operator of the GBA licences, have also determined that the preferred development solution for the GBA development is via the redeployment of an FPSO. The concept selection was driven by the ability to re-use existing infrastructure and the ability to make the FPSO “electrification-ready”, enabling the potential connection to one of the anticipated floating wind power developments that are intended to be located close to the GBA. With the GBA development solution now identified, work is progressing on the engineering studies that are required prior to submission of the development plan in 2024. The total capital expenditure for the re-development, including the cost of acquiring the FPSO, will be in the region of $900 million (gross cost). The overall Buchan field re-development plan is anticipated to be submitted to the NSTA during the first half of 2024.

The Danish Energy Agency (DEA) has opened a mini-tender round for interested oil and gas companies to apply for a licence for a new oil and gas concession in the Danish sector of the North Sea. The area offered for licensing is located within the Central Graben, covering ~160 km² comprising the Elly-Luke discoveries. The Elly-Luke area is located in blocks 5504/6 and 5504/10 and the reservoir is under high pressure and temperature (HP/HT) with primarily gas and a smaller proportion of condensate resources. The reason behind the launch of the mini-round is that the DEA has received an unsolicited application in the area from BlueNord (ex-Noreco). On this basis, the Minister for Climate, Energy and Utilities has made the decision to launch the mini-tendering round. Danish national oil and gas company Nordsøfonden participates on behalf of the state in the new concession with a share of 20% and the oil companies with 80%. The award of a concession is decided on the basis of criteria such as technical and financial capacity, which work program the applicant offers to carry out and the time frame for this. The deadline for applications is 15 October 2023 and the licences are expected to be granted about three months after the deadline.

KeyFacts Energy Industry Directory: Esgian