Bassoe Analytics weekly rig market round-up (week 35)
Rig Contracts
According to partner Ratio Oil, operator in Block 47 offshore Suriname, Tullow Oil, has awarded a one-well contract for provision of ultra-deepwater drillship Stena Forth to undertake exploration activities at the acreage. The rig is expected to spud a wildcat targeting the Goliathberg-Voltzberg North prospect in early 2021 and will continue drilling for around two months. The well will be drilled at a water depth of about 1,900 meters, to a total depth of about 5,400 meters and is expected to pass two geological target layers.
Seadrill Partners has announced a new two-well plus one-well option contract for its ultra-deepwater drillship West Capella in Malaysian waters. The deal is set to begin during October this year and the firm term will keep the rig committed until January 2021. The contract and option will be at a dayrate of $188,000.
An amendment has been signed for Seadrill harsh-environment semisub West Phoenix, extending its work with Neptune Energy by one well in Norway. Earlier this year, a notice of intent to early terminate was received from Neptune, therefore with the additional well the rig is expected to conclude operations early October.
BW Energy confirmed that it has entered into a letter of intent with Borr Drilling for provision of a jackup to resume drilling at the Phase 2 of the Tortue field development offshore Gabon as soon as restrictions are lifted. The operator had previously been using jackup Norve at the development.
Independent Oil & Gas (IOG) it expects to make a five-well award for a jackup to undertake its Core Phase 1 development campaign in the UK North Sea in the coming weeks. The drilling campaign is expected to begin in the first half of 2021.
Rig Demand
Melbana Energy is still planning to drill an exploration well targeting the Beehive prospect in WA-488-P offshore Australia by late 2021. The 100% operator is currently in the process of farming out a portion of its share in the licence prior to drilling the well, which will likely require a jackup. The prospect is now characterized as greater than 400 million barrels of prospective resource in the best case.
Lekoil says that plans are continuing for a five to seven-well drilling campaign at Phase 2 of its Otakikpo field development offshore Nigeria. The purpose of the drill is to increase production to around gross 15,000 to 20,000 bopd, and secure further investment in infrastructure facilities for crude oil evacuation. A jackup will be required for the campaign.
Ithaca Energy is proceeding with plans for a second stage of its Captain enhanced oil recovery polymer program in the UK central North Sea. Stage two would involve drilling up to four more producer and six injector wells to optimize oil recovery from the area of the Upper Captain Sands reservoir currently produced through subsea wells. It is likely that a semisub will be required for the drill.
Drilling Activities & Discoveries
Mid-water semisub Borgland Dolphin has commenced an exploration drilling contract with Wellesley Petroleum in the Norwegian sector. The deal covers two wells plus options, with the first firm well to be drilled in 2020 and the second in 2021. The first well will be the 6204/11–3 wildcat, targeting the Schweinsteiger prospect in PL 829.
ConocoPhillips has received consent to drill the 6507/5–10 S Slagugle wildcat well, using Transocean harsh-environment semisub Leiv Eiriksson. The rig will drill the well in PL 891 with work expected to take 47 days.
Equinor has been granted consent to drill the 35/11–24 Swisher exploration well in the Norwegian North Sea, using Seadrill harsh-environment semisub West Hercules. The well, which will be drilled in PL 248 C, is expected to take 63 days to complete.
TPAO confirmed a large discovery at its Tuna-1 well in the Turkish Black Sea, which encountered 100 metres of pay at a total depth of 3,520 meters. It is expected that an additional 1,000 meters will be drilled to assess two additional structures. Drilling was undertaken using TPAO's own ultra-deepwater drillship Fatih. Turkish officials announced that they believe this discovery is a portion of a giant gas field and they will continue to drill to delineate the full extent to the gas field. Certain media reports cite an expected 26 trillion cubic feet or 800 billion cubic metres gas.
Bureau of Safety and Environmental Enforcement (BSEE) Hurricane Response Team continues to monitor Tropical Storm Marco in the Gulf of Mexico and Tropical Storm Laura as it makes its way into the Gulf of Mexico. The Hurricane Response Team is monitoring offshore oil and gas operators in the Gulf as they evacuate platforms and rigs in response to the storms. Personnel have been evacuated from six rigs (non-dynamically positioned), equivalent to 60% of the 10 rigs of this type currently operating in the Gulf. A total of 11 dynamically positioned rigs have moved off location out of the storms’ projected paths as a precaution. This number represents 68% of the 16 DP rigs currently operating in the Gulf.
Valaris ultra-deepwater drillship Valaris DS-15 is expected to depart US waters in early September and head for Mexico to start a new contract with CNOOC.
Total has recommenced operations using ultra-deepwater drillship Maersk Voyager offshore Angola. The rig is committed to the operator until at least the end of this year, covering drilling of one exploration well offshore Angola and one off Namibia.
Odfjell Drilling harsh-environment semisub Deepsea Stavanger has spudded the Luiperd-1X well, the second exploration well on Block 11B/12B offshore South Africa. The rig, which had previously been operating in Norwegian waters, is committed to Total for around a year of exploration and appraisal drilling off the country.
Awilco Drilling mid-water semisub WilPhoenix is expected to shortly conclude plug and abandonment operations at the UK Renee and Rubie fields, where it has been working for Petrofac since May 2020. The rig is next scheduled to work for Serica Energy at the UK Rhum field under a one-well contract, commencing next month.
Newbuilds & Sales
During early August 1981-built jackup Noble Joe Beall was sold for recycling and has been removed from the active fleet.
Odfjell Drilling has announced plans to recycle its 1982-built semisub Deepsea Bergen. The rig completed its last contract, which was with MOL Norge, during March 2020.
Financial Information
For the second quarter of 2020, Seadrill reported a net loss of USD 88 million on revenues of USD 277 million. Total operating expenses were USD 365 million. The company reported an adjusted EBITDA of USD 35 million for the quarter, delivering an adjusted EBITDA margin of 12.6%. Seadrill stated that ‚we continue to evaluate capital structure proposals from our financial stakeholders; whilst no agreement has been reached at this point it is expected that potential solutions will lead to significant equitization of debt which is likely to result in minimal or no recovery for current shareholders.‘
For the second quarter of 2020, Velesto's Drilling Services segment registered a 13.8% increase in revenue to RM 312.1 million in current period, mainly due to higher average jackup rig utilisation of 75% as compared to 70% in the corresponding period. As a result, the Drilling Services segment registered a significant higher profit before tax of RM 18.8 million against RM 8.5 million profit before tax reported in the corresponding period.
Valaris has received a notice of immediate suspension of trading and delisting of common stock from the New York Stock Exchange (NYSE). According to Valaris’ statement from Tuesday, it was notified by the NYSE of its determination to indefinitely suspend trading of the company’s common stock and to start proceedings to delist the company’s common stock from the NYSE.
For the second quarter of 2020, Odfjell Drilling reported operating revenue of USD 167 million compared to USD 186 million in Q2 2019. EBITDA for the quarter was USD 81 million compared to USD 72 million in Q2 2019. The EBITDA margin was 49% compared to an EBITDA margin of 39% in Q2 2019. Meanwhile, the Group’s contract backlog is USD 2.2 billion, whereof USD 1.2 billion is firm backlog. The comparable figure at the end of Q2 2019 was USD 2.3 billion, whereof USD 1.3 billion was firm backlog.
For the second quarter of 2020, Borr Drilling reported total operating revenues of USD 84.0 million, net loss of USD 109.6 million and Adjusted EBITDA* of USD (1.9) million. The adjusted EBITDA includes approximately USD 12 million of non-recurring costs related to the agreements reached with the Company's creditors in June 2020. The combined Adjusted EBITDA of the four separate Mexican JVs that the Company has 49% ownership in was USD 30.1 million in the second quarter 2020, compared to negative EBITDA in the first quarter of 2020 of (USD 2.3) million, an increase of USD 32.4 million quarter on quarter.
Oil Price
Oil prices rose on Monday as tropical storms Marco and Laura headed for the US Gulf of Mexico, resulting in companies shutting around 82% of oil production and 57% of gas production and evacuating personnel from offshore installations. However, oil prices dipped again in early trade on Friday as the after affects of the hurricane are not expected to have a lasting impact on the industry.
Other
Petrobras has started the opportunity disclosure stage (teaser), referring to the sale of all of its stakes in a set of twenty-six onshore and shallow water E&P concessions, located in the Potiguar Basin, in the state of Rio Grande do Norte, jointly called the Potiguar Cluster. The main subsequent stages of the project will be reported to the market in due course.
The Australian authorities have launched its 2020 offshore licensing round. The round includes 42 release areas that will be available for offshore oil and gas exploration.The areas available are offshore of the Northern Territory, Western Australia, Victoria and the Ashmore and Cartier Islands. Bidding on these areas is open until Tuesday 1 June 2021.
Odfjell Drilling has reached an agreement with Oceanwind AS to become their strategic partner and investor. Odfjell Drilling has the intention to achieve a controlling position subject to successful completion of the contemplated equity tranches. Oceanwind has an ambition to become a major player in the harsh environment offshore wind market. The company’s founders have more than 20 years offshore wind experience, and they will be key contributors going forward, combined with Odfjell Drilling’s competence from operating offshore floaters. Odfjell Drilling sees this as an important step towards its “zero emission drilling”-concept. Offshore wind may be utilized as the main energy source to an offshore drilling operation, enabling Odfjell Drilling to deliver energy efficient drilling services, and thereby contributing to the clients’ and Odfjell Drilling’s emissions targets.
In case you missed it: last week's rig market round-up can be found here.
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Data: Bassoe Analytics, Image attribution: Stena Drilling.
