Bassoe Analytics weekly rig market round-up (week 36)
Rig Contracts
Dolphin Drilling has signed a new USD 83 million deal with Pemex for provision of its harsh-environment semisub Blackford Dolphin for 15 months in Mexican waters. The rig, which is currently located in Norway, is being prepared for the mobilization ahead of starting the new deal in October. It is understood that the contract will cover drilling of the Asab-1 exploration well.
A new 100-day deal has been signed for jackup PV Drilling II with an undisclosed operator in Vietnamese waters, commencing later this month. Meanwhile, the new 5-well deal for PV Drilling III (reported previously by Bassoe Analytics) with kris Energy has now been confirmed for start-up during October this year and will last around three months.
Stena Drilling has signed a new contract with PSE Kinsale Energy Ltd for a 10-well plug and abandonment campaign offshore Ireland using mid-water semisub Stena Spey. Work under the deal will begin in April 2021. AGR Well Management are the lead contractor managing the design, supply chain and execution of both the platform and subsea well decommissioning work scopes on behalf of PSE Kinsale Energy Ltd. The rig will mobilize in Q1 next year to the Kinsale Field, offshore Cork and operations are expected to take 180 days to complete.
Stena also confirmed the one-well deal for ultra-deepwater drillship Stena Forth with Tullow Oil off Suriname (announced by Bassoe last week) and that ultra-deepwater drillship Stena IceMAX has been awarded a one-well plus three-well options contract, commencing in May 2021. Bassoe has been advised that work will be in Mexican waters with the operator still to be announced.
Neptune Energy Norge has extended the contract for the Odfjell Drilling-managed semisub Deepsea Yantai by an additional three wells taking the rig to late 2021. The rig will conduct the second drilling phase of Neptune Energy’s Fenja field development project. In addition, the parties have agreed to increase the number of optional wells from the remaining five up to ten optional wells.
Brunei Shell Petroleum Company Sdn. Bhd. (BSP) has exercised the contract extension option for jackup Maersk Convincer that allows the rig to continue operating offshore Brunei Darussalam. The contract extension has an expected duration of 602 days and will commence in May 2021 in direct continuation of the rig’s current work scope, which means that Maersk Convincer is now contracted by BSP until the end of 2022. The extension has a firm contract value of approximately USD 47 million, excluding a potential performance bonus.
Rig Demand
AGR has now received responses from a market survey issued on behalf of Emperor Energy for provision of a jackup or semisub to undertake drilling of the Judith-2 appraisal/exploration well offshore Australia. Five drilling contractors responded to the survey. Formal tenders and direct negotiations with a preferred supplier to contract the most suitable drilling unit will commence once Emperor Energy secures an exploration partner via a farm-in process currently being conducted. Drilling will take around 26 days, with costs estimated at AUD $25 Million, excluding any Drill Stem Tests (flow testing).
Kato Energy is planning to move ahead with its Australian Amulet development, which consists of an initial two-well jackup drilling campaign lasting for seven months. A second phase of drilling may also take place around one to two years after production start-up, lasting for around four months. Due to its proximity to the Amulet field, the operator may also choose to reinstate production from the Talisman field concurrently with the Amulet Development. The Amulet development is within Commonwealth waters in retention lease WA-8-L, located around 132 km north of Dampier in the northwest of Australia, in water depths of about 80m.
Drilling Activities & Discoveries
Tullow Oil has completed drilling operations offshore Ghana using ultra-deepwater drillship Maersk Venturer. The rig will now undergo some planned maintenance in Las Palmas, Canary Islands.
Constellation ultra-deepwater semisub Alpha Star started operations for Petrobras in the Brazilian Campos Basin on August 16, 2020. The rig is committed under a two-year deal.
Constellation mid-water semisub Atlantic Star is now due to begin its three-year contract with Petrobras offshore Brazil by the end of October 2020.
Transocean mid-water semisub Paul B Loyd Jr is scheduled to begin operations with Chrysaor offshore the UK later this week under a deal that will see the rig occupied until summer 2021.
Premier Oil has completed drilling operations using jackup Valaris JU-248 at the UK Catcher field and the rig has moved inshore Dundee, UK.
Total UK has spudded its 12/30–2 Finzean exploration well in Licence P2277 using jackup Noble Sam Turner. Operations are scheduled to last until late September/early October.
Awilco Drilling mid-water semisub WilPhoenix is scheduled to begin operations under a new contract with Serica Energy at the UK Rhum field imminently. The rig will remain with the operator for around 70 days.
Ultra-deepwater semisub Maersk Discoverer has arrived offshore Trinidad and Tobago from the Egyptian Mediterranean to commence a new contract with BP. The rig will shortly commence a three-well development drilling campaign at the Matapal field that will see the unit occupied until summer 2021.
Tender-assisted drilling rig PV Drilling V is now expected to commence its long-term contract with Brunei Shell Petroleum (BSP) from Q2 2021.
Ultra-deepwater drillship Valaris DS-15 is now mobilizing from US to Mexican waters to commence a new two-well plus options campaign with CNOOC.
Newbuilds & Sales
Market reports indicate that steel has been cut on the second of two newbuild jackups for ARO Drilling at the Lamprell Hamriyah shipyard. The pair of newbuild jackups on order from International Maritime Industries (IMI) are due for delivery in 2022 and will be put to work with Saudi Aramco under initial eight-year contracts.
Financial Information
For its offshore drilling segment, Stena reported a Q2 2020 EBITDA decrease of SEK 555 million to SEK 430 million in the six-month period 2020, compared to SEK 125 million in the corresponding period in 2019. The decrease is due to fewer units on contract offset by continued positive effects from the Cost Race program.
Constellation reported a net loss of USD 73.8 million in Q2 2020, down from a net loss of USD 79.2 million in Q2 2019; while net operating revenue increased 71.5% year-over-year to USD 59.0 million in Q2 2020. Adjusted EBITDA totaled negative USD 8.8 million and the Adjusted EBITDA margin was negative 15.0% during the quarter.
For the first half of 2020, PetroVietnam Drilling & Well Service Corporation (PV Drilling) reported an estimated total revenue of VND 3,180 billion, an increase of 64% compared to the same period last year, and a profit after tax of VND 85 billion compared to VND 22 billion of the first 6 months of 2019.
Seadrill published cleansing material related to a bondholder proposal. The Ad-Hoc group of bondholders proposed Seadrill to turn over the collateral for the NSN and extinguish the indebtedness. Seadrill answered that it would be willing to give up Seabras Sapura and Archer, while it would keep SeaMex and Seadrill Partners, as well as USD 59 million in cash.
Oil Price
Oil prices increased on Monday as Abu Dhabi National Oil Company (ADNOC) announced 30% cut to October supplies. Brent crude oil futures rose by 46 cents, or 1% to $46.38 a barrel while US West Texas Intermediate (WTI) crude futures increased by 28 cents, or 0.7% to $43.25 a barrel, Reuters reported.
On Wednesday, oil rallied further after the American Petroleum Institute (API) reported larger draws in crude and gasoline inventories of 6.360 million barrels for the week ending August 28.
However, oil prices dropped on Thursday morning, extending losses from Wednesday’s close to the lowest levels in more than a month, after U.S. data showed gasoline demand is faltering despite major inventory draws in recent weeks.
Other
On 3 September 2020, the Oil and Gas Authority (OGA) offered for award 113 licence areas over 259 blocks or part-blocks to 65 companies in the 32nd Offshore Licensing Round.
Pemex and Hokchi Energy have begun the first stage of unitization negotiations over a possible offshore shared reservoir in the southern Gulf of Mexico. The negotiations, if they result in success, would result in a second shared oil reservoir in Mexico.
In case you missed it, you can access last week's rig market round-up here.
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Data: Bassoe Analytics, Image attribution: Dolphin Drilling.
