In case you missed it, you can access last week's rig market round-up here.
Black Sea Oil & Gas is scheduled to begin drilling at its Midia gas development in the Romanian Black Sea using jackup GSP Uranus during December. The campaign will last for seven to eight months. The Midia project consists of five production wells (one subsea well at the Doina field and four platform wells at the Ana field).
Maersk Drilling has secured a contract from Dana Petroleum to drill two development wells at the Project Unity in the Dutch sector of the North Sea. The harsh-environment jackup to be used for the job is yet to be assigned. The contract is expected to commence in Q2 2021, with an estimated duration of 121 days. The contract value is approximately USD 12.1 million. Prior to commencement, the rig to be used will be equipped with a high-efficiency Selective Catalytic Reduction (SCR) system which uses ammonia injection to convert NOx into harmless water and nitrogen, expectedly reducing NOx emissions by up to 98%. Meanwhile, Maersk and Dana have agreed to defer the previously announced one-well contract in the Danish sector, originally expected to commence in May 2020. Commencement will be determined at a later stage, and the rig to be used is yet to be assigned. Maersk expects to receive compensation in the form of a deferral fee.
Borr Drilling jackup Mist has been delayed from beginning its new drilling contract with Roc Oil at the D21 field off Sarawak, East Malaysia, due to the whole rig crew having to undergo Covid-19 testing. Drilling had been due to start this month but it is now unknown when work will commence.
Tower Resources is still unsure of timing for spudding of its NJOM-3 appraisal well within the Thali license offshore Cameroon due to the ongoing pandemic and force majeure situation. The operator had been scheduled to start drilling with jackup COSLSeeker earlier this year.
A new two-well contract has been secured for jackup Shelf Drilling Tenacious for work offshore Oman with an undisclosed operator. The campaign will begin in early December and also comes with additional options for extension after the firm period ends.
Shell has started its search for HPHT-capable jackup to undertake a minimum two-year drilling and workover campaign offshore Nigeria, commencing in third quarter 2021. There will also be options available to extend for two years. The required unit must be under ten years old and the drilling contractor and crew must have demonstrable knowledge of HP/HT drilling operations.
Equinor has submitted the plan for development and operation of the Breidablikk field to the Norwegian authorities. The operator will drill 23 oil production wells. It is understood that the operator already has a tender out for a harsh-environment semisub for the campaign covering 15 wells starting from late 2022, with an award expected to be made shortly. Meanwhile, it is understood that Equinor has also started its search for a high-specification semisub to undertake drilling at its Wisting field development offshore Norway. The operator is seeking a rig with a hybrid power system for the campaign, which could include over 30 wells.
Bahamas Petroleum Company (BPC) says that in the event of a successful discovery at its upcoming Perseverance-1 exploration well, to be drilled offshore the Bahamas later this year, a preferred development concept for a field size of approximately 0.7 billion barrels would involve an initial 16 wells and an FPSO concept. Meanwhile, the operator says that it will soon undertake a physical inspection of ultra-deepwater drillship Stena IceMAX, which will be used for the initial wildcat. The vessel is currently in port in Las Palmas, Canary Islands.
ExxonMobil has made a final investment decision to proceed with the Payara field development, offshore Guyana, after receiving government approvals. The USD 9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels. Ten drill centers are planned along with up to 41 wells, including 20 production and 21 injection wells. Payara is the third project in the Stabroek Block and is expected to produce up to 220,000 barrels of oil per day after startup in 2024.
Market reports suggest that nine drilling contractors submitted bids for Petrobras’ tender for two ultra-deepwater rigs to undertake three-year plus options campaigns starting in 2021.
Vaalco Energy reports that in planning for future drilling programs at the Etame Marin block, offshore Gabon, it will begin acquiring and processing new 3D seismic data in the fourth quarter of 2020. The seismic survey is expected to begin and conclude in the fourth quarter of 2020, with processing to be fully completed by the fourth quarter of 2021. The company expects the full field 3D survey will optimize future drilling locations, provide better imaging of existing satellite and infill locations, as well as identify additional upside opportunities.
Drilling Activities & Discoveries
Tender-assist semisub Sapura Esperanza has commenced its six-well drilling campaign for Sabah Shell Petroleum at the Malaysian Malikai Phase 2 development. The work scope is expected to keep the unit busy until the middle of next year.
Equinor has completed drilling of the 35/11–24 S, 35/11–24 A and 35/11–24 B wells, which were drilled to target the Swisher prospect offshore Norway, using Seadrill harsh-environment semisub West Hercules. The drill resulted in an oil and gas discovery with recoverable resources estimated to be in the range of 2–6 million standard cubic meters of oil equivalent, or around to 13–38 million barrels of oil equivalent. The rig has now moved to PL263 D in the Norwegian Sea where it has commenced drilling of the Apollonia prospect.
Wintershall Noordzee has successfully drilled the Sillimanite South field discovery well, using jackup Maersk Resolve, and was directly converted it into a development sidetrack. It was the third well drilled in sequence after the two Sillimanite Unit field development wells were successfully brought into production earlier this year. The rig is due to imminently finish its campaign and move to the port of Esbjerg for stacking.
Talos Energy is currently finishing up with Transocean ultra-deepwater drillship Discoverer Inspiration in the US Gulf of Mexico. The rig has no firm follow-on commitments in place and is expected to be stacked.
Dubai Petroleum is scheduled to finish its drilling campaign with jackup Shelf Drilling Mentor this weekend. The rig has been working with the operator since 2018.
Velesto Energy jackup Naga-7 is due to move from its current E6DP-A platform location, offshore Sarawak, Malaysia, where it is working for Sabah Shell Petroleum and will be demobilized and moved to Labuan Anchorage around 6 October 2020. This will conclude the rig's contract with the operator and its next commitment will be with Petronas Malaysia and is due to begin around late October.
Jackup Noble Sam Hartley has concluded its one-well drilling campaign with Total at the Finzean prospect offshore the UK and has now mobilized inshore Scotland for stacking.
Jackup Valaris JU-100 has arrived at the M.A.R.S Europe facility at the Port of Frederikshavn, Denmark, from the UK, where it is to be stacked while Valaris continues to evaluate operational, conversion and other retirement opportunities for the rig.
Northern Ocean newbuild harsh-environment semisub West Bollsta has commenced mobilization offshore Norway for its maiden contract with Lundin. The rig, which is being managed by seadrill, is committed for 10 wells plus options with the firm period to keep it busy until 2022.
Harsh-environment semisub Transocean Endurance has moved inshore Norway for a short yard stay at the CCB Agotnes facility in Bergen. The unit is committed to Equinor under a contract that runs until mid-2023 with options lasting until 2027.
Ultra-deepwater semisub Maersk Developer has departed Trindad and Tobago and is mobilizing to Suriname ahead of a new campaign with Petronas. The contract will cover drilling of the Sloanea exploration well in Block 52 plus a one-well option.
Newbuilds & Sales
Keppel Corp says that it has identified assets worth SGD 17.5 billion (USD 12.8 billion) that could potentially be monetized, including through sales, and started a review of its loss-making offshore and marine (O&M) business. Keppel is now exploring options including strategic mergers and disposals for its offshore and marine business, which includes the construction of offshore rigs.
Valaris plc revealed that, on September 25, 2020, the Company entered into a $500 million Debtor-in-Possession (“DIP”) term loan agreement with certain of its noteholders. This agreement was executed after receiving final approval to access the DIP term loan facility from the United States Bankruptcy Court for the Southern District of Texas. Including over $180 million of cash on hand as of September 25, 2020, the Company has over $680 million of total liquidity available. Valaris also received final approval for the First Day Motions to continue to operate in the ordinary course of business.
Borr Drilling announced further concessions from its lenders and the decision to adjust the amount to be raised in the contemplated equity offering to USD 25 to USD 30 million. The company’s board has approved the subscription and allocation of a total of 51,886,793 new depositary receipts, each at a subscription price of USD 0.53 per share, raising gross proceeds of USD 27.5 million. Following issuance, the company's outstanding and issued share capital will increase by around USD 2.6 million to USD 10.5 million.The settlement date is expected to be on or about 5 October 2020.
Seadrill has agreed to extend and/or renew the existing forbearance agreements with certain creditors, announced on 15 September 2020 for the group's senior secured credit facility agreements, senior secured notes, and guarantee facility agreement. Pursuant to the forbearance agreements, the consenting creditors have agreed not to exercise any voting rights to, or otherwise take actions, in respect of certain events of default that may arise under facilities if the group does not pay certain interest and charter hire payments until and including the earlier of 31 October 2020 and any termination of the forbearance agreements. Forbearance has not yet been agreed with respect to certain defaults that may arise under the Company's leasing agreements in respect of the West Hercules, West Linus and West Taurus. Without a forbearance in respect of these leasing agreements, non-payment of charter hire and interest could result in enforcement of a default or cross-default under such leasing agreements.
Noble Corporation has entered into a settlement agreement with Paragon Litigation Trust to settle the disputes which have been ongoing for some time. Among other things, the agreement provides that the claims asserted by the Trust against each of the Noble Defendants in the Action shall be allowed as a prepetition unsecured claim in the Chapter 11 Cases in the aggregate amount of USD 85 million, and, on account of that claim, requires the Debtors to either (a) make a USD 10 million payment to the Trust, if a full settlement and release of (i) all claims brought against all defendants in the Action, including the Noble Defendants and D&O Defendants, (ii) the Noble Defense Cost Claim, and (iii) the Noble Indemnity Claim (each as defined in the Settlement Agreement) (“Global Resolution”) is reached by or before October 1, 2020, or (b) if Global Resolution is not reached by or before October 1, 2020, make an up-front payment of USD 7.5 million for a release of only the claims against the Noble Defendants, bring litigation against the insurers with respect to the D&O Defendants’ director and officer’s liability insurance policies and share the proceeds thereof with the Trust on the terms and conditions set forth in the Settlement Agreement.
Oil prices were trading down on Tuesday afternoon before the American Petroleum Institute's (API) data release as the market continues to be worried by the rising number of Covid-19 cases around the world, which could lead to decreased movements and industrial activity around the world, and ultimately, to decreased oil demand.
Other Industry Events
US President Donald Trump announced that he has extended the drilling ban off the coast of North Carolina and Virginia until 2032, weeks after a similar extension affecting offshore drilling in the waters off Florida, Georgia, and South Carolina.
The Norwegian government said that 33 companies applied for acreage in its 2020 Awards in Pre-defined Areas (APA) round. Awards of new production licenses are expected to be awarded in early 2021.
Canada's Newfoundland and Labrador has revealed a new offshore initiative to help increase drilling of more wells in the best prospects. The policy measure will allow all future bid deposit forfeitures to be reinvested as received, resulting in an injection of hundreds of millions of dollars in support of growth in the offshore petroleum industry. The measure intends to „provide near term drilling activity and employment, enhance global competitiveness at a critical time, and position the province to realize its significant resource potential“.
Stuart Jackson, currently Chief Financial Officer at Seadrill, will succeed Anton Dibowitz as Chief Executive Officer with immediate effect. Following the appointment, the role and responsibilities of the CFO will be divided into two new roles: Grant Creed will become Chief Restructuring Officer and Neil Gilliver will become Chief Accounting Officer.
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