Bassoe Analytics weekly rig market round-up (week 41)

Bassoe Analytics weekly rig market round-up (week 41)
This week floating rigs Stena Forth, Deepsea Aberdeen and Noble Tom Madden were awarded additional contract scopes. Meanwhile, jackup Perisai Pacific 101 was finally confirmed as sold for USD 41.8 million to Icon Offshore.

In case you missed it, you can access last week's rig market round-up here.

Rig Contracts


Stena Drilling has signed a new contract with Noble Energy Mediterranean Ltd for a decommissioning campaign offshore Israel, plus a potential optional scope for Noble Energy International Ltd in Cyprus. Ultra-deepwater drillship Stena Forth has been selected for this work scope and shall mobilize offshore Israel between July and August 2021. There are four wells to be plugged and abandoned and the work is estimated to take around 80 days. In addition, there is an option to extend the contract for up to three P&A wells and one completion in Israel, as well as one further option well to be drilled off Cyprus. 

Odfjell Drilling has secured another letter of intent (LOI) this time from Equinor for the drilling and completion of wells at the Breidablikk project, using harsh-environment semisub Deepsea Aberdeen. The deal is still subject to finalization. The contract is set to commence during spring 2022 with a scope of fifteen firm wells and an estimated duration of 2.5 years. In addition, there are nine optional wells. The approximate contract value for the firm scope is USD 290 million (excluding any integrated services, modifications/upgrades and mobilisation/ demobilisation fees). In addition, a notable performance incentive rate will apply when wells are delivered ahead of target. The rate for the optional wells will be mutually agreed based on performance and market benchmarks.

Ultra-deepwater drillship Noble Tom Madden has been awarded 6.5 years of additional contract term with ExxonMobil for work offshore Guyana, keeping it busy until mid-August 2030. The rig day rate will be updated at least twice per year, subject to a scale-based discount and performance bonus, under the CEA which also provides ExxonMobil the flexibility to transfer awarded term between the Noble Don Taylor, Noble Bob Douglas, Noble Tom Madden, and Noble Sam Croft.


Rig Demand


Medco Energi plans to fast track the development of its recent offshore gas discoveries in its Natuna Sea licence. The company has now made three discoveries in Block B, including Bronang-2, Kaci-2 wells and Terubuk-5. These discoveries will be fast tracked for development through existing South Natuna Sea PSC infrastructure. Medco is currently drilling another well within the same block, West Belut-1, using Vantage Drilling jackup Pearl Driller (Soehanah).

Chrysaor is scheduled to drill an appraisal well at the UK Talbot field next year along with near-field exploration wells at the Jade South and Dunnottar fields.

Jersey Oil & Gas is planning to use a heavy-duty jackup to undertake production drilling at its Greater Buchan Area Core development in the UK North Sea. The company aims to begin a farm-out of the project in the first quarter of 2021 to help fund its development using a new fixed platform.

Lukoil and Kazmuneygas are set to explore for hydrocarbons at the Al-Farabi Project (formerly I-P-2 license block) in the Kazakh Sector of the Caspian Sea. Al-Farabi is located in the Kazakh Sector of the Caspian Sea, around 100km from shore where water depth is between 150 and 500m. The license block covers over six thousand square kilometers and is ice-free year round. Given the water depth at the acreage it is likely that a semisub will be sought for any planned drilling work. 


Drilling Activities & Discoveries


Transocean semisub Deepwater Nautilus is scheduled to mobilize from the Gaharu-1 well within Block SK316, offshore Sarawak, to the Kamomil-1 well site within the same area, to begin drilling around 8 October 2020, for approximately 35 days. The rig is on hire with Petronas until early next year.

Petronas is due to spud the Slonea-1 exploration well in Block 52 offshore Suriname using ultra-deepwater semisub Maersk Developer imminently.

Lundin has submitted an application to the Norwegian authorities to gain permission to drill the 17/8–1 exploration well targeting the Dovregubben prospect, situated about 50km south-east of the Johan Sverdrup field. Northern Ocean newbuild semisub West Bollsta will be used for the drill, which is set to begin during December. Operations are scheduled to take 42 days for the main well and up to 112 days if a sidetrack is drilled. 

Equinor is planning to use Seadrill harsh-environment semisub West hercules to drill the Røver Nord prospect in PL 923 within the Norwegian North Sea, with an option for a side track. Operations will take around 65 days. 

During Q1 2021, Neptune Energy will return to Norwegian PL 882 for an appraisal well at the Dugong discovery, made earlier this year using Odfjell Drilling-managed semisub Deepsea Yantai. Another exploration well, targeting the Tail prospect, will also be drilled. Dugong is the largest discovery on the Norwegian Continental Shelf so far this year, with volumes estimated in the range of 40–120 million barrels of oil equivalent (boe). Prospective resources for the Tail prospect are currently estimated at 33 million boe.

Ultra-deepwater drillship Pacific Santa Ana is now scheduled to return to Mauritania and to restart plug and abandonment operations for Petronas at the Chinguetti field from January 2021. Work under the contract was suspended earlier this year due to the covid pandemic. Total still has two one-well options to use the rig offshore Senegal and Mauritania on conclusion of the Petronas work. 

Total is continuing operations with ultra-deepwater drillship Pacific Khamsin at the South Platte well for Total in the US Gulf of Mexico, with work to last for a couple more weeks before it is released. The rig is being marketed in the US and other regions for follow-on commitments. 

Borr Drilling jackup Prospector 5 is being prepared for its upcoming contract with CNOOC International at the UK Glengorm field, with work now set to begin in late November this year. The commitment will see the unit kept busy until around Q2 2022. 


Rig Mobilizations


Borr Drilling jackup Prospector 1 has mobilized from Sheerness, UK, offshore the Netherlands to commence a new contract, which will see it occupied from October through January 2021. 

Ultra-deepwater drillship Saipem 12000 is mobilizing to South Africa. The rig had been drilling offshore Mozambique at the Eni-operated Coral development until April this year but drilling was suspended due to the Covid-19 pandemic. The rig is due to resume operations at the project from early next year for a few months before being suspended again until late 2021 when it will carryout the remainder of its firm term. 

Sinoocean-managed jackup Oriental Discovery has moved inshore Murmansk, Russia, from the Kara Sea where it was understood to have been undertaking an exploration drilling campaign for Rosneft. 


Energy Transition 


Borr Drilling jackup Prospector 1 is the first rig in its fleet to be fitted with a Selective Catalytic Reduction  (SCR) System, which is expected to reduce the emissions of nitrogen oxide, carbon oxide and hydrocarbon by 90–95%. In addition, the system is fitted with filters that is expected to reduce particle matter emission by over 85%. The rig just this week mobilized from the UK to the Dutch North Sea, commencing a new contract that will see it occupied until early next year. 

Oil Price

After increasing sharply on Monday, oil prices continued to rise on Tuesday after U.S. President Donald Trump returned to the White House from the hospital where he was treated for COVID-19, while supply disruptions in Norway and the U.S. Gulf Coast also supported price gains. However on Wednesday, Oil prices fell after Trump dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy and on a larger-than-expected increase in US crude inventories. US West Texas Intermediate crude futures fell 81 cents to $39.86 a barrel, while Brent crude futures fell by 70 cents to $41.95 a barrel. Increasing strike action in Norway raised the prospect of further price rises on the international oil market as benchmark Brent crude traded up more than 1% on Thursday morning.

In its closely-watched annual World Oil Outlook, OPEC outlined its medium to long-term expectations for the global economy, oil and energy demand, and related policy matters. OPEC believes oil will remain the largest contributor to the energy mix through to 2045, accounting for more than 27%, followed by gas (roughly 25%), and coal (nearly 20%). However, OPEC believes world oil demand will plateau in the late 2030s and could by then have begun to decline. 

Norwegian oil firms and labor officials are to meet on Friday with a state-appointed mediator to try to end an ongoing strike and avoid cutting output from western Europe's biggest oil producer by almost a quarter. Almost 1 million barrels of oil equivalent per day is at risk of being shut in due to the ongoing strike that has already seen production halted at several fields. The Lederne union said on Thursday it was hopeful a resolution could be found. 


Newbuilds & Sales


Seadrill Europe Management AS has received an Acknowledgement of Compliance (AoC) for newbuild harsh-environment semisub West Bollsta, enabling it to work in the Norwegian sector.

It is understood that cold-stacked, ultra-deepwater 6th-generation drillships Noble Bully I and Noble Bully II have now been sold for scrap. The former rig was delivered in 2011 and is stacked in Curacao, while the latter was also delivered in 2011 and is stacked in Oman. 

Icon Offshore has signed an agreement to buy jackup Perisai Pacific 101 for approximately USD 41.8 million. The rig, which was delivered in 2014-and is owned by a subsidiary of Perisai Petroleum Teknologi Bhd (PPTB), is an asset mortgaged to Oversea-Chinese Banking Corporation (OCBC). In addition to the rig acquisition, Icon will acquire a 51% stake in Perisai Offshore from PPTB for USD 255,000. The completion of the acquisition is subject to several factors, including a satisfactory due diligence review of the rig to be carried out by Icon, and relevant shareholder and creditors approvals.

Market sources indicate that cold-stacked jackups Valaris JU-84 and Valaris JU-88 have been sold for scrap, following conclusion of contracts with Saudi Aramco earlier this year. The former unit was delivered in 1981, while the latter was delivered in 1982. Both units are 250ft, LeTourneau Class 82 SD-C designs. 


Rig Values


Jackup Perisai Pacific 101 (2014 built PPL Pacific Class 400) was finally confirmed as sold this week to Icon Offshore for a reported USD 41.8 million. The sale was initiated by the rig’s creditor and as such, being a distressed sale, is at a lower value than Bassoe Rig Valuations value USD 51–60 million. Bassoe was aware of the sale being negotiated at this level and reduced jackup values by about 5% during mid-September.  While the confirmation of this transaction will emphasize the negative sentiment in the market, we do not believe that as a result values should be reduced any further. Bassoe regards this as a distressed sale and as our values are based on a willing seller and a willing buyer principle, we do not believe that there are any non-distressed sellers at this level. A transaction at this “new low” influences Rig Valuations and our system has reduced values over the past two months anticipating this sale, as well as the sale of two or potentially three of Aban’s Deep Driller jackups (KFELS Super B Class /2006–8) for a price rumored to be in the region of USD 30– 35 million per rig to their charterer ADNOC. 


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Data: Bassoe Analytics, Image attribution: Noble Corporation.

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