Bassoe Analytics weekly rig market round-up (week 44)

Bassoe Analytics weekly rig market round-up (week 44)
A selection of new offshore rig contracts and extensions were confirmed this week, meanwhile some noteworthy hydrocarbon discoveries were made offshore South Africa, Canada and Norway.

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

Rig Contracts

ConocoPhillips has extended its contract for jackup Valaris JU-292 (ex-Rowan Norway) by eight wells. The rig has been working for the operator at its Norwegian assets since late 2019. 

A new short-term contract has been awarded to Valaris for provision of its jackup Valaris JU-115 by an undisclosed operator. The new deal will commence in February 2021. 

Chevron has awarded a 60-day contract extension to ultra-deepwater drillship Valaris DS-18 to continue operations in the US Gulf of Mexico. 

Eni Angola has extended its charter of Saipem harsh-environment semisub Scarabeo 5 for production support services. The rig is now firmly committed for operations with Eni until late February 2021 with options lasting until mid-2022.

Diamond Offshore semisub Ocean Courage has been awarded a new 800-day contract by Petrobras for further operations offshore Brazil. Work is scheduled to commence around early March 2021.

It is expected that Diamond Offshore semisub Ocean Monarch will commence mobilization for a new campaign with Posco Daewoo off Myanmar around 8 November, with the seven-well campaign to begin around the end of the month. The rig is expected to be committed to the operator until mid-2022 with further options available thereafter. 

Ultra-deepwater drillship Saipem 12000 is now scheduled to resume development drilling operations offshore Mozambique with Eni in January 2021, reducing the planned downtime of the rig by several months. The rig is currently stacked in South Africa. Meanwhile, Saipem leased jackup Jindal Pioneer will also return to operations earlier than expected. The rig will restart work with Eni off Mexico this November instead of April 2021.  

Eni Mexico has delayed the start-up of its 12-well development drilling campaign using jackup Valaris JU-102 from September 2020 to September 2021. The rig will earn a standby rate until the campaign, which is expected to last two years, begins. 

Saudi Aramco has halted work with Saipem jackup Perro Negro 7 off Saudi Arabia until early 2021 with the rig to earn a standby rate during the downtime. The rig is committed to the operator until early 2023. Meanwhile, during the third quarter jackups Valaris JU-76 and Valaris JU-54 were also put on standby (at a standby dayrate) by Saudi Aramco until December 2020. Following the reduced standby rate period, the rigs will be operating at an agreed upon reduced day rate until the end of 2021. Valaris also negotiated reduced rates with Saudi Aramco for jackups Valaris JU-108, Valaris JU-140 and Valaris JU-141, the reduced rates are effective beginning the second quarter of 2020 through November 2021, June 2021 and August 2021, respectively.


Drilling Activities & Discoveries

Odfjell harsh-environment semisub Deepsea Stavanger has hit a significant gas condensate discovery at the Luiperd prospect off South Africa for Total. The well encountered 73 meters of net gas condensate pay and the joint venture is now testing the well to assess dynamic reservoir characteristics and deliverability. 

BP is preparing to spud the Ironbark-1 exploration well offshore Australia using Diamond Offshore semisub Ocean Apex. The rig's next deployment after this campaign will be with Woodside, which is scheduled to begin around 1 May, 2021 for work at the Greater Western Flank Phase 3 Campaign, also in Australian waters.

Petrobras is scheduled to conclude drilling operations using Diamond Offshore semisub Ocean Valor offshore Brazil around the middle of November, subject to the well in progress. The rig does not yet have any follow-on commitments in place. 

PTTEP HK Offshore Limited is preparing to conduct a geophysical site investigation survey for exploration well Mak Yong within Block SK438, offshore Sarawak, on or about 25 October 2020 until 1 November 2020. The operator has Borr Drilling jackups Saga and Gunnlod on hire in the region. 

Lundin Energy has been granted permission to drill the 16/4–12 Merckx exploration well in the North Sea, using harsh-environment semisub West Bollsta

Harsh-environment semisub West Hercules is now cleared to drill the 7018/5–1 exploration well, targeting the Spissa prospect, in the Norwegian Barents Sea for Equinor.

Saudi Aramco has commenced operations with Saipem leased jackup Perro Negro 9 off Saudi Arabia under a new four-year deal. The rig is replacing jackup Perro Negro 5 which had been working for the operator on a long-term deal that ended in August. Perro Negro 5 is set to be scrapped. 

Vår Energi is on schedule to commence drilling operations using Saipem harsh-environment semisub Scarabeo 8 in Norwegian waters during December this year. The rig will undertake drilling of two production wells and one injector at the Goliat development plus the Prince and King exploration well. Operations are expected to keep the rig busy until Q2 2021 with options available thereafter. 

Wintershall Dea has begun drilling the first of six wells at its Nova field in the Norwegian North Sea using harsh-environment semisub West Mira. The rig is scheduled to drill at the field for around 400 days, during which time it will drill three production wells through one of two subsea templates, and three water injection wells, through the second.

Neptune Energy has made a minor oil discovery while drilling the 6406/12-G-1H exploration well at the under-development Fenja field in the Norwegian Sea, using Seadrill harsh-environment semisub West Phoenix. The well struck an oil column of 38 metres just over the secondary objective in the lower part of the Intra-Melke formation. The rig has now completed its contract with Neptune and will move inshore Norway, where it will remain stacked until starting a new contract with Vår Energi on the Balder field redevelopment project off Norway, scheduled to start next summer.

Equinor has confirmed that it has made discoveries at its Cappahayden and Cambriol prospects, drilled in the Flemish Pass Basin, off Canada. The wells were drilled using harsh-environment semisub Transocean Barents, which also drilled a top-hole at the Sitka prospect as part of the 2020 campaign. The rig has finished its contract with the operator and mobilized inshore to Bay Bulls. 


Rig Demand

Market sources indicate that ExxonMobil will shortly award a contract for another ultra-deepwater drillship to undertake operations offshore Guyana. The oil company already has four Noble Corp drillships and one Stena Drilling drillship contracted for work in the region. 

Triangle Energy is seeking a farm-in partner to help fund a three-well drilling campaign at its shallow-water Cliff Head Renewal Project, off Western Australia. The operator has commenced well planning for probes targeting the West High, SE Nose and Mentelle Updip prospects, which it hopes to drill during the first half of 2022. 

OMV is understood to have started its search for a couple of rigs to undertake work offshore New Zealand in 2021/2022.

DNO is revisiting development options for the Norwegian Brasse field (2021 PDO), meanwhile it is actively participating in evaluating Iris/Hades, Fogelberg and Trym South discoveries (2022 PDOs) and accelerating infill drilling at Ula, Tambar and Brage producing fields in 2021. The company plans to step up North Sea investments following Norwegian petroleum tax incentives. 


Rig Mobilizations


According to an announcement made by the Bureau of Safety and Environmental Enforcement on Monday, a total of six dynamically positioned rigs in the US Gulf of Mexico have moved off location out of the path of Hurricane Zeta as a precaution. This is the 27th named storm of the 2020 Atlantic season.

Ultra-deepwater drillship Stena DrillMAX has left Gibraltar, where it has been undergoing a yard stay and is now headed for Las Palmas in the Canary Islands. 

Tender-assist semisub Altantica Delta has concluded its demobilization from Total’s Noho Nord TLP, in the Congo, and has now arrived in the Port of Las Palmas, Gran Canaria. 


Newbuilds & Sales

Borr Drilling Limited has entered into an agreement to sell its cold-stacked jackup Atla to an independent operator. The completion of the sale is expected in the fourth quarter 2020. Together with the previously announced sale of the standard jackup Eir, which has been completed in October, the company will record total cash proceeds of USD 13 million. Following these rig sales, Borr Drilling will have 28 modern assets built after 2011, and one remaining older cold stacked rig, which is likely to be sold within the fourth quarter.

News reports indicate that an order has been placed for a newbuild high-specification drillship by Chinese Guangzhou Marine Geological Survey (GMGS) at the CSSC-affiliated Huangpu Wenchong Shipbuilding yard for around $432 million. The rig will be used for gas hydrate exploration in the South China Sea and has an expected delivery in 2024. 

Valaris has confirmed our earlier reports that jackups Valaris JU-84 and Valaris JU-88 have now been sold and that 2011-built semisub Valaris 8504 is classed as held for sale.


Rig Values

Borr Drilling announced the sale of its 2003-built, F&G JU-2000-designed jackup Atla to an undisclosed buyer, which Bassoe Analytics understands to be for MOPU conversion. The cash contribution is reported to be USD 13 million including the sale of the 1999-built, F&G L-780 mod VI- designed jackup Eir earlier in the month. Bassoe holds a value of USD 9 – 13 million for Atla and USD 0.9 – 2.7 million for Eir in its Rig Values online data base.


Oil Price 


Oil prices decreased early on Wednesday due to a surge in US crude stocks and growing Covid-19 infections in the US and Europe fanned fears of a supply glut in oil and weaker fuel demand. Brent crude was down 76 cents, or 1.8%, at $40.44 a barrel early on Wednesday, having climbed nearly 2% the previous day. US oil was down 90 cents, or 2.3%, at $38.67 a barrel, after gaining 2.6% on Tuesday.



Awilco Drilling is to undertake cost saving measures in light of the termination of its newbuild semisub Nordic Winter and the significant delay in the construction and anticipated start-up of operations of the newbuild rig Nordic Spring.

Saipem reported revenues for the first half of 2020 of €185 million, down 27.7% compared with the same period in 2019, due mainly to the drillship Saipem 10000, which underwent class reinstatement works, and the semi-submersible rigs Scarabeo 7 and Scarabeo 9, which were respectively idle and in demobilization during the period; the decrease was partly compensated by greater revenues from the full activity of the semi-submersible rig Scarabeo 5, which was idle in the corresponding period of 2019, and the jack-up Sea Lion 7, which started working at the beginning of 2020. The adjusted gross operating profit (EBITDA) for the first half of 2020 was €63 million, equal to 34.1% of revenue. This was down from €102 million or 39.8% of revenue in the corresponding period of 2019.

For the third quarter of 2020, Valaris reported an EBITDA of negative USD 94 million. The driller recorded a USD 118 million loss of hire recovery in relation to the dropped BOP incident and resulting contract termination with Valaris DS-8 in Angola. 


Other News

The Norwegian Petroleum Directorate (NPD) reports that just 30 exploration wells are likely to be drilled off the country this year, compared with the 50 wells that were expected at the start of the year and the 58 drilled in 2019. This is due to oil companies cutting spending in response to lower oil demand due to the pandemic and a shift towards renewable energy.


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Data: Bassoe Analytics, Image attribution: Saipem.

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