Bassoe Analytics weekly rig market round-up (week 45)
In case you missed it, you can access last week's rig market round-up here.
Independent Oil and Gas has awarded jackup Noble Hans Deul a contract for drilling of five production wells at its Core Project Phase 1 in the UK Southern North Sea. One well will be drilled at each of the Blythe and Elgood fields and three at the Southwark field. The fields all lie in 20–30 metres of water. The drilling campaign is scheduled to commence in Q1 2021 and, subject to actual well duration over the five wells, is expected to last into Q2 2022 with first gas scheduled for Q3 2021. The contract also includes extension options to drill up to two further wells on favourable terms, at IOG's election.
Japan Drilling Company (JDC) has secured a 1.5-year contract extension for its jackup Hakuryu-14 with PT Pertamina Hulu Mahakam. The rig will be used for drilling within the Mahakam Block, offshore Indonesia. This means that the rig is now committed until May 2022 and has two one-year options also available.
It has now been confirmed that harsh-environment semisub Borgland Dolphin will undertake 5 months of work with DNO offshore Norway next year. In June 2020, DNO awarded a deal for the P&A of 3 wells using the rig and the operator has now declared a one-well option to cover drilling of an exploration well. Work will begin in late Q1 2021.
Ultra-deepwater drillship Stena Carron is now committed to ExxonMobil offshore Guyana until July 2021. There is also an option attached to the rig contract to keep the rig in country past this date.
Shelf Drilling jackup Adriatic I is expected to continue drilling operations with Conoil offshore Nigeria until at least December 2020 as the unit is still on the second well of the operator's campaign.
Petropars is about to commence a three-year drilling campaign using Mapna jackup Map Driller I at the South Pars Phase 11 development offshore Iran. During its contract, the rig will drill 12 wells at the project. Just last week, IOOC completed its two-year campaign using the rig at the Soroosh oil field, off Iran.
Shell Brunei has early terminated its contract for Aban Offshore jackup Deep Driller 5. The rig is now expected to complete drilling operations in late 2020 instead of October 2022 as initially planned. The rig has no follow-on commitments in place.
Valaris has confirmed that its newly awarded contract for jackup Valaris JU-115 will be an eight-month deal with Mubadala Thailand, commencing on 1 February 2021.
Qatar Gas has awarded a contract extension for further use of jackup Noble Mick O'Brien. The deal had been due to finish this month but will now continue until late August 2021.
Equinor will continue drilling with jackup Noble Lloyd Noble offshore the UK until at least mid-December 2020, with a two-well option also available. The rig had been due to finish with the operator this month.
CNOOC International has exercised the first one-well option on its contract for jackup Noble Sam Hartley in the UK North Sea. The rig is now committed through mid-February 2021 and CNOOC has three one-well options remaining under the deal.
Saudi Aramco will suspend operations with jackup Noble Roger Lewis from late November 2020, for up to 365 days at zero dayrate, but the standby period shall not count against the contract term.
Noble Corporation stated in its Q3 results call that it is hopeful to secure a new contract for its warm-stacked semisub Noble Clyde Bourdreaux for work starting in the first half of 2021 in Asia-Pacific.
Drilling Activities & Discoveries
Equinor has made a gas discovery of 3–10mmboe with its 6407/1–8 S Apollonia wildcat well near the Maria field in the Norwegian Sea, drilled using Seadrill harsh-environment semisub West Hercules. The licensees will assess the discovery along with other discoveries/prospect in the vicinity as regards further follow-up. The rig has now moved to PL 960 in the Barents Sea and spudded the 7018/5–1 wildcat on the Spissa prospect for Equinor.
BP has spudded the Ironbark-1 well offshore Australia using Diamond Offshore semisub Ocean Apex. The well, located in water depths of 300 metres, is currently at 407m MDRT and is expected to take approximately 70 to 90 days to drill. 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.
Dolphin Drilling harsh-environment semisub Blackford Dolphin has arrived in Mexican waters and is in the process of customs clearance. The rig is expected to commence drilling imminently under its new 15-month contract with the operator.
Noble Corp jackup Noble Regina Allen has moved offshore Trinidad and Tobago, commencing its new five-well plus options campaign with BHP Billiton.
Transocean semisub GSF Development Driller I has completed its drilling campaign with Chevron Australia. The rig does not yet have any firm follow-on commitments in place and has been moved to cold stack.
ExxonMobil has concluded operations using jackup Noble Tom Prosser offshore Australia. The rig has now moved inshore for stacking and is being bid on work in the region with 2021 commencement.
Market sources indicate that jackup Anadolu (ex-Trident XIV) has commenced work under a long-term contract with BOTAS Ronesans at the Kuzey Marmara Natural Gas Storage Extension Phase III in Turkey.
Total is expected to finish its drilling campaign with jackup Valaris JU-247 (ex-Rowan Gorilla V) in the UK sector during the middle of this month. The rig has been on hire with Total for 16 years.
Turkish Petroleum Corporation (TPAO) has begun drilling a second borehole on the Sakarya natural gas field in the Black Sea where it made its largest-ever discovery earlier this year with the Tuna-1 (Danube-1) well. The well is being drilled using its own ultra-deepwater drillship Fatih.
During its third quarter results call, Transocean reported that it has identified two dozen projects in the Norwegian sector that could be given the green light as a result of the tax change. If all of these projects move forward, it believe that the market for high specification assets could be sold out as we exit 2021 and enter 2022. Meanwhile, the driller says that it expects to see several more awards from Petrobras Brazil in the near future and that Equinor has relaunched its tender for provision of a deepwater rig to undertake a four-year drilling campaign at the Brazilian Bacalhau field. It also expects to see an award made in the coming months for Total's long-term Mozambique deepwater drilling campaign, while there are 11 awards expected to be made over the next few months for work starting in 2021 in Asia-Pacific.
Shell has been awarded more time to drill an exploration well targeting the Pensacola prospect in licence P2252 offshore the UK. The operator now plans to spud the well during the final quarter of 2021. A jackup will likely to be required for the drill.
Seadrill ultra-deepwater drillship West Saturn has departed from Trinidad and is en route to Brazil. The rig has a new long-term campaign lined up with ExxonMobil Brazil, which is due to commence in early 2021 and run until late 2023.
Harsh-environment semisub Transocean Barents has commenced mobilization from Canadian waters to Olen, Norway. The rig recently completed a drilling campaign with Equinor in the Flemish Pass and does not yet have any follow-on commitment in place but will be marketed for operations in the Norwegian sector.
Newbuilds & Sales
BW Energy has acquired two jackups, the 2003-built sister-units Atla and Balder, from Borr Drilling Ltd. BW Energy will pay a total of USD 14.5 million for the two units and the transactions are expected to conclude in Q4 2020. The buyer plans to convert these rigs to Offshore Installations equipped with production facilities, meaning the rigs will cease to trade in the drilling rig market. Following these rig sales, Borr Drilling will have 28 modern assets built after 2011.
In it's recent 8K filing, Pacific Drilling stated that a potential scenario for high-grading its fleet if ‚current opportunities do not yield results during Q4 2020‘ it could retire its 2010-built ultra-deepwater drillship Pacific Bora and 2011-built ultra-deepwater drillship Pacific Mistral.
Transocean has now confirmed previous reports that it has now scrapped its 1987-built harsh-environment semisub Transocean Arctic. The rig completed its last campaign in August this year after undertaking a development drill for Wintershall Dea at the Norwegian Dvalin field.
Noble has reports that as a result of stacking costs and potential reactivation costs, it has signed rig sale agreements for five of its cold-stacked floaters: drillships Noble Bully I (2011), Noble Bully II (2011) and semisubs Noble Jim Day (1999), Noble Danny Adkins (1999) and Noble Paul Romano (1981). The Company is currently in various stages in the sales processes and are working towards closing the sale agreements as quickly as possible.
On Thursday the oil price dropped as Democrat Joe Biden moved closer to winning the US presidential election but the Republicans look likely to retain Senate control, decreasing the chances of any huge Covid-19 relief package. Brent crude futures dropped 68 cents, or 1.65%, to $40.55 a barrel and US West Texas Intermediate crude futures fell 64 cents, or 1.63%, to $38.51 a barrel.
For the third quarter of 2020, Transocean reported total contract drilling revenues of USD 773 million (total adjusted contract drilling revenues of USD 830 million), compared with USD 930 million in the second quarter of 2020 (total adjusted contract drilling revenues of USD 983 million). Revenue efficiency was 96.6%, compared with 97.2% in the prior quarter and operating and maintenance expense was USD 470 million, compared with USD 525 million in the prior period. The driller posted a net income attributable to controlling interest of USD 359 million, compared with net loss attributable to controlling interest of USD 497 million in the second quarter of 2020. Adjusted EBITDA was USD 338 million, compared with adjusted EBITDA of USD 418 million in the prior quarter, meanwhile contract backlog totaled USD 8.2 billion as of the October 2020 Fleet Status Report.
Pacific Drilling is the latest driller to file for voluntary petitions for relief under Chapter 11 of the United States Bankruptcy and has entered into a restructuring support agreement with an ad hoc group of the largest holders of its outstanding bond debt. This restructuring will eliminate the estimated USD 1.1 billion in outstanding bond debt through the cancellation and exchange of debt for new equity in the reorganized company. The company also announced that it has repaid its USD 50 million first lien superpriority RCF. With around USD 120 million of cash as of 30 October 2020, it intends to continue its operations as usual. The company expects to emerge by year-end with a USD 80 million exit facility and with around USD 100 million of cash on the balance sheet.
Seadrill announced that the term of its forbearance agreements expired on 31 October 2020, and its creditors are no longer prevented from declaring default under the senior secured credit facility agreements, senior notes and guarantee facility agreement as a result of the group not making interest and charter hire payments. Seadrill continues to engage in constructive discussions with its financial stakeholders for potential further forbearances and the heads of terms of a comprehensive restructuring of its balance sheet. Whilst no agreement has been reached at this point it is expected that potential solutions will lead to significant equitization of debt and minimal or no recovery for current shareholders.
Following the recent acquisition of their second asset, Well-Safe Solutions has secured a £26 million investment to fund the next phase of its growth plan. The further investment into the decommissioning company was led by MW&L Capital Partners, following their initial investment of £66 million to the company back in October 2019. Alasdair Locke, Chairman and majority shareholder in Well-Safe Solutions said: “Well-Safe Solutions has the delivery model and capability that will revolutionise how we approach well decommissioning. It is committed to providing a world-class offering and has the skills, tools and experience to become a market leader in this exciting yet pivotal phase of our industry.”
Noble Corporation reports that contract drilling services revenues for the third quarter totaled $227 million compared to $220 million in the second quarter of 2020. The increase in revenues was due in part to a return to full dayrate on rigs that were on standby rates in the second quarter, partially offset by lower fleet utilization of 57% in the third quarter compared to 59% in the second quarter. Contract drilling services costs for the third quarter were $137 million compared to $144 million in the second quarter of 2020. The 5% decline from second quarter was primarily driven by lower operations support expenses as a result of our cost reduction measures announced earlier this year. Contract drilling margin improved to 40 percent from 35 percent in the previous period. Additionally, Adjusted EBITDA for the third quarter increased to $76 million from $58 million in the second quarter, and total backlog increased to approximately $1.7 billion, primarily driven by the Noble Tom Madden contract award by ExxonMobil
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