Bassoe Rig Analytics weekly rig market round-up (week 10)
In case you missed it, you can access our previous Rig Market Round-Up here.
Rig Contracts
Harsh-environment jackup Maersk Resolute was awarded a one-well contract by Petrogas to perform well maintenance and drill a side-track of the A9 well at the P6 Horizon field in the Dutch sector. The contract will commence in April 2021 for a period of approximately 45 days. The contract value is USD 4.5m. Prior to commencement of the contract, Maersk Resolute 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%. The design will include an advanced control interface between engines and SCR units.
In its latest fleet update, Noble confirmed a new contract award for semisub Noble Clyde Boudreaux with Premier Oil Indonesia, running from early July 2021 to early November 2021. It is understood that the contract will cover drilling within the Tuna PSC. Meanwhile, jackup Noble Sam Hartley has had its contract with CNOOC in the UK sector extended by one well, which will see it committed until early May 2021. The driller also confirmed that in Guyana, contract term have been shifted between drillships under the Commercial Enabling Agreement with ExxonMobil, meaning that Noble Tom Madden will now be occupied until December 2027, Noble Sam Croft will be occupied until January 2022 and Noble Don Taylor and Noble Bob Douglas are firm until December 2022. Additionally, jackup Noble Regina Allen will continue working off Trinidad and Tobago for BHP until early June 2021. Finally, for the period from January 1, 2021 through December 31, 2021, the dayrate for jackup Noble Scott Marks has been adjusted to $139k while drilling for gas and $90k while drilling for oil, after which time the dayrate is scheduled to return to $159k. For jackup Noble Roger Lewis, the previously issued 12-month suspension notice has been rescinded and the dayrate during the period from January 1, 2021 through December 31, 2021, has been adjusted to $139k while drilling for gas and $90k while drilling for oil, after which time the dayrate is scheduled to return to $159k.
Drilling Activities & Discoveries
Ultra-deepwater drillship Stena Carron commenced drilling operations at the Jabillo-1 exploration well in the Canje Block, offshore Guyana. According to a notice to mariners in Guyana, the Stena drillship will be engaged in drilling operations until March 27th. The drillship previously drilled Bulletwood-1 in the Canje Block, which was deemed non-commercial.
Equinor has struck oil with its 7220/7–4 wildcat in production licence 532 in the Barents Sea, while drilling with semisub Transocean Enabler. Recoverable resources are so far estimated at between 5 and 8 million standard cubic metres of recoverable oil, corresponding to 31 – 50 million barrels of recoverable oil. Further development of the discovery towards the planned infrastructure for the Johan Castberg field will be considered at a later stage. The proven resources may thus generate important additional value and tax revenues for society from the Johan Castberg field. The rig will now return to and continue drilling on the Equinor-operated Johan Castberg field.
Eni is still planning to undertake an exploration drilling campaign at Block 10 offshore Mexico during Q2 2021, targeting the Sayulita prospect. It is likely that drilling will be undertaken using semisub Valaris 8505, which will be on hire with the operator in Mexican waters next quarter.
Vantage Drilling jackup Topaz Driller is scheduled to commence its drilling program offshore Montenegro for Eni in the coming days. The rig will undertake around six months of drilling for the operator.
Apache and Total issued an update on Keskesi East-1 discovery well in Block 58 offshore Suriname, as the deeper drilling encountered higher pressure. The oil companies announced in January that Keskesi East-1 discovered oil, volatile oil and condensate, and continued drilling toward deeper Neocomian-aged targets. As drilling progressed, the well encountered substantial pressure increases that Apache and Total determined could ultimately exceed the capabilities of the wellbore design and pressure control equipment. The partners decided to conclude drilling operations and will use the information gathered to design a wellbore and drilling program that will ensure a safe test of the deep Neocomian targets in future exploration. The well was drilled by drillship Noble Sam Croft.
Equinor has been given consent by Norwegian PSA to drill exploration wells 30/11-U-1 and 30/11-U-2, in PL 035 and PL 272, in the Norwegian North Sea. The purpose of the drilling is to investigate whether there is shallow gas in the area. The exploration wells will be drilled by Seadrill harsh-environment semisub West Hercules.
Mobilizations
Ultra-deepwater drillship Noble Sam Croft has completed drilling operations at Keskesi East-1, offshore Suriname, for Total and Apache Corp. and will be released as planned. The drillship is scheduled start its contract with ExxonMobil next month for development drilling offshore Guyana.
Ultra-deepwater drillship Brava Star has moved offshore Brazil to commence its contract with Petrobras for development drilling. The Constellation drillship has been warm stacked in Brazil the past months following the termination of contract with Shell in July 2020.
Rig Demand
CGX plans to drill the Kawa-1 exploration well, located on the Corentyne block, in the second half of 2021. The primary target is a Santonian age, stratigraphic trap, interpreted to be analogous to the discoveries immediately to the east on Block 58 in Suriname. The Canadian oil company also plans to drill the wildcat Makarapan-1 on the Demerara block. The Company expects that the total cost of the Guyana exploration program in 2021 will be approximately USD 90 million.
Further to previous Bassoe Rig Analytics’ reports, VAALCO confirms that it is still planning to commence a multi-well drilling campaign at its Etame field offshore Gabon in late 2021 or early 2022. The locations of the wells will be determined in conjunction with the new seismic processing and interpretation, and VAALCO is currently planning for a four-well program with two development wells and two appraisal wells. The estimated cost of the program is $115 million to $125 million gross, or $73 million to $79 million, net to VAALCO’s 63.6% participating interest. The operator is currently in the tender process for a jackup to undertake the campaign. Meanwhile, VAALCO says that it and the joint venture for Block P offshore Equatorial Guinea are evaluating the timing and budgeting for development and exploration activities at the acreage.
Cairn Energy is planning to drill a new exploration well offshore the UK during Q2 2022, targeting the Diadem prospect in P2379. The well is to be drilled close to the upcoming Shell-operated Jaws-1 exploration well which cairn is a partner in. The jaws well will be drilled using jackup Valaris JU-122.
The Mexican Block 10 joint venture (operated by Eni) are planning for an appraisal drilling campaign at the Saasken discovery, with a well anticipated to spud during H2 2021, pending approval by CNH. The discovery well was drilled in February 2020 and located in the mid-deep water of the Cuenca Salina in the Sureste Basin. Semisub Valaris 8505 drilled the initial Saasken discovery well.
Cairn Energy has identified multiple targets within its 100%-operated Block 61 offshore Suriname. The company is planning a 3D seismic acquisition at the block, which has water depths from 100–800m, during H2 2021.
Tullow Oil is now set to begin its plug and abandonment campaign at the Banda and Tiof fields offshore Mauritania at the end of 2021. In February 2020, Maersk Decom was awarded a contract for end-to-end P&A for the project including providing all personnel, assets and equipment including a drilling rig. However, it is understood that rig availability within the Maersk Drilling fleet is somewhat limited and therefore a tender has been issued for a rig to undertake the campaign.
Tullow Oil has alluded that it may once again consider a two-rig scenario for its drilling operations offshore Ghana potentially from 2023, if commodity prices continue to recover to help accelerate its development operations. However there are no firm plans for this yet. The operator has already firmed up a four-year contract for drillship Maersk Venturer, which is scheduled to begin working at the Jubillee and TEN fields from next month.
It is understood that Repsol is focusing on finding drillable prospects within the Kanuku block offshore Guyana in a bid to spud a well during 2022.
The partners in the UK HPHT Isabella discovery are carrying out planning activities for drilling of an appraisal well in early 2022. Total is the operator of the UK licence P.1820 where the discovery well was drilled in early 2020 using jackup Noble Sam Hartley.
Talos Energy expects to execute a four-well program around its Pompano facility, including two re-completions, one workover and one development well (Salamanca). Talos expects the projects completed and online by the end of 2021 and the Salamanca well online by Q1 2022. The US oil company also expects to drill and complete a sidetrack development well to optimize the successful 2020 water flood project in the Company's Tornado field. Meanwhile, Talos is currently drilling the Puma West exploration well on the Green Canyon block, and the company may add an additional high-impact exploration project during 2021.
Newbuilds & Rig Sales
Last week it was confirmed that ultra-deepwater drillship Bolette Dolphin is to be sold at USD 65 million, just above Bassoe Rig Values‚ value range of USD 54 – 63 million. The 2014 built GustoMSC P10000 7th-Generation drillship was sold by the creditors to Deep Value Driller, a newly formed Norwegian based company, that raised USD 85 million within a week from a solid group of international investors. Two other buyers were also making offers on the vessel. As a result, Bassoe Rig Values is increasing the value ranges for 6th and 7th generation drillships with 10% for ships built after 2023 and 5% for ships built during 2010 to 2013, while older ship values to remain unchanged.Bassoe Rig Values expects more focus will build towards asset play for modern units at today‘s deeply depressed values, hence a bottom is building and values may increase in the near- to medium-term.
Aban Offshore has approved the proposed sale of its owned jackups Aban V, Aban VI, drillship Aban Ice and three units owned by its subsidiaries jackups Aban VII and Deep Driller 3 and drillship Aban Abraham to "prospective buyer(s) as may be decided in due course subject to the execution of definitive documents in relation to sale of such rigs“. The proposal is still subject to necessary approval of the Shareholders and other relevant authorities as may be required under applicable laws. The approval of the shareholder is being sought through an Extra Ordinary General Meeting to be held on 29th March 2021.
Oil Price
The brent crude oil price increased past the $70 mark earlier in the week, which is the highest since January 2020, after Houthi forces fired drones and missiles at Saudi Aramco's facilities at Ras Tanura. The Saudi ministry said there were no casualties or loss of property from the attacks.
Financial News
Chevron Corporation and Noble Midstream Partners, LP announced that they have entered into a definitive agreement for Chevron to acquire all (33.925 million) of the publicly held common units representing the limited partner interests in Noble Midstream, not already owned by Chevron and its affiliates, in an all-stock transaction whereby each outstanding unitholder of Noble Midstream would receive 0.1393 of a share of common stock of Chevron in exchange for each Common Unit owned.
Innovative Energy Holding has made a cash offer for the entire issued and to be issued ordinary share capital of ADES International. Innovative Energy is a new company to be jointly owned by ADES Investments, the Public Investment Fund of the Kingdom of Saudi Arabia and Zamil Investments. ADES is to be delisted from the London Stock Exchange and it is planned that the company's headquarters will be relocated to Saudi Arabia as six of its 13 jackups are currently committed to Saudi Aramco. Innovative Energy believes that the offer represents an attractive opportunity to gain exposure to the oil and gas drilling and production services sector in the Middle East and North Africa region.
Seadrill Limited announced that Seadrill New Finance Limited, a subsidiary of the Company, has agreed to extend the existing forbearance agreement announced on 11 February 2021, and extended on 23 February 2021, with respect to the 12.0% senior secured notes due 2025 with certain holders of the Notes.
Shelf Drilling Holdings, Ltd announced that it plans to offer, subject to market conditions, $300 million aggregate principal amount of senior secured first lien notes due 2024. The notes will be guaranteed by Shelf Drilling and certain of the Company’s subsidiaries that guarantee its existing indebtedness and will be secured by a first-priority lien on substantially all of the assets of the Company and the subsidiary guarantors. The net proceeds from the notes offering will be used to repay and terminate its revolver, cash collateralize bank guarantees issued under the revolver, redeem or repurchase all of the outstanding 8.75% Senior Secured Notes due 2024 and for general corporate purposes
Samsung Heavy Industries was ordered by a London Arbitration Tribunal to pay USD 411 million to Stena Drilling in a cancelled rig order case regarding the harsh-environment semi-submersible unit, formerly known as "Stena Midmax“ (now renamed Deepsea Nordkapp). The contract for the unit was signed on 26 June 2013 with delivery of the unit to be made by 20 march 2016. The contract was terminated by Stena on 1 June 2017 due to excessive delay. SHI disputed the termination and referred he dispute to London Arbitration. The Tribunal determined that Stena's termination of the contract was valid and in doing so dismissed all claims by SHI against Stena.
For the fourth quarter of 2020, Noble reported a loss of over $2.8 billion, compared with a loss of $51 million in Q3 2020, while total loss for 2020 was over $3.9 billion. The fourth quarter results include a non-cash, before-tax charge of $2.8 billion relating to the impairment of certain rigs and related capital spares. The company reported revenues of $203 million, down from $242 million in the previous quarter. Noble increased its total backlog in 2020 and ended the year with a contract backlog of over $1.6 billion.
Other Market News
PetroRio announced last week the signing of an agreement with Total for the acquisition of a 28.6% interest in the Wahoo field located in the block BM-C-30, offshore Brazil. The Brazilian company will hold a total stake of 64.3% after the acquisition, including the stake acquired by BP last year.
Petronas has launched the Malaysia Bid Round 2021, offering up 17 offshore exploration blocks. Included in the offering are three blocks in in the Malay basin (PM340, PM327 and PM342), four in the Sabah basin (SB409, SB412, 2W and X), and six are in the Sarawak basin (ND3A, SK4E, SK328, SK427, SK439 and SK440). Included in blocks PM342, SK4E, SK328 and SB409 are six discovered fields. Four deepwater blocks are also up for grabs (ND3A, 4E, 2W and X) off the coast of Sarawak and Sabah, where there have been exploration discoveries in recent years.
The Norwegian Petroleum Safety Authority has given Seadrill two orders and a decision on a coercive fine after serious breaches of the regulations. These breaches have been identified by the PSA through its audit activities with Seadrill and its West Mira mobile drilling facility. On that basis, Seadrill has now been given two orders. The first is directed specifically at West Mira, while the other covers conditions affecting all Seadrill’s facilities on the Norwegian continental shelf (NCS). In addition, the PSA has decided to impose a coercive fine on Seadrill. The deadline for compliance with this part of the order is 12 March. Should Seadrill fail to meet this deadline, it will be subject to a fine of NOK 50,000 per day until the order has been complied with.
OMV Petrom has announced the signing of the Production Sharing Contract (PSC) for the offshore Block II in the exclusive economic zone of the Georgian Black Sea. The PSC provides for exploration, development and production of hydrocarbon resources in the offshore Block II. It covers a total area of 5,282 sq kms and the water depth varies between 400 and 2,000 meters. OMV Petrom will establish an operating company in Georgia, proceed with geoscientific and environmental studies in 2021 and prepare for a large offshore 3D seismic campaign in 2022, which will allow for a detailed evaluation of this block’s potential.
The Biden administration will launch a review of the federal oil and gas leasing program on March 25. Earlier this year, Biden signed the executive order to halt all new oil and gas drilling leases on federal lands and waters. This review could be the next step that will determine if the Biden administration will halt new leases on federal lands permanently.
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Data: Bassoe Analytics, Image attribution: Bolette Dolphin
