Bassoe Rig Analytics weekly rig market round-up (week 3)

This week Maersk Drilling confirmed two rigs for work offshore Suriname and Shelf received two jackup contract cancellations from ADNOC. Meanwhile, Borr Drilling confirmed that the liquidity improvement plan received support from creditors.

In case you missed it, you can access our previous Rig Market Round-Up here.

Rig Contracts

Shelf Drilling received a notification from ADNOC of early termination for contracts for jackups High Island VII and Compact Driller. The contract end date for both rigs has been updated to August 2021. The original contract end dates for the jackups were February 2023 and June 2022, respectively.

Market sources indicate that ExxonMobil has awarded a contract for ultra-deepwater drillship Stena DrillMAX for development drilling within the Stabroek and Canje Blocks off Guyana. The drillship is expected to work for the U.S. oil giant for a minimum of 6 months with potential for extension thereafter. Stena DrillMAX has been undergoing yard work in Las Palmas, Canary Islands, and will shortly begin mobilizing for the new contract.

Maersk Drilling's previously announced Conditional Letter of Award from Total for two floaters offshore Suriname has now been confirmed. Ultra-deepwater drillship Maersk Valiant and semisub Maersk Developer will work on Total's exploration and appraisal project on Block 58, Offshore Suriname. The two floaters will be employed for an estimated combined total duration of 500 days and the total value of the firm contracts is approximately USD 100 million, including rig modifications, integrated services provided, and a mobilization fee for Maersk Valiant. The contracts also include various extension options. The Maersk Developer is expected to commence operations in January 2021, while the Maersk Valiant is expected to commence operations in March 2021.

Equinor exercised one additional option well for Deepsea Atlantic. The well has been exercised under the Continued Optionality mechanism in the contract entered into between the parties in May 2018, as part of the overall Master Frame Agreement. The Ultra-deepwater semisub will commence work after the completion of the current scope estimated to be in Q2 2021, with the same commercial terms as for the recently announced Johan Sverdrup Phase 2 contract award.

Shelf Drilling Jackup Baltic has resumed operations with Total, offshore Nigeria. The rig is currently providing accommodation support for Total and will do so until the end of March 2021.

Jackup Adriatic I has returned to Conoil offshore Nigeria. The jackup re-started work in early January 2021 after renewing its Temporary Importation Permit in Equatorial Guinea. The rig is expected to stay with Conoil until at least April 2021.

INEOS Energy has secured harsh-environment semisub Borgland Dolphin for exploration drilling on the Norwegian Continental Shelf. The one-well job is scheduled to commence during Q3 2021 and will cover drilling of the Fat Canyon well in the Norwegian sea for an estimated time of 40 days.

Wintershall Dea plans to swap rigs for drilling production wells at the Norwegian Vega field. The original plan was to carry out parts of the development on Vega Infill in advance of production drilling on Nova, and then return to Vega after the completion of Nova to complete drilling the remaining wells on Vega Infill with Northern Ocean semisub West Mira. However, it has been decided to continue drilling on Vega Infill with harsh-environment semisub Deepsea Aberdeen to speed up well delivery and achieve earlier production from the Vega Infill wells. Earliest resumption of drilling is 29 April, 2021.

Shell has declared an option on its contract for Valaris JU-122, which will see the jackup firm until July 2021. The unit still has seven, one-well options that would see the contract extended thereafter.

Serica Energy confirms that it will continue using Awilco Drilling harsh-environment semisub WilPhoenix until March 2021 due to further delays at the UK Rhum (R3) well Intervention program. The operator stated that “the removal of the 2005 completion is taking longer than anticipated due largely to the unexpectedly poor condition of the equipment being recovered from the well”. The campaign, which began in early October 2020, had initially been scheduled to only take around 70 days to complete. WilPhoenix does not yet have any other work commitments in place.

Drilling Activities & Discoveries

Shelf Drilling Jackup High Island IV has resumed work with Aramco after the contract was suspended back in June last year. The jackup is on a long-term contract with the Saudi Arabian giants and is expected to remain busy until Q1 2031.

Transocean ultra-deepwater drillship Dhirubhai Deepwater KG2 has kicked off a new 3-well drilling campaign offshore Myanmar for Woodside. The rig will drill at Blocks A-7, AD-1 and AD-8 for the operator under a deal that will run until April 2021.

Equinor is looking to drill an exploration well in the 6507/3–14 Black Vulture appraisal, located in PL 159 B offshore Norway. The Norwegian oil company has already sent an application for the drilling activity. Equinor will utilize Seadrill's harsh-environment semisub West Hercules and operations are scheduled to commence Q2 2021.

Shelf Drilling Jackup Rig 141 is expected to complete its Gempetco contract by the end of January 2021. The jackup has been on hire with the operator since April 2019.

BHP confirms that its exploration well, Broadside-1, was a dry hole. The ultra-deepwater exploration well reached the main reservoir on 22 October, 2020, while P&A work was done 8 November, 2020. BHP previously had the ultra-deepwater drillship Deepwater Invictus working in the region.

Borr Drilling Jackup Saga will commence drilling activities at Helang D1–1 well, Offshore Sarawak, on 26 January 2021 for JX Nippon Oil & Gas Exporation. The drilling activities are expected to last until 31 May 2021.

OMV Petrom has initiated an offshore drilling campaign in the shallow waters of the Istria Block in the Black Sea. The first drilling operations started at the end of December 2020 and the drilling of the second well will start at the beginning of this year. OMV Petrom currently has the Jackup GSP Saturn on contract since December 2020. The investment for this campaign is approximately 32 million Euros.

Kosmos Energy has confirmed an oil discovery in the U.S. Gulf of Mexico at the Winterfell infrastructure-led exploration well. Winterfell was designed to test a sub-salt Upper Miocene prospect located in Green Canyon Block 944. The well encountered approximately 26 meters (85 feet) of net oil pay in two intervals. Kosmos Energy has a 17.5% working interest.

Rig Demand

Tulip Oil is evaluating rig availability for the drilling of two discovered gas fields offshore the Netherlands. It is understood the company is looking for a jackup for a multi-well program with a start date to be confirmed.

ExxonMobil is expected to ramp up activity offshore Guyana this year as the company searches for more hydrocarbons. The U.S oil major aims to drill more than a dozen exploration and appraisal wells in the region. Most of the activity will be set in the prolific Stabroek block but the company also plans to drill two to three wells in the Canje block. ExxonMobil currently has four drillships in the region and will be adding two more this year. Earlier, the oil company drilled the Hassa-1 exploration well but did not encounter hydrocarbons in the primary target reservoirs. Although the well did encounter hydrocarbons in other intervals.

Energean has made a Final Investment Decision (FID) on the North El Amriya (NEA) and North Idku (NI) subsea tieback project this month. Total capital expenditure is expected to be approximately $235 million, the majority of which is expected to be incurred in 2022. The project is expected to deliver first gas in 2H 2022. The NEA/NI drilling campaign is expected to be integrated with a broader Abu Qir drilling campaign, providing synergies on capital expenditure.

Equinor and EnQuest have completed the Bressay oil field transaction, whereby Equinor sold a 40.8125% interest in and transferred operatorship of the Bressay old field development on the UK continental shelf to EnQuest. EnQuest now has a 40.8125% interest and operatorship, Equinor has a 40.8125% non-operated interest, and Chrysaor holds the remaining 13.375% interest. Development drilling at the Bressay field is expected to require a jackup for multiple years.

Newbuilds & Rig Sales

Borr Drilling's five newbuilding jackups that are being built in Singapore's Keppel Offshore & Marine have had delivery delayed until 2023. The first newbuilding is now set to be handed over in May 2023 and the final one in December. The units still under construction at the Singapore Shipyard are Heidrun, Var, Huldra, Vale and Tivar. The rigs were originally scheduled for delivery this year but have faced ongoing deferment due to the challenging market.

Further to Bassoe Analytics' reports from July 2020, CNBC has confirmed that Valaris sold its semisubs Valaris 8500 & 8501 to Elon Musk's SpaceX. The two ultra-deepwater semisubs were reportedly sold for USD 3.5 million each and will be converted into floating launchpads for SpaceX's Starship rockets.

Financial News

Borr Drilling has confirmed that the liquidity improvement plan announced in December 2020 has received support from its creditors, including the $400m syndicated bank facilities maturity deferred to January 2023, the $195m Hayfin facility maturity deferred to January 2023, $760m PPL facilities maturity amended to May 2023, with interest payments deferred until March 2023, except $6m payment in 2021 and $12m in 2022 (estimated accumulated interest deferred is in excess of $110m, including the approximately $65m announced in May 2020), the $272m Keppel newbuild delivery facilities for three delivered rigs all extended by one year (from five to six year financing) and interest deferred to the fourth anniversary of the drawdown of each loan, the $620m in Keppel newbuilding delivery commitments for five rigs deferred to 2023, with the first delivery in May 2023 and the final delivery in December 2023, and in addition, there will be amendments to certain of the current financial covenants, including the minimum value covenants.

Other Industry News

The Awards in Predefined Areas 2020 – 61 production licences on the Norwegian Shelf has been awarded to 30 companies, whereas 34 are in the North Sea, 24 are in the Norwegian Sea and 3 are in the Barents Sea. 12 of the production licences are additional acreage to existing production licences. The company landscape is very diverse, both small companies and major international players are being offered exploration acreage. In addition, Norway expects to award oil and gas exploration permits in frontier regions of the Arctic in the second quarter 2021.

UAE-based Mubadala Petroleum signs Concession Agreement for Block 4 in the Red Sea, offshore Egypt. Mubadala Petroleum will hold 27% participation interest in the block, while operator Shell holds a 63% interest and Tharwa holds the remaining 10%.

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