Bassoe Rig Analytics weekly rig market round-up (week 51)
In case you missed it, you can access last week's Rig Market Round-Up here.
Announcement
This will be the last edition of the Rig Market Round-Up for this year and the next report will be published during the week commencing January 4th, 2021. Bassoe Rig Analytics would like to wish all of our clients, subscribers and readers a happy holiday and all the very best for 2021.
Rig Contracts
Vantage Drilling jackup Sapphire Driller has been secured by Trident Energy for a new campaign offshore Equatorial Guinea. The work scope consists of two firm wells and five options, commencing in the second quarter of 2021.
Drilling Activities & Discoveries
Beach Energy is now expected to begin its exploration and development drilling campaign offshore Australia, using Diamond Offshore semisub Ocean Onyx, around February 2021. The campaign will keep the rig busy until 2022 with three one-well options also available thereafter.
Serica Energy reports that offshore operations at its UK Rhum field, R3 Intervention Project using Awilco Drilling semisub WilPhoenix, have been slower than had been anticipated due mainly to two factors. Poor weather conditions have resulted in approximately 11 days of weather-related downtime and the resolution of a technical problem with rig equipment has led to a further 28 days of downtime. As a result, rig operations will not be completed before late January 2021. Serica and its partners have some financial protection against the effects of both weather and rig-related downtime. During periods of inactivity due to weather the ‘day-rate’ paid for the rig is reduced and for periods of rig downtime longer than 24 hours no day-rate is payable. Despite this, it is anticipated that the Serica share of costs associated with the R3 Intervention Project will increase by some £3 million.
Serica confirms that it is progressing on schedule towards the drilling of the development well at the UK Columbus gas-condensate development, with operations scheduled to begin in first half of 2021 and with first production planned later in the year. Jackup Maersk Resilient is scheduled to undertake the campaign in a window between March and July.
Eni is scheduled to recommence drilling later this month with ultra-deepwater drillship Saipem 12000 off Mozambique. The drilling campaign at the Coral project was suspended in April due to the Coronavirus pandemic and will recommence in the second half of December. It is understood that the campaign will keep the rig busy until at least the middle of next year with options for further work available thereafter.
Masirah Oil has spudded its second development well at the Yumna Field, Oman, using jackup Shelf Drilling Tenacious. A third development well will be drilled back-to-back with Yumna 2. A wildcat well will also be drilled to evaluate one of the nearby lookalike prospects. The drilling campaign is expected to last for 90 days, after which the rig will be released.
POSCO is preparing to commence drilling with Diamond Offshore semisub Ocean Monarch at the Shwe field, offshore Myanmar. The new campaign will keep the rig busy until 2022, with further options available thereafter.
Pemex has commenced its campaign with semisub Blackford Dolphin offshore Mexico. The SAAP- 1EXP well was scheduled to spud late on Monday. The rig will continue with the operator under a 15-month contract.
According to an application made to the Norwegian authorities, Aker BP may begin work with Deepsea Stavanger as early as April 2021. The operator has applied to use the rig for drilling and completion of a production well and injection well on Gråsel and permanent plug and abandonment of a well at Skarv. The rig already has a contract in place with the operator, covering an initial scope of five wells and lasting for 150 days. The unit is currently en route to Norway from South Africa.
DNO has made an application to the Norwegian authorities seeking approval for the plug and abandonment of three wells at its Oselvar field using semisub Borgland Dolphin.The earliest expected start-up is March 2021 and the estimated duration for plugging the wells is 115 days.
Rig Mobilizations
Semisub Noble Danny Adkins is shortly scheduled to depart the US Gulf of Mexico and head for Turkey where it will be recycled.
Jackup Valaris JU-117 (previously named Ralph Coffman) has completed mobilization from Trinidad and Tobago to the US Gulf of Mexico. The rig does not yet have any firm work in place but is being marketed for opportunities in the US Gulf and also worldwide.
COSL-managed jackup Oriental Phoenix is now scheduled to commence mobilization from China to Kuwait next month. The rig has a contract lined up with Kuwait oil Company that will keep it busy until 2024.
Rig Demand
Carnarvon Petroleum is planning to drill the Buffalo-10 well offshore Timor Leste next year. The objective is for drilling operations to take place in late 2021, with a date to be determined once a rig has been identified and long lead items have been ordered, along with completion of any necessary regulatory approvals. It is scheduled that the well will take 30 days to drill and will be suspended as a future producer. The operator is also planning further drilling at the field in the coming years as part of the Buffalo Re-development project, likely to include drilling of a further two or three wells.
Jersey Oil and Gas is planning an exploration drilling campaign in 2022 in the UK North Sea, with any successes envisaged as tie-backs to the proposed facility in the Greater Buchan Area (GBA) field development. Jersey has now identified four prospects – Verbier Deep, Cortina NE, Wengen and Zermatt – which are estimated to host some 222 million barrels of P50 prospective resources.
News reports suggest that ONGC Videsh is planning to tender soon for a rig to undertake a two-well drilling campaign offshore Bangladesh, commencing in late 2021. It is understood that the operator will target the Titly prospect in shallow sea block SS-04 and Moitree prospect in block SS-04. The Indian oil-gas exploration firm has already completed a portion of a geo-hazard survey on the blocks. Block SS-04 covers an area of 7,269 square kilometres while Block SS-09 stretches 7,026 sq km. Water depth of both the blocks ranges between 20 and 200m.
In December, Chrysaor sanctioned the LAD infill development well at Everest East, with drilling scheduled for Q3 2021. The Everest field is located in Blocks 22/9, 22/10a, 22/14a in the Central North Sea, around 217km east of the Scotttish mainland and 14km west of the UK/Norway median line, in a water depth of approximately 90m.
According to partner Chrysaor, Total is currently planning facilities and integrity work towards a potential extension of field life its British Elgin-Franklin field.
Hurricane Energy confirms that it is considering adding a new production well in the central "attic“ high of the UK Lancaster field, by re-entering and side-tracking the existing 205/21a-7z well. The operator says that subject to a sanction decision early in the first quarter of 2021 and securing a suitable rig and equipment, first production from this well should be possible by late 2021. Market sources indicate that Hurricane is already searching for a semisub for next year, with the campaign expected to last 95 to 120 days.
Market sources indicate that Siccar Point is planning to approach the market early next year with a tender for a semisub to undertake development drilling at its Cambo field Phase 1 offshore the UK. It is understood that the campaign will consist of nine firm wells and further options will be available thereafter. Operations are now set to begin in second quarter of 2022.
Operators Tullow Oil and Eni are both understood to be close to announcing rig contracts for drilling campaigns offshore Ghana, both of which will commence next year.Both will utilize drillships during their campaigns. Tullow requires a unit for approximately 550 days, while Eni is reported to be planning a two-well plus options campaign.
Newbuilds & Rig Sales
A new report issued by Bassoe Rig Values/Esgian explains the result of 2020's challenges on offshore rig values. Read more here: Offshore rig values take $30 billion hit in just 12 months.
MHWirth AS has received a notice from Keppel FELS to suspend works under the drilling equipment package project for the second mid-water semisub under construction at Keppel FELS (Nordic Spring). The project relates to the main construction contract between Keppel FELS and Awilco Drilling, which was recently terminated. The contract between MHWirth and Keppel FELS was signed in April 2019 and includes rights for the yard to suspend the project including compensation mechanisms in relation thereto. The majority of MHWirth’s scope of supply for the project has been substantially manufactured, with payments received in accordance with progress to date.
Energy Transition
After successfully being converted to a hybrid, low-emission rig, jackup Maersk Intrepid has entered operations as the first Maersk Drilling rig to feature this set of upgrades. Maersk Intrepid is currently working for Equinor on the Martin Linge field where the ultra-harsh environment jackup in November this year commenced its first drilling operation with the full low-emission package in use. The full technology package was expected to deliver a double-digit energy savings potential, and this has now been confirmed where the first month of operations on Martin Linge produced an initial data point of reducing fuel consumption and CO2 emissions by approximately 25% compared to the baseline average for the rig. In addition, NOx emissions were reduced by approximately 95%, an improvement from the original target of 90%. The full package of hybrid, low-emissions upgrades is also being installed on the ultra-harsh environment jackup Maersk Integrator, which is expected to start operating in full low-emission mode in early 2021 in Norway.
Financial News
Pacific Drilling announced today the final voting results on the First Amended Joint Plan of Reorganization of Pacific Drilling S.A. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”). The voting results indicate overwhelming acceptance of the Plan by the two classes entitled to vote on the Plan. The Company has received votes in favor of the Plan from (a) 97.87% in number of the holders of Class 3 First Lien Notes Claims that voted and 99.98% in amount of Class 3 First Lien Notes Claims that voted and (b) 100% in number and amount of the Holders of Class 4 Second Lien Notes Claims that voted. Based on the voting results, the Company believes that it remains on track for Plan confirmation at or shortly following the Plan confirmation hearing currently scheduled for December 21, 2020 in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) and for emergence from the Chapter 11 proceedings by year-end. The Plan, if confirmed by the Bankruptcy Court, will de-lever the Company’s balance sheet by eliminating over $1 billion of funded debt obligations and provide the Company with access to additional liquidity to operate going forward through an $80,000,000 senior secured delayed draw term loan exit facility. The Company expects to emerge by year-end with approximately $180 million of liquidity, consisting of new capital in the form of the exit facility and approximately $100 million of cash and cash equivalents on hand.
Seadrill reports that the term of the forbearance agreements expired on 14 December 2020, and, accordingly, the creditors with whom forbearance agreements were entered into are no longer prevented from taking actions in respect of events of default that may arise under the senior secured credit facility agreements and leasing arrangements as a result of the group not making interest and charter hire payments under the group's senior secured credit agreements and leasing arrangements. Seadrill says that it continues to maintain its readiness to carry out a comprehensive restructuring of its balance sheet. Such a restructuring may involve the use of a court-supervised process. The company continues to engage in constructive discussions with its financial stakeholders in relation to 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 which is likely to result in minimal or no recovery for current shareholders.
Meanwhile, the Board of Seadrill Limited was also informed this week reported that the lenders in the AOD facility (under which Asia Offshore Rig 1 Limited, Asia Offshore Rig 2 Limited and Asia Offshore Rig 3 Limited are borrowers) have utilised $97.2 million of AOD's cash contained in restricted accounts secured against their facility to repay a corresponding amount of the $210 million debt outstanding as of today. This leaves $112.8 million of such debt outstanding going forward. The AOD facility maintains sufficient cash to support AOD's operations and this event will have no impact to continued operations.The face value of the net debt on the balance sheet remains unchanged as a result of this action and Seadrill maintains its strong liquidity position as it progresses in discussions with the broader group of lenders. The Company’s cash balance remains sufficient to manage liquidity requirements through a formal restructuring process. At the close of third quarter 2020, Seadrill had a total cash balance of $851m including the cash in the AOD companies.
Other Industry News
Seadrill announced the appointment of Reid Warriner as Chief Operating Officer and Leif Neilson as Chief Technology Officer, effective immediately. As Chief Operating Officer, Reid Warriner will oversee daily operational delivery for Seadrill’s customers across the Harsh Environment, Jack-Up and Floater Operating Units. In this role, Reid will drive to achieve the highest safety standards whilst enhancing the operational performance of its long-term fleet and scrapping assets, which will no longer have a role to play. As Chief Technology Officer, Leif Nelson will focus on the future development of the fleet. In this regard Leif will continue the development of the innovation pipeline with the adoption of new technologies, which will deliver more efficient and safer operational capabilities whilst reducing Seadrill and its clients' environmental footprint.
Premier Oil announced this week that Harbour Energy has been selected as the name for the new independent oil company being created by the reverse takeover of Premier Oil by Chrysaor. The merger of the pair is set to create the largest independent oil and gas company listed on the London Stock Exchange with production of more than 250,000 barrels of oil equivalent per day and combined proven and probable reserves of 717 million boe.
On 12 December, production commenced from the Snorre Expansion Project in the Norwegian North Sea. The Increased Oil Recovery project will add almost 200 million barrels of recoverable oil reserves and help extend the productive life of the Snorre field through 2040. The project was originally scheduled to come on stream in the first quarter of 2021. Twenty four new wells will be drilled to recover the new volumes. The wells are divided into six subsea templates. Bundles connecting the new wells to the platform have also been installed, in addition to new risers. The project also includes a new module and modifications on Snorre A.
Petrobras has started the non-binding phase of the sale of a 50% stake in the Marlim Cluster in the Campos basin offshore Brazil. The cluster includes Marlim, Voador, East Marlim, and South Marlim production concessions, where Petrobras is operator of the fields with 100% stake. The fields share production infrastructure and, between January and November 2020, produced an average of 65,300 b/d of oil and 885,000 cu m/d of gas.
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Data: Bassoe Analytics, Image attribution: Vantage Drilling.
