Bassoe Offshore AS

02/26/2021 | News release | Distributed by Public on 02/26/2021 04:04

Bassoe Rig Analytics weekly rig market round-up (week 8)

Over the past week Borr Drilling, Saipem and Transocean announced new contracts and extensions. Meanwhile, Petrobras issued new tenders in a bid to charter up to five deepwater rigs for work offshore Brazil.

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

Rig Contracts

Borr Drilling has been awarded a new three-year deal for its 2018-built KFELS Super B Class jackup Skald by PTTEP offshore Thailand. The contract is set to begin in June 2021. This is the first award from PTTEP's multiple, multi-year jackup tenders. Borr has also secured extensions for three of its jackups already operating in Mexican waters with PEMEX, that will keep them all committed through the end of 2021. The Grid and Gersemi have been awarded 300-day extension and the Galar has been awarded a 76-day extension.Transocean has secured a new deal for its semisub Deepwater Nautilus with Posco Daewoo that will commence in late March 2021 and continue into the summer. It is understood that the campaign will be for drilling offshore Myanmar. The rig is currently in Labuan being made ready for the work. Meanwhile, the rig owner has also confirmed that BHP Billiton has declared an option on its contract for ultra-deepwater drillship Deepwater Invictus, keeping the rig working in the US Gulf of Mexico until September 2021. The new term will be at an increased rate of $215,000 per day in comparison to the current rate of $155,000.

In its latest fleet update, Saipem has reported some details of a new long-term deal for its jackup Perro Negro 8 with a company known as Aurora. The campaign, which will cover work in the Arctic Sea will begin next month and run until late 2022, with options until 2023. The rig is currently stacked in the UAE. Additionally, the rig owner has announced a short-term award for its harsh-environment semisub Scarabeo 8. This is understood to be further work with Var Energi offshore Norway, commencing during the second half of the year. The rig is currently on hire with Var, under a deal that ends around May. Meanwhile, Saipem has also confirmed that Eni has extended its contract for ultra-deepwater drillship Saipem 10000 into 2023 to cover operations 'Worldwide'. The rig had previously been committed from mid-2021 until late 2022 for work in the Egyptian Mediterranean. The driller has not disclosed where these additional work scopes will be carried out, however Eni has previously been looking for rigs for work offshore Angola, Ghana, Mozambique and Kenya as well as other areas outside of Africa.

In it's Q4 results report, Odfjell Drilling stated that the updated firm well plan for its harsh-environment semisub Deepsea Atlantic with Equinor is expected to be finalized at the end of April 2021 and that it further anticipates Equinor to award more wells in 2021 to bridge the gap towards the commencement of Johan Sverdrup phase 2 in Q1 2022.

Drilling Activities & Discoveries

CNOOC announced this week that it has made a large oil and gas discovery at Bozhong 13-2 in Bohai Bay, China. The Bozhong 13-2 structure is located in the south-western Ring of Bozhong Sag in the Bohai Bay with an average water depth of about 23.2 meters. The discovery well BZ13-2-2 was drilled and completed at a depth of 5,223 meters, and encountered oil pay zones with a total thickness of approximately 346m. The well was tested to produce an average of approximately 1,980 barrels of crude oil and 5.25 million cubic feet of natural gas per day.

Masirah Oil announced that jackup Shelf Drilling Tenacious spudded the exploration well Zakhera-1 on 21 February 2021. The jackup was moved from the Yumna field, following the completion of the two new additional production wells, Yumna 2 and Yumna 3, which recently commenced production.

JackupMaersk Invincible has been approved by PSA Norway to drill development well 2/8-IF-16 on Valhall Flanke Nord for Aker BP.

PTTEP announced a successful gas discovery from the exploration well Dokong-1 in Block SK417, offshore Malaysia. The drilling commenced in November 2020 and is located in shallow waters. The second exploration well will be drilled mid-2021 as part of the exploration plan. PTTEP currently has Borr Drilling jackup Gunnlod on contract for work offshore Malaysia.

Petroserv Marine semisub SSV Catarina is scheduled to complete its 5-well drilling campaign with ENI Indonesia mid-2021. The drilling campaign commenced in October 2019, but ENI had to suspend operations due to the covid-19 outbreak March 2020. Operations resumed in October 2020.

Ultra-deepwater semisub SSV Louisiana is due to complete its 3-year contract with ONGC off India in April 2021.

Rig Demand

Sixty-one new production licenses were awarded in the APA 2020 licensing round (Awards in Predefined Areas). Of the new production licenses, 34 are in the North Sea, 24 are in the Norwegian Sea and 3 are in the Barents Sea.

Petronas has awarded Block SB405, off the coast of Sabah offshore Malaysia, to ConocoPhillips and PETRONAS Carigali Sdn. Bhd. (PCSB). The award of the exploration block is expected to bolster exploration activities off the coast of Sabah following the opening of more block investment opportunities in the country. COPEM is the operator for Block SB405 PSC, with a participating interest of 85 per cent, while PCSB holds the remaining 15 per cent.

Petrobras has issued a new tender to charter up to five deepwater drilling rigs for work offshore Brazil. The Brazilian NOC has split the tender into two pairs, where as tender 1 calls for up to two rigs with MPD systems for a period of 1,095 days starting September 2022. While tender 2 calls for up to three rigs for a period of 1,040 days starting December 2022 (MPD not mandatory).

Petronas made an oil discovery at the Hidayah-1 exploration well, drilled using Vantage Drilling jackup Pearl Driller (also known as Soehanah), located within the North Madura II Production Sharing Contract (PSC), offshore East Java, Indonesia. The Hidayah-1 exploration well was spudded on 7 January 2021 and drilled to a depth of 2,739 meters. Petronas' subsidiary, PC North Madura II Ltd., is the operator with 100 per cent participating interest in the North Madura II PSC.

Six oil and gas operators in the Dutch North Sea have agreed to participate in a well decommissioning campaign organized by Nextstep. The companies involved are Wintershall, Total, Petrogas, NAM, Neptune Energy and ONE-Dyas, which have all issued a joint tender for decommissioning of wells. This marks the first time on the Dutch continental shelf that wells operated by different companies will be removed in one campaign.

Kosmos reports that the BP-operated Greater Tortue Ahmeyim project made good progress in the quarter and was around 50% completed by year end. The project remains on track for first gas in the first half of 2023. The strong progress with Phase 1 is enabling the advancement of Phase 2 towards final investment decision, which is targeted for the end of 2022. Kosmos continues to collaborate with operator BP and the National Oil Companies of Mauritania and Senegal on a more capital efficient project, which leverages the infrastructure built in Phase 1 to reduce costs and enhance the returns of future phases.

Rig Sales & Newbuilds

Reuters reports that a lawyer for Dolphin Drilling, Stephen Zide of Kramer Levin Naftalis & Frankel, announced Dolphin's interest in purchasing certain rig assets from Seadrill on Friday during Seadrill's first appearance before U.S. Bankruptcy Judge David Jones in Houston a few weeks ago. No details of Dolphin's letter of interest were disclosed during the hearing, but Zide said that if Seadrill does decide to pursue a potential sale, Dolphin is 'very interested in participating.'

Transocean reports that it continues discussions with Beacon Offshore regarding the contract for its under construction 20k drillship Deepwater Atlas. The rig owner reports that Beacon is still committed to the contract but is still awaiting a final investment decision for the Shenandoah development in the US Gulf of Mexico. The estimated duration of the contract is around 520 days at a day rate of around $490,000. Transocean says that it is also engaged with the Jurong shipyard where the rig is currently being built in regards to a delivery date and whether it will need to delay delivery.

Further to an announcement made on December 21, 2020, Shelf Drilling has announced that the company has on February 24, 2021, completed the sale and delivery of jackup Shelf Drilling Journey to ADNOC Drilling, a subsidiary of the Abu Dhabi National Oil Company (ADNOC).

Energy Transition

Odfjell Drilling is currently evaluating further steps to 100% electrify its drilling units such as green onshore power and offshore wind. The latter example is supported by its own investment and initiative in Oceanwind AS. Odfjell Drilling has furthermore been admitted to SINTEF's LowEmission Research Centre as the only drilling contractor. The Centre will develop new technologies and concepts for offshore energy systems, energy efficiency and integration with renewable power production technologies for application on the Norwegian Continental Shelf. Members consist of operators, vendor/service companies and academic research- and development institutions.

Financial News

Transocean reports that contract drilling revenues for the three months ended December 31, 2020, decreased sequentially by $83 million to $690 million, primarily due to reduced activities for two rigs that were idle, one rig that demobilized from Canada to Norway and two rigs undertaking out-of-service maintenance in Brazil. A non-cash revenue reduction of $57 million was recognized in both the fourth and third quarters as a result of contract intangible amortization associated with the Songa and Ocean Rig acquisitions. Meanwhile, operating and maintenance expense was $465 million, compared with $470 million in the prior period, net loss attributable to controlling interest was $37 million, compared with net income attributable to controlling interest of $359 million in the third quarter of 2020. The rig owner reported adjusted EBITDA of $210 million, compared with adjusted EBITDA of $338 million in the prior quarter and contract backlog was $7.8 billion as of the February 2021.

Seadrill has announced that its subsidiary Seadrill New Finance has agreed to extend the existing forbearance agreement which it announced on 11 February for to the 12.0% senior secured notes due during 2025 with certain noteholders. Pursuant to the agreement, the consenting noteholders have agreed not to exercise any enforcement rights or otherwise take actions in respect of default. The purpose of the forbearance agreement is to allow the issuer and its stakeholders more time to negotiate on the terms of a comprehensive restructuring of its balance sheet that may involve the use of a court-supervised process.

For the fourth quarter of 2020, Odfjell Drilling reported operating revenue of USD 355 million, compared to USD 221 million in Q4 2019. EBITDA for the past quarter was USD 171 million, compared to USD 93 million in Q4 2019 and EBITDA margin was 48% compared to an EBITDA margin of 42% in Q4 2019. The group's contract backlog is currently USD 2.3 billion, whereof USD 1.3 billion is firm backlog. The comparable figure at the end of Q4 2019 was USD 2.3 billion, whereof USD 1.3 billion was firm backlog.

For the fourth quarter of 2020, Borr Drilling reported total operating revenues of $60.2 million compared with $59.2 million in the previous quarter and a net loss of $46.7 million compared to a net loss of $61.9 million in the previous period. Meanwhile, Adjusted EBITDA was $6.6 million in the fourth quarter of last year, compared with $10.1 million in the prior quarter. During the period the Company entered into agreements to divest its remaining three non-core drilling rigs for total gross proceeds of $17.5 million and on October 5 its equity offering raised total proceeds of $27.5 million, while a subsequent offering closed on November 30, raising an additional $5.3 million.

Other Market News

Woodside Petroleum says that it sees the military coup in Myanmar as 'a transitionary issue' that would not affect its drilling in waters off the Southeast Asian nation, its chief executive said. The company does not see the coup holding back gas exploration work this year, including pre-engineering work for the A-6 gas field, which Woodside plans to develop with Total SA.

Equinor plans to shutdown the Veslefrikk field after more than 30 years and over 400 million boe in the spring of 2022. The P&A of wells has already begun. The field was discovered in 1981, and when it came on stream in 1989, Veslefrikk's development concept, as a first on the Norwegian continental shelf, consisted of a floating production unit. The Veslefrikk development was important to the development of regulations for the use of floating installations in the petroleum industry, which have seen a sharp increase. Veslefrikk B was originally the West Vision drilling rig, owned by Smedvig in Stavanger. The rig was purchased by the then Statoil for conversion to petroleum production, and Smedvig won the contract for staffing maritime crews and drilling services.

Saipem has received a Letter of Award from Qatargas for the development of the North Field Production Sustainability Offshore Project, located offshore of the North-East cost of Qatar peninsula. The contract is worth approximately 1.7 billion USD. The scope of work encompasses the Engineering, Procurement, Construction and Installation of various offshore facilities for the extraction and transportation of natural gas, including platforms, supporting and connecting structures, subsea cables and anticorrosion internally cladded pipelines. Furthermore, the project encompasses the decommissioning of a pipeline and other significant modifications to existing offshore facilities.

Brazilian President Jair Bolsonaro nominated retired army general Joaquim Silva e Luna to replace the current CEO Roberto Castello Branco within Petrobras. Bolsonaro has recently criticized Branco for ignoring the complaints of truckers as he hiked the diesel prices 15%.

Neptune Energy has started production from the Gjøa P1 development in the Norwegian sector of the North Sea. The field is a two-well development, with wells drilled using Odfjell-managed Deepsea Yantai. < /a>The semi-submersible Gjøa production unit is electrified with hydropower from shore and according to Neptune has one of the lowest CO2 footprints per produced barrel of oil equivalent (boe) on the Norwegian Shelf.

NEO Energy is acquiring a major portfolio of non-operated oil and gas assets in the Central and Northern North Sea from ExxonMobil. The agreement is valued at more than USD 1 billion. There may be additional contingent considerations of approximately USD 300 million based on the potential for increases in commodity prices. The portfolio to be acquired consists of 21 assets, including 14 fields and a number of infrastructure positions. The signing of the transaction puts NEO Energy among the top five oil and gas companies in the UK.

EnQuest announced that it has signed an agreement with Hibiscus to farm-down an 85% working interest in, and transfer operatorship of, the Eagle discovery located in the UK North Sea. EnQuest will retain a 15% non-operating working interest.

Get on-demand offshore rig values from Bassoe Rig Values

Did you know that Bassoe Analytics has launched Bassoe Analytics Premium, a subscription service which gives users enhanced access to our offshore rig market data and analysis platform?

Do you have the Bassoe Analytics mobile app?

On the back of the success of the Bassoe Analytics website, we've decided to go mobile. Now you can access our open source offshore rig database when you're on the go. Find out more and download the app from the Google Play or App Store here.

Data: Bassoe Analytics, Image attribution: Transocean