Bassoe Offshore AS

01/08/2021 | News release | Distributed by Public on 01/08/2021 12:45

Bassoe Rig Analytics weekly rig market round-up (week 1)

Jan 08, 2021

This week we saw Petrobras award two new rig deals offshore Brazil, drillship Stena Carron commenced drilling of a new wildcat offshore Guyana for ExxonMobil and the oil price reached 11-month highs after news that Saudi Arabia committed to reducing its oil production.

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

Rig Contracts

Petrobras reports that Sacanb Offshore is the winner of its tender for an ultra-deepwater rig to drill offshore Brazil for three years beginning in the middle of 2021. Cylindrical semisub unit Sevan Developer was bid at a low rate of USD 139,000 plus a mobilization fee of USD 7.9 million from China. The tender was for two rigs but it is not yet known if Petrobras has made a decision on the second rig.

Santos confirms that it has secured jackupNoble Tom Prosser for a three-well infill drilling campaign at its Phase 3 Bayu-Undan project, offshore Timor-Leste. Drilling is set to begin in the second quarter of this year with the first well scheduled to come onstream in the following quarter. The rig is currently idle offshore Darwin, Australia, after completing its last contract with ExxonMobil in November.

Equinor has exercised two options on its contract for harsh-environment semisub Deepsea Atlantic. The wells have 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 work shall commence after the completion of the current scope estimated to be in Q1 2021. The commercial terms are materially the same as for the recently announced Johan Sverdrup Phase 2 contract award.

PV Drilling has signed a contract to supply jackupPV Drilling VI to Eni for its 2021 drilling program offshore Vietnam. The drilling program is scheduled to start from early January 2021 off the coast of Vietnam. Along with the provision of drilling services, PV Drilling will also provide other technical services for the drilling campaign of ENI such as the pipe pull and drop service of PVD Well Services; Services of providing suspension head of anti-mezzanine pipes, directional drilling and surveying, PVD Baker Hughes's rescue service, oil spill response service of PVD Offshore.

Neptune Energy has extended the contract for harsh-environment semisub Deepsea Yantai with an additional two wells, securing the rig through 2021. The extension is made so that the rig can continue to work in the Dugong area where Neptune Energy successfully drilled a well with the rig during summer 2020. In addition, Neptune has the option to exercise a further 8 wells under the current contract.

Ocyan ultra-deepwater drillship Norbe VIII has won Petrobras' tender for drilling operations at the Mero field, located in the Santos Basin offshore Brazil. The duration of the contract is 425 days, with an option of another 655 days, and the dayrate is reported to be $200,000. The drillship is currently on contract with Petrobras and is expected to commence the new term in July 2021.

Drilling Activities & Discoveries

Transocean harsh-environment semisubLeiv Eiriksson has completed its drilling campaign for ConocoPhillips offshore Norway and has now moved inshore where it will be stacked. Market reports suggest that the rig may be in line for scrapping.

Ultra-deepwater drillshipPacific Santa Ana has resumed plug and abandonment operations offshore Mauritania for Petronas following a period of suspension due to the Covid pandemic. The rig is expected to carry on working at the Chinguetti field for the operator until the middle of this year. Total still has two one-well options available for the use of the rig off Mauritania and Senegal on completion of the Petronas contract.

SinoOcean-managed jackup SMS Essa has commenced its maiden contract offshore the UAE for ADNOC, which will see it committed under a long-term deal.

JackupMærsk Inspirer has been safely installed at the Norwegian Yme field, marking the beginning of its five-year (plus five-year option) contract with Repsol as a combined drilling and production unit for the development of the field.

JackupShelf Drilling Enterprise has moved offshore Thailand to imminently begin a new long-term drilling campaign with Chevron that will keep it busy until at least Q3 2022 with further options available thereafter.

Ultra-deepwater drillshipStena Carron has commenced drilling at the Bulletwood-1 exploration well at the Canje Block, Offshore Guyana, for ExxonMobil. The drilling operations are scheduled to be completed by 23 February, 2021.

Seadrill-managed harsh-environment semisub West Bollsta will drill the 16/4-13 S exploration well after the Norwegian Petroleum Directorate granted Lundin Energy Norway a drilling permit for the well. The semisub is currently drilling wildcat well 7219/11-1 for Lundin in production license 533 B.

The drilling of Perseverance #1 well continues, using ultra-deepwater drillship Stena IceMAX, as a Bahamian justice official has refused to grant any orders, requested by environmentalists that would affect Bahamas Petroleum company's current operations. The drilling of the exploration well has been underway since 20 December 2020 and will remain on track to take 45-60 days from commencement to completion.

Petrobras has proven more oil in the Buzios field in the presalt Santos basin offshore Brazil. The well, 9-BUZ-48D-RJS, was drilled in a water depth of 1,850m (6,070 ft) and tests done at a depth of 5,540m (18,176 ft) confirmed the oil reservoir.

Rig Mobilizations

Ultra-deepwater drillshipsValaris DS-4 and Valaris DS-8 have arrived at a new stacking location at Hunterston Terminal on the west coast of Scotland after mobilizing from Las Palmas, Canary Islands.

Jackup Valaris JU-248 is scheduled to begin mobilizing offshore over the next few days to begin drilling for Neptune Energy at the UK Seagull field. The contract covers drilling of four wells at the development that will keep the rig busy until around mid-2022 with two, one-well options available thereafter. Located in the Central North Sea, the Seagull field development started in 2019 with first oil projected for 2022 and is expected to hold 19.0 mmboe net 2P reserves.

Tender-assist rig BassDrill Beta is expected to be fully demobilized and off-hire from Q2 2021. Atlantica continues to pursue new opportunities for both BassDrill Beta and Atlantica Delta, but it is likely that the rigs will be off-hire and stacked from mid-2021.

Rig Demand

Petrobras has launched a new tender for up to two deepwater units to undertake work in its Campos and Santos basin acreage from first quarter of 2022. The contracts are for three-years apiece and the rigs must have MPD systems.

Aker BP and partners in the Skarv acreage, Equinor, Wintershall Dea, and PGNiG, have decided to develop the Grasel discovery. Situated above the Skarv reservoir in the Norwegian sea, Grasel holds around 13 mmboe. The total investment costs for the project are around NOK 1.2 billion with a breakeven price around USD 15 per barrel. The production is expected to start during Q4 2021.

Carnarvon Petroleum has entered into an agreement with Advance Energy regarding the re-development of the Buffalo oil field offshore northwest Australia. Advance will acquire up to 50% interest in the project through funding drilling of the Buffalo-10 well up to USD 20 million on a free-carry basis. Carnarvon remains as the operator and is working on tenders for the Buffalo-10 well aimed to start drilling operations Q4 2021.

Egypt has signed billion-dollar offshore exploration programs with six companies, including ExxonMobil and Chevron, to search for oil and natural gas in the Mediterranean and the Red Sea. Three more agreements are pending approval in the future, which targets the drilling of 23 wells in the Mediterranean and in the Red Sea, with a minimum total investment at USD 1.4 billion.

Newbuilds & Rig Sales

Shelf Drilling has announced that one of its subsidiaries has entered into a definitive agreement with ADNOC Drilling, a subsidiary of the Abu Dhabi National Oil Company (ADNOC), to sell jackup Shelf Drilling Journey for a total consideration of USD 77.6 million. The seller has been designated as an unrestricted subsidiary as defined in the applicable financing agreements of the Company's subsidiaries. The transaction is subject to customary closing conditions, and the rig is expected to be delivered during the first quarter of 2021.

The 1999-built Saipem semisubScarabeo 7 has now been sold for scrap. The rig last worked for Eni Indonesia under a contract that ended in August 2019.

Local Norwegian press reports suggest that Diamond Offshore semisub Ocean America has now been sold for conversion to a wind installation vessel for a price of around USD 3 million.

Petrobras informs that its Dutch subsidiary Petrobras Netherlands B.V. transferred, to companies of Sete Brasil Group, for the symbolic total amount of 7 euros, the equity interest of 15% that it held in each of the Dutch special purpose companies controlled by Sete Brasil Group: Arpoador Drilling B.V., Marambaia Drilling B.V., Grumari Drilling B.V., Copacabana Drilling B.V., Leme Drilling B.V., Leblon Drilling B.V. and Ipanema Drilling B.V. With the sale made, Petrobras no longer holds any direct or indirect equity interest in the companies of the Sete Brasil Group. Petrobras reiterates that the effectiveness of the agreement with Sete Brasil is still subject to compliance with suspensive conditions to be implemented by January 31, 2021, as announced on November 12, 2020.

Awilco Rig 2 Pte. Ltd. ('AR2'), a wholly owned subsidiary of Awilco Drilling PLC ('Awilco Drilling'), has notified Keppel FELS Limited ('KFELS') that it has exercised its contractual termination right under the newbuilding contract between KFELS and AR2 for the construction of a semi-submersible drilling rig, Nordic Spring, as a result of breaches under the Vessel Construction Contract. At the same time, AR2 has also exercised its contractual rights under the contract and given KFELS notice of termination as a result of Force Majeure. The vessel construction contract provides that on termination AR2 will be entitled to a refund of the instalments paid to KFELS of USD 43.0 million plus accrued interest. Nordic Spring is one of the two semi-submersible drilling rigs of Moss Maritime CS60 Eco MW design ordered by Awilco Drilling subsidiaries from KFELS, which both now have been terminated. In addition, a separate Awilco Drilling subsidiary has an option for one further rig of the same design.

Financial News

Pacific Drilling S.A. announced that the Company and each of its debtor affiliates have emerged from the Chapter 11 process, signaling the successful completion of the Company's balance-sheet restructuring and the implementation of the Modified 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') confirmed by the United States Bankruptcy Court for the Southern District of Texas on December 21, 2020 . Pursuant to the Plan, all of the Company's outstanding common shares were deemed to have no value and will receive no recovery. In accordance with the restructuring transactions contemplated by the Plan, upon emergence, the Company has a new parent company, Pacific Drilling Company LLC , a Cayman Islands limited liability company (the 'reorganized Company'), the equity of which is owned by former creditors of the Company and its debtor affiliates.

On December 30, Seadrill Limited announced that it has entered into a forbearance agreement with certain creditors in respect of nine out of the group's twelve senior secured credit facility agreements.The purpose of the forbearance agreement is to allow the Company and its stakeholders more time to finalize negotiations on the head terms of a comprehensive restructuring of its balance sheet. Such a restructuring may involve the use of a court-supervised process. The Company continues to evaluate capital structure proposals from its financial stakeholders; 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.

On December 30, Northern Ocean announced that it extended the covenant waivers until February 26th, which should allow the company to comply with its covenants while the discussions with Seadrill continued. The discussions with Seadrill are related to the USD 120 million payable of outstanding project balances.

Atlantica has decided to suspend bond coupon payments and payments of interest and amortization under the senior bank facility effective 31 December 2020 following both its rigs will likely be off-hire and stacked from mid-2021. The company has initiated dialogue with financial creditors regarding a formal standstill and the way forward.

Oil Price

Oil prices climbed nearly 5% on Tuesday after news that Saudi Arabia will make voluntary cuts to its oil output, while international political tension increase over Iran's seizure of a South Korean vessel.

Other Industry News

Borr Drilling Limited has announced the appointment of Mr. Magnus Vaaler as its new Chief Financial Officer, replacing Mr. Christoph Bausch with effect from 28 December 2020.

Seadrill announced that Reid Warriner has been appointed as new COO of the company and Leif Neilson was appointed as the new CTO.

The Petroleum Safety Authority Norway has carried out an audit of Odjfell Drilling following the company's application for an Acknowledgement of Compliance (AoC) for harsh-environment semisub Deepsea Aberdeen. The objective was to verify the technical condition, organization, preparations for operations and relevant documents in the management system. The audit discovered 11 non-conformities and 2 improvement points, and the PSA has asked Odfjell to report on how the non-conformities will be addressed. The semisub was in process of being prepared for operations on the Norwegian Continental Shelf.

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Data: Bassoe Analytics, Image attribution: Noble Corp.