Report: Rig contract terms are lengthening
A total of 15 rig contracts have been announced in March thus far, tracking in line with 14 as of this time a year ago, according to Evercore ISI’s latest Offshore Rig Market Snapshot.
“But on a rig year basis, nearly 12 rig years have been awarded vs. less than 8 a year ago, supporting our view that contract terms are lengthening for both floaters and jackups,” the report said. Noble Corp. was “the clear winner” over the past month, the report commented, with two jackups awarded new 3.5-year terms each from Qatargas while four floaters working for ExxonMobil in Guyana were awarded a total of 7.4 years of additional term.
Options were also exercised for offshore Norway and the US Gulf of Mexico, with Petrodata Rigbase estimating that Noble increased its floater and jackup contract coverage by a net 6.5 and 7 years respectively over the past month.
Term jackup contracts were also awarded to Valaris by Saudi Aramco; Gulf Drilling International by North Oil Company; and Shelf Drilling by PTTEP for a total of 8 right years as jackups make up 51% of rig contracts and 65% of all rig years, year-to-date.
The global jackup fleet (including 29 newbuilds and 69 cold stacked) is 54% contracted for the remainder of 2022, ahead of the year-ago 48%, while the global floater fleet (including 23 newbuilds and 29 cold stacked) is nearly 50% contracted for the remainder of 2022, about 800 basis points higher than a year ago and on par with levels since in early 2016 and late 2019 and 2021.
The report also said that the forward year contracted status for floaters is 27%, well above the year-ago number of 19% and closer to the forward outlook as of early 2017. “We would not be surprised to find the floater fleet more than 50% contracted heading into 2023, well above the trailing five year average of 39%,” the report added. “Jackup coverage could increase to 48% by year-end, about 600 basis points higher than its five-year average based on recent trends.”
Awilco stacks two North Sea rigs, sees market upturn
Awilco Drilling has cold-stacked its semisubmersible WilHunter in the port of Invergordon, northeast Scotland, and is examining recycling options.
The company’s other semisubmersible, Wilphoenix, is presently warm-stacked at the same facility after completing operations late last year on the Fotla discovery well in the UK North Sea for Ithaca Energy.
Awilco is tendering the rig for two programs due to start later this year and 2023, and also anticipates tenders for two P&A programs for around four years of work, starting in Q1/Q2 2023.
The company says forecast rig activity levels in the UK mid-water drilling segment from 2023 onwards are significantly higher than those expected in 2022, with higher levels of rig fleet utilization and improving day rates as the global drilling market continues its recovery.
Seadrill updates rig contracts, stacking developments
Seadrill has issued an update on the status of its offshore drilling fleet in its latest results statement. Post 2Q 2021, the company had two harsh environment rigs operating offshore Norway, with the West Elara remaining on contract with ConocoPhillips and the West Phoenix starting operations for Vär Energi.
Seadrill sold the harsh-environment semisubmersible West Venture, which had been cold stacked for a few years, to Rota Shipping for recycling.
At the end of 2Q 2021, the company had four drillships and one benign-environment semi in operation. The West Neptune and Sevan Louisiana were under contract in the Gulf of Mexico with LLOG and Walter Oil & Gas respectively.
Off Brazil, the West Tellus was working for Shell and the West Saturn for ExxonMobil, while the West Gemini started a program offshore Angola.
Currently, the West Jupiter and the West Carina are being reactivated for long-term assignments for Petrobras on the Búzios field in the presalt Santos basin off Brazil.
As for jackups, the AOD I, AOD II, AOD III, and West Callisto continued operations offshore Saudi Arabia for Saudi Aramco. The West Castor, West Telesto, and West Tucana remained on bareboat charter to the Gulfdrill joint venture in Qatar.
Seadrill sold the six long-term cold stacked rigs West Freedom, West Pegasus, West Eminence, West Navigator, West Orion, West Alpha during 2Q 2021, and more recently West Venture.
It has identified two more for its rig disposal program, Sevan Brasil and Sevan Driller, which it plans to either sell or recycle this year.
The company continues to market the cold-stacked benign environment semisubmersible West Eclipse and four cold-stacked jackups West Ariel, West Prospero, West Leda and West Cressida.
As for Seadrill’s three leased harsh environment units operating in the North Sea, the West Linus and the West Hercules, under contract with ConocoPhillips and Equinor, are due to be handed back to SFL Corp. later this year. The West Bollsta completed operations with Lundin in February 2022 and the rig will shortly be returned to Northern Ocean.
As for drillships, the West Capella and West Vela will both be handed back to owner Aquadrill in 2Q 2022.
Equinor lengthens offshore Norway drilling deals
Equinor is exercising options for drilling services on numerous producing fields in the North Sea and Norwegian Sea, under agreements with three drilling contractors signed in 2018.
The two-year extension options, with a total value of NOK8 billion ($900 million), cover drilling, completion, intervention services, plugging, maintenance, and modifications on 19 offshore installations.
The scope of work will be the same as defined under the original contracts.
Archer’s extension, due to take effect on Oct. 1, covers the rigs which the company is operating on Statfjord A, B and C, Gullfaks A, B and C, Grane, Njord, Sleipner A, Snorre A and B, and Visund.
Odfjell Drilling’s platform drilling contracts extensions are for to Heidrun and the Johan Sverdrup drilling platform. Odfjell is responsible for drilling operations, workover campaigns, P&A activities and preventative/corrective maintenance on the two sets of installations.
KCA Deutag is the drilling service provider for Kvitebjørn and Oseberg B, C, South and East.
Following this option, the contract period is firm until 4Q 2024. This option is the first of three options of two years each.