NEW YORK CITY – Evercore ISI’s latest Offshore Oracle report examines the improving offshore exploration market.
The report notes that Schlumberger highlighted that exploration drilling increased offshore Africa in the first quarter of this year, particularly offshore Angola, Namibia, Gabon, and Kenya. The report further noted that the company anticipates a “resurgence” in offshore exploration activity this summer.
At the same time, the report noted that Halliburton noted a “slight uptick” in offshore exploration from a historically low base over the past few years.
“Given dramatically shorter cycle times than a decade ago, we believe near field exploration activity represents attractive short cycle barrels for select NOCs and IOCs that operate offshore,” the report commented.
Both Eni and Chevron announced new exploration campaigns for offshore Mexico, with Eni advancing a four-well campaign in deepwater Block 24 previously delayed by the COVID-19 pandemic; while Chevron will spud its first exploration well in Block 22 later this year.
The report notes that “not a single floater is operating offshore Mexico currently,” but adds that Murphy has plans to mobilize the Valaris DPS-5 from the US for one well in September, estimated to take about two months to drill.
The report further noted that Chevron “will likely mobilize a floater from the US GoM as well,” ostensibly to the offshore Mexico market. It added that Eni has an open tender for a semisubmersible to drill three wells plus 3x1 well options offshore Mexico, which could take at least 250 days beginning in October.
Overall, there are formal tenders for floaters from five different operators for Mexico, with four for exploration running 475-770 days and one for development estimated to take 100-200 days. On a global basis, there are outstanding tenders for 36 years of exploration work, which pales in comparison to 165 years of development work.
In addition, the report highlighted the following global rig trends over the past month:
* Floater and jackup marketed utilization were largely unchanged at 80.0% and 84.8%, respectively.
* The ultra-deepwater floater marketed utilization edged up 100 basis points to 81.3% while midwater utilization slipped a modest 8 basis points to 80.9%.
* Saudi Aramco contracted a newbuild jackup, Bluewhale Offshore’s Gulf Driller VII, for five years plus a 2-year option starting year-end.