Operators ramping up exploration drilling
Exploration drilling is expected to ramp up this year, buoyed by higher oil and gas prices and rising energy demand. Those are among the findings in Evercore ISI’s latest Offshore Oracle report, which examined 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.
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, Evercore noted.
Valaris announces contract awards
Valaris has announced a number of new contracts and contract extensions, with associated contract backlog of $181 million. These include:
- Two-year contract extensions with BP in the US Gulf of Mexico for managed rigs Mad Dog and Thunder Horse. The contract extensions were effective on January 27, 2022.
- One-well contract extension with TotalEnergies EP Brazil, offshore Brazil for drillship VALARIS DS-15. The option well is in direct continuation of the current firm program and has an estimated duration of 100 days.
- ARO Drilling awarded a three-year contract with Saudi Aramco for standard duty modern jackup VALARIS 140. This contract relates to the previously disclosed three-year bareboat charter agreement between Valaris and ARO Drilling. Contract backlog associated with the bareboat charter agreement is included in the total contract backlog of $181 million awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2022.
- The previously disclosed contract awarded to VALARIS DS-11 for an eight-well contract for a deepwater project in the US Gulf of Mexico has been novated from TotalEnergies to Equinor. No material changes to the contract resulted from the novation, including with respect to the termination provisions in the event the project does not receive final investment decision (FID).
- The VALARIS 67 has been sold and retired from the offshore drilling fleet.
Aker BP engages Maersk rig for North Sea Ivar Aasen drilling
Aker BP has contracted the ultra-harsh environment jackup rig Maersk Invincible to drill three infill wells at the Ivar Aasen field in the Norwegian North Sea.
The 86-day program should start in September or October, with a value to Maersk Drilling of around $22.4 million, excluding integrated services and potential performance bonuses.
Maersk Invincible is contracted under a frame agreement the two companies entered into in 2017 when the Aker BP Jack-up Alliance (also including Halliburton) was created.