LONDON — Westwood Global Energy Group expects Saudi Aramco to issue a total of 31 rig contracts as the company seeks to double its active jackup fleet by the end of 2024.
Most of the awards will be for rigs that have been either out of service for over a year or stranded (newbuilds), according to Terry Childs, head of Westwood’s RigLogix division.
Many of the idle jackups were inactive due to falling rig demand in previous years.
Since March this year, Aramco has awarded 26 new jackup contracts, and Westwood expects a further five to follow in the next month. All range in duration from three to five years with extension options.
Aramco will then have 78 jackups under contract and will likely tender for another 10. The company’s reported target is to have 90 jackups in service by the end of 2024.
Five of the 31 rigs contracted were stranded newbuilds that have either been purchased or bareboat chartered from their construction yards.
Advanced Energy Services (ADES) will provide 17 of the rigs following a program of acquisition, and it will now manage 32 active jackups in total, putting it ahead of Shelf Drilling, Borr Drilling and Valaris. ADES has acquired further rigs for deployment in Qatar and India.
Of the other contract winners, Seadrill and China Oilfield Services Ltd. each account for three of the rigs, while Seadrill, Saipem, Valaris and Borr Drilling will supply two each.
Day rates range from $78,000 to $98,000, with mobilization fees in certain cases of up to $35 million. Since the award process started, Childs pointed out the average leading edge day rate in the Middle East region has risen from just over $83,500 to about $93,500.
Ultimately, 21 of the 31 jackups will be mobilized from other countries’ regions, boosting the existing 147-rig count in the area. But many of the rigs will require some level of reactivation.
Lamprell in the UAE recently announced a contract to upgrade three jackups, which according to Westwood could be Seadrill’s West Leda, West Ariel and West Cressida.
Other reports suggest Arab Shipyard & Repair Yard in Bahrain could take in up to six jackups, while Drydocks World in Dubai also will probably perform some reactivation work.
For Noble Drilling/Maersk Drilling to secure approval for their merger from the U.K. Competition and Markets Authority, they may be obliged to divest five rigs. ADES is reportedly a potential taker.
ADNOC Drilling in the UAE also has been in expansion mode, recently signing an agreement to acquire the formerly Oro Negro-managed Argent 1, Argent 2 and Argent 3, all currently stacked in the Bahamas and out of service since late 2017.
Last November, ADNOC bought the former Aban Offshore-managed Deep Driller 3 jackup, which had been working for parent company ADNOC Offshore. It has additionally purchased three former Shelf Drilling jackups; all the rigs have started or are due to start contracts for ADNOC Offshore.
Finally, Childs noted, these developments could lift marketed jackup use globally above 90%.