Esgian: Rigs on the Move in Asia and Europe

This week Esgian’s Week 50 Rig Analytics Market Roundup notes developments in the semisub sector including that Shell has decided to exercise its option on Stena Don in the North Sea but not on Deepsea Bollsta in Namibia. Meanwhile, a new contract for the Transocean Barents will see it operate in the Black Sea, and jackup Shelf Drilling Perseverance will move to Vietnam.

Contracts

Shelf Drilling has secured a contract award for the 400ft Shelf Drilling Perseverance jackup rig with PetroVietnam Domestic Exploration Production Operating Company Limited (PVEP POC). The rig will begin mobilization to Southeast Asia shortly, and the planned start-up of operations with PVEP POC in Vietnam is Q3 2024. The firm term of the contract is approximately 16 months, keeping it busy into Q4 2025. The total estimated contract value for the firm period is approximately $73 million.

The rig, previously known as Noble Hans Deul, has been operating in the UK sector of the North Sea for years. However, it has been available and warm stacked in the UK since July 2023, after it was released from its contract with IOG earlier than initially expected. In addition to a reduced semisub supply in the North Sea region due to the departures of several rigs over the past couple of years, the jackup supply in the region is also set to decrease with the upcoming departures of the 400ft Valaris 247 for a contract to Australia and now the Shelf Drilling Perseverance. The Shelf unit was one of six available in the region, excluding Russia (North), with most of them idle for over a year. As rig supply gets tighter, operators are showing more willingness to pay for mobilization costs to secure suitable rigs for their campaigns.

Shell has elected not to exercise a remaining six-month option under its contract for 7,500ft semisubmersible Deepsea Bollsta offshore Namibia, with the rig to become available from June 2024. Owner Northern Ocean stated that it is continuing ongoing dialogue with potential customers in West Africa and harsh environment markets. Deepsea Bollsta is owned by Northern Ocean and currently managed by Odfjell Drilling.

The rig began work for Shell offshore Namibia in December 2022, with Shell exercising its first six-month option for the rig in May 2023. Northern Ocean, which also has 10,000ft Odfjell-managed semisub Deepsea Mira working offshore Namibia for TotalEnergies at this time, stated that it is “confident its rigs are the right solution for this market long-term” but will continue to market its units for opportunities “in all relevant offshore basins.”  

Transocean has secured a minimum 540-day contract with OMV Petrom in the Romanian Black Sea for the 10,000ft semisub Transocean Barents. This comes following initial reports that Seadrill’s 7,874ft semisub West Phoenix was the low bidder for this OMV tender for work on the Neptun Deep project. However, the tender was revised and has now been awarded to the Transocean Barents.

Transocean hinted at a possible new contract award for this semisub unit, as well as for the 12,000ft drillship Deepwater Skyros, during its Q3 2023 earnings call in late October 2023. The new contract in the Black Sea is at a rate of $465,000 per day, excluding additional services. The program is expected to begin in the first quarter of 2025 and is estimated to contribute approximately $251 million in backlog, excluding full compensation for mobilization and a demobilization fee. For each day over 540 days, including the two option periods, the operating day rate will be $480,000. OMV Petrom stated that the rig's mobilisation to the Black Sea is scheduled to commence towards the end of 2024.

Ten wells are to be drilled for the Neptun Deep project with work in shallow and deepwater areas. First gas from Neptun Deep is targeted for 2027. Halliburton Energy Service Romania and Newpark Drilling Fluids Eastern Europe will provide integrated drilling services. After working in the North Sea over the last couple of years, Transocean Barents left the region for a contract with TotalEnergies in Lebanon in the summer of 2023 and moved on to Cyprus in October for a well with Eni. It is expected to work with Eni until January 2024 and, after that, TotalEnergies has two remaining options for the rig that could keep it working into mid-2024.

Shell has exercised a six-month option period for Stena Drilling’s 1,640ft semisub Stena Don for the continuation of operations in the UK sector of the North Sea. Shell hired the rig for a one-year firm contract back in July 2022, and the firm portion of the contract started in May 2023. The contract is for a combination of plugging & abandonment work and development wells. So far, the rig has worked on Gannet, Merganser, and Kingfisher fields.

As part of the contract, the operator also secured a one-year priced option for the rig and has now exercised six months, with the other six months still available. The exercised option period is expected to start in May 2024 and keep the rig busy into late 2024, while the remaining option period could keep it busy into May 2025.

Odfjell Drilling has signed an amendment with Aker BP, which extends the firm contract for the 6,560ft semisub Deepsea Nordkapp in Norway. The extended term will begin on 1 January 2025, in direct continuation of the current firm contract period, and run for a fixed duration of two years. The two additional years are compensated on a market-based rate mechanism. As previously agreed with Aker BP in 2022, the contract value for 2025 has a floor and ceiling day rate, resulting in a contract value of $124 million to $146 million, where the ceiling of the day rate range will be adjusted annually based on an inflation formula.

The contract value for 2026 is approximately $179 million, which will also be adjusted annually based on an inflation formula. In addition to the market-based day rates, Aker BP will pay performance and fuel savings incentive bonuses. The contract extension is subject to license partner approval. In addition to the extended firm duration, the contract now includes rolling one-year unpriced optional periods, the price of which will be based on market rates set in advance of each respective optional year.

Drilling Activity and Discoveries

Thailand-focused oil and gas firm Valeura Energy said it was planning to mobilize its contracted drilling rig to the Wassana field offshore Thailand. The Wassana field resumed production on December 8, 2023. Production at the Wassana had been shut down since 7July, following an incident in which the floating storage and offloading vessel (FSO) stationed at the field deviated from its intended position and "contacted" the field’s catenary anchor leg mooring (CALM) buoy.

Valeura had shut down the Wassana production “to address safety concerns with operating practices on the third-party-owned and operated FSO. In a statement, Valeura said it would move its contracted drilling rig to the Wassana field to conduct an infill drilling program comprised of three production-oriented horizontal development wells targeting deeper reservoir intervals within the field.

According to Esgian’s database, the rig in question is Borr Drilling’s 350ft Mist jackup. Sean Guest, President and CEO of Valeura said: "We have a brief window of opportunity in our overall drilling sequence plan to drill three wells at Wassana commencing later this month, which we anticipate will increase production capacity to over 4,000 bbl/d, before re-deploying the rig to our Nong Yao C development early in 2024.” He also said that Valeura was working toward a longer-term redevelopment of the Wassana field, to commercialize the two appraisal discoveries it made in Q3 2023 by adding reserves and expanding the overall capacity of the field. The FID on this is expected in 2024.

Neptune Energy has made a new discovery at the Kyrre prospect and confirmed the volumes for the Ofelia appraisal well, both located in the PL 929 license, close to the Gjøa field in the Norwegian sector of the North Sea. The license is operated by Neptune Energy (40%), with partners Wintershall Dea (20%), Pandion Energy (20%), Aker BP (10%), and DNO (10%). Neptune started drilling the Ofelia appraisal well, 35/6-4 ST2, in the Agat formation, in October 2023, using the Odfjell Drilling-managed Deepsea Yantai semisub. The well has been completed and the estimated recoverable volume is in the range of 16-33 million barrels of oil equivalent (mmboe). In addition, the 35/6-4 A sidetrack well was drilled into the overlying Kyrre prospect, resulting in a new gas discovery. Estimated recoverable resources are between 11-19 mmboe of gas, bringing the total recoverable volume from both discoveries to approximately 27-52 mmboe.

Located 23 kilometres north of the Neptune-operated Gjøa platform, Ofelia Agat and Kyrre will be considered for development as tie-backs to Gjøa. Neptune will also evaluate if the company’s oil and gas discovery Gjøa Nord (Hamlet), with estimated recoverable volumes between 8-24 mmboe, can be jointly developed. The Deepsea Yantai has now moved on to work for Vår Energi on the Hubert and Magellan (sidetrack) prospects. Norway’s Petroleum Safety Authority (PSA) has granted Harbour Energy consent for exploration drilling in block 15/9 in the North Sea off Norway. 

The well 15/9-25, targeting the prospect named Amethyst, is located in production license 1138, which is operated by Harbour Energy in partnership with Sval Energi and Aker BP. The water depth at the site is 84 meters. Harbour Energy has also already secured a drilling permit for this well. The PSA’s consent includes an option for drilling sidetracks and well testing upon discovery. These operations will be carried out with the CJ70 jackup Noble Integrator, which was hired back in August 2023. The 492-ft rig is currently warm stacked in Stavanger, awaiting the Harbour contract, which will be followed by the Aker BP contract.

Following the Wei-1 and Kawa-1 discoveries, partners CGX Energy and Frontera are concluding the exploration phase on the Corentyne block offshore Guyana and believe around 514 to 628 million BOE of unrisked gross prospective resources are present in the northern portion of the block. The partners are actively pursuing options for a possible farm down as they move into the appraisal phase.

The Kawa-1 discovery was made in 2022, followed by Wei-1 in 2023. Both wells were drilled with Noble 10,000-ft semisubmersible Noble Discoverer (previously Maersk Discoverer). CGX Energy is the operator of Corentyne with a 28% interest. Frontera Energy has a 72% interest. Additional appraisal activities will be required before commerciality can be determined. The company has hired Subsea7 / SLB joint venture SIA to complete a conceptual field development plan for the northern portion of Corentyne, including development drilling and an FPSO. A final investment decision is targeted for 2026, with first oil in 2030 if the project goes ahead.

Wintershall Dea’s appraisal well on the Bergknapp discovery confirmed the earlier oil discovery as well as the 6406/3-10A gas discovery in the Norwegian Sea. Wintershall Dea originally discovered oil in the Bergknapp prospect in 2020, followed by a gas discovery in the deeper Åre Formation during a successful re-entry and sidetrack in 2021. After securing a drilling permit in September 2023, Wintershall Dea started drilling the 6406/3-12S well using the 10,000-ft Transocean Norge semisub in production licence 836 S. The licence is located in the Haltenbanken region of the Norwegian Sea, a core area for Wintershall Dea.

The appraisal well confirmed the size of the oil discovery. The updated recoverable resource estimate for the oil discovery in the Garn, Ile and Tilje formations is between 44 million and 75 million barrels of oil equivalent, while estimates for the underlying Åre Formation discovery are between 6 and 25 million barrels of oil equivalent. The licensees will now consider connecting both discoveries to existing infrastructure in the area. The Transocean Norge rig, under a long-term contract for Wintershall Dea and OMV, will now move to the nearby Wintershall Dea-operated PL211 CS license, where it will drill another appraisal well on the Adriana and Sabina discoveries.

Perenco UK has made a near-field discovery on Ravenspurn South (RS) with a new well, C06, proving gas in a previously undrilled fault block downdip of the currently producing RS field in the UK North Sea. This is the third well in Perenco UK’s Southern North Sea (SNS) 2023 drilling campaign using the 400ft jackup Valaris 247, and follows the successful drilling of Ravenspurn North sidetracks, D15 and D16, producing all together 30 MMscf/d.

The new well has found a 90m section of fully gas-bearing Lower Leman Sandstone, Rotliegend Formation, with reservoir properties in line with nearby RS producers. The initial rate, forecast for January 2024, is expected to deliver a Base Case of around 12 MMscf/d (2,000 boepd), bringing 21 Bscf (3.5 Mboe) incremental reserves after 30 years. After completion with the rig, the well will be stimulated with support from the Petrodec ERDA jackup barge.

A well test will enable effective monitoring and clean-up before connecting the gas produced from this new well via the Cleeton Hub into Perenco’s Dimlington terminal. Following the completion of its contract with Perenco, Valaris 247 is scheduled for a 60-day out-of-service period for contract preparations across Q1–Q2 2024, after which it is scheduled to work for Inpex in Australia. The operating day rate is $180,000, and Valaris will receive a mobilization and demobilization fee that covers operating costs while the rig is in transit.

Australia-based Beach Energy last week confirmed a gas column while drilling a development well at the Kupe gas field, offshore New Zealand. The well, being drilled by the Valaris 107 jackup rig in the Taranaki Basin, will be completed as the field’s fourth producer well, starting to flow in the new year. The progress update was shared this week by Andrew Jefferies, Chief Executive of NZOG, Beach Energy’s partner in the field, who said: "Kupe in South Taranaki, New Zealand, remains a key piece of the country’s energy infrastructure and a gift that keeps giving.” He said that the well would boost Kupe field production and also provide vital insights into opportunities in the field.

The development well, referred to as the Kupe South-9 well, is being drilled as part of the Kupe Phase 2 Development Drilling Programme, and is the first Beach-operated well in New Zealand and the first Kupe well since 2009. Beach is 50% owner/operator of the Kupe field. Its partners are Genesis (46%) and New Zealand Oil and Gas (4%).