Global shallow water drilling activity continued its recent gains, with contracted offshore jack-up rigs rising for the fourth consecutive week, according to data compiled by offshore energy analysts
Deepwater drilling activity slipped, with the number of contracted floaters falling by one unit week-on-week to 106 units. It is the first time floater activity has fallen in six weeks.
Westwood Global Energy Group reports in its RigLogix data that there were 326 contracted jack-up drilling rigs for week 36 of 2020, an increase of two week-on-week. While Middle East activity held steady at 118 units, gains were registered in the North Sea and southeast Asia.
In southeast Asia, Brunei Shell Petroleum Company exercised the contract extension option for the jack-up rig Maersk Convincer that allows the rig to continue operating offshore Brunei Darussalam. The contract extension has an expected duration of 602 days and will commence in May 2021 in direct continuation of the rig’s current work scope, which means that Maersk Convincer is now contracted by Brunei Shell Petroleum until the end of 2022. The extension has a firm contract value of about US$47M, excluding a potential performance bonus.
Maersk Drilling chief operating officer Morten Kelstrup said the long-term extension for Maersk Convincer “is a confirmation of the strong and productive collaboration that has been established between the customer and the rig team.” Mr Kelstrup said rig operations have focused on safety and reducing fuel consumption to limit the rig’s carbon footprint.
A Baker Pacific Class 375 cantilever jack-up, 2008-built Maersk Convincer is designed for year-round operation. The rig is currently operating on the Seria field offshore Brunei Darussalam.
While the news of recent increased jack-up drilling is welcome, it is overshadowed by the fortunes of some of the sector’s biggest names: Valaris, Noble Drilling and Diamond Offshore have all filed for Chapter 11 bankruptcy, undone by the energy demand destruction caused by the Covid-19 pandemic, the weak oil price environment and crushing debt.
Valaris, the latest to file for Chapter 11 in US bankruptcy court, is looking to slash its debt by more than US$6.5Bn through its restructuring. The deal would see creditors swap debt for equity in Valaris, improving the company’s balance sheet and helping maintain operations during the current market downturn.
“The substantial downturn in the energy sector, exacerbated by the Covid-19 pandemic, requires that we take this step to create a stronger company able to adapt to the prolonged contraction in the industry, and to continue to enhance our position as overall market conditions improve,” commented Valaris president and chief executive Tom Burke.
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