Trident Energy has terminated its drilling contract for the semi-submersible rig Island Innovator over what it says are safety concerns, while Diamond Offshore Drilling has won a two-year contract extension with a BP subsidiary
London-based Trident Energy and partners Panoro and Kosmos began a three-well campaign on Block G offshore Equatorial Guinea on 22 January, and the first infill wells were expected midway through the year. Trident serves as operator of Block G with a 40.375% stake, Kosmos Energy holds an equivalent share while Panoro Energy and GEPetrol make up 14.250% and 5.000% respectively.
Trident cited safety concerns for the cancellation, flagging “serious problems” with the rig’s blowout preventer. Panoro Energy said the joint venture decided to terminate the rig’s contract on Trident’s advice and the joint venture claimed Island Innovator is “not operationally in a condition to safely drill the wells”.
Island Innovator was warm-stacked at the beginning of 2020 and was working for Dana Petroleum in the UK as recently as September 2023, before preparing for the Equatorial Guinea contract.
The rig’s contractor Island Drilling disputes the termination of the contract, labelling Trident’s statements as “not an accurate description of the situation on Island Innovator.”
The Norwegian outfit added, “There have been no critical safety incidents. The blowout preventer has been checked and tested by the OEM representative on board the rig and declared safe and ready for operations. Island Drilling is evaluating all legal recourse at its disposal to contest the termination.”
However, Trident is believed to be evaluating alternative options to allow the programme to recommence (including the Kosmos-operated Akeng Deep exploration well) sometime in Q2 with an alternative rig.
Panoro chief executive John Hamilton said his company does not anticipate the pause in drilling to affect shareholder distributions, or financial or operational targets this year.
The news was followed by ExxonMobil announcing it is leaving Equatorial Guinea in Q2; the latest exit in a wave of divestments by oil companies from mature basins in the region. In December 2022, ExxonMobil also closed the sale of its operations in Chad and Cameroon.
The American oil major has a long, often colourful history in Africa. Two years ago, ExxonMobil notified its intent to decommission its flagship asset in the country, the once prolific Zafiro field, when its licences expired.
Equatorial Guinea is OPEC’s smallest producer and its output has fallen in recent years, with no new projects to replace lost production. Meanwhile, ExxonMobil has been trying to sell its Zafiro operation since 2020.
New contracts and extensions
Diamond Offshore Drilling has won a two-year contract extension worth US$350M with a BP subsidiary for its Ocean BlackLion drillship. The rig will commence its contract in the US Gulf of Mexico in September 2024 in direct continuation of the rig’s current contract.
Additionally, the company has entered into a drilling contract with Serica Energy to utilise the Ocean Patriot rig for two plug and abandonment wells in the UK North Sea. The 60-day programme is estimated to commence March 2024 and represents more than US$10M of additional backlog, excluding mobilisation.
Three of Borr Drilling’s premium jack-up rigs have secured new contract commitments totalling 495 days and US$82M in contract revenue.
BW Energy has extended the contract for Norve by approximately two months through July 2024. In Thailand, Mist has secured a contract extension from a subsidiary of Valeura Energy that will cover a 12-month firm term beginning in direct continuation of the current contract and will keep the rig contracted through August 2025.
An undisclosed customer awarded Thor a binding letter of award for work in southeast Asia. This award will cover a firm scope of two wells, with an anticipated duration of 70 days, and is expected to commence in Q3 2024 in direct continuation of its current commitment.
Following these new contracts, Borr’s fleet contract coverage stands at 87% for 2024, which includes firm commitments and priced options.
ADES Holding Co has received notifications of extension for three of its offshore jack-up rigs operating in Egypt. The three rigs are contracted by General Petroleum Co, which has notified the Group of a two-year extension for Admarine III and Admarine VI contracts, and a one-year extension for Admarine V. The group expects the extensions to be executed in the coming weeks following the approval of the Egyptian General Petroleum Corp.
ADES said its backlog stands at about US$120M. The renewals will replenish ADES’ backlog (about US$120M) at higher daily rates in a tight market for offshore jack-ups and further entrench its position in the Egyptian market.
Finally, Middle East contractor Shelf Drilling is seeing an executive reshuffle this year. Effective August 2024, chief executive David Mullen will step down from his role and assume his new role as executive chairman.
Greg O’Brien, current executive vice president and chief financial officer will be appointed as chief executive. Concurrently, Ernie Danner will step down as chairman of the board and will then serve as lead independent director of the company.
Shelf Drilling said it is in the process of identifying a candidate to replace Mr O’Brien as executive vice president and chief financial officer.
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