Global offshore drilling activity slipped in week 2 2021, as Brent crude oil futures settled at US$55.39 for March contracts on 11 January, slipping from US$55.99 on 8 January
Despite a head-spinning week which saw deadly riots at the US Capitol, oil has been buoyed by the continued rollout of Covid-19 vaccines and surprising crude oil production cuts by Saudi Arabia promised for February and March.
Analysts are bullish on the oil market despite the slight slippage in the future price of Brent crude. They believe the incoming Biden Administration and a Democratic-controlled Congress will be quick to enact new economic stimulus, push a clean energy agenda and pursue measures to limit the production of US oil and gas.
Overall, offshore jack-up activity showed 325 units active for the week, down one rig week-on-week. In deepwater, 105 floaters were contracted, less two units week-on-week, according to Westwood Global Energy’s RigLogix.
New contracts for jack-ups in Africa, Asia and North Sea
In central Africa, BW Energy has confirmed a contract for the currently warm-stacked jack-up rig Norve to begin a two-well drilling campaign in Gabon starting in April 2021.
The PPL Pacific Class 400 rig is owned by Oslo-listed Borr Drilling, which reported it added US$35.1M over 480 days to its backlog.
In Asia, Borr Drilling’s KFELS Super B Bigfoot Class jack-up Idun was awarded a letter of authorisation to start operations in Q1 2021 for a contract period of about 12 months.
Borr signed a contract amendment on Prospector 1 with privately held Dutch E&P company ONE-Dyas for three optional wells, one of which has already been exercised. Additionally, Prospector 1 has received a letter of intent for four wells plus options for operations in the North Sea, which has an estimated period of seven months.
“The recent awards will bring the total number of committed and contracted rigs up to 13, and we are encouraged about this increased activity in the shallow water jack-up drilling market,” said Borr Drilling in a statement. “Borr has four additional warm-stacked rigs that can be brought into operation without significant activation capex. We are negotiating terms with Pemex for an extension to the current contract covering five rigs contracted under the Integrated Well Services business model, with an aim to secure incremental work throughout 2021 in Mexico. It is, however, important for the joint venture and Borr Drilling that the working capital situation in Mexico improves, which is a key point in the negotiations on further work.”
Meanwhile, London Stock Exchange-listed Gulf Marine Services (GMS) has secured a long-term contract for self-elevating, accommodation jack-up vessel GMS Evolution. This contract follows the successful trial of the vessel’s cantilever workover system, with a national oil company in the Middle East-North Africa region.
GMS Evolution will replace a K-Class vessel currently on contract with the same client from January 2021 to Q4 2022, on a higher day rate that reflects the additional capabilities of GMS Evolution. The dynamic positioning class 2 vessel is capable of providing well service, construction and installation, and accommodation. It has been specifically fitted out for heavy well intervention operations.
Including recent firm contracts and options, GMS’s current backlog stands at US$220.2M of which US$101M will be executed in 2021. GMS is also in advanced discussions for a potential award for the released K-Class vessel, which, if successful will increase secured utilisation for 2021 from 75% to about 80%.
Commenting on the UAE-based company’s financial situation, GMS executive chairman Mansour Al Alami said recent “discussions with the banks have been positive, around improvements to the terms of the debt structure, and we continue to seek to put in place a workable solution that protects all stakeholders."
Added Mr Al Alami, "Our client has seen first-hand the unique operational time and cost benefits of utilising the cantilever system on GMS Evolution, when carrying out well workover activities. The system is capable of carrying out all aspects of well workover activity normally carried out by a drilling rig, however, its real strength comes when frequent moves within the field are required. Being self-propelled unlike a drilling rig, Evolution does not rely on tug support, so can move between locations in a fraction of the time."
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