Rigs report: steady activity in Middle East, but clouds on horizon

Week-on-week, the Brent crude oil per barrel price rose 7% to US$42.54 on 22 June, up from US$39.72 on 15 June. The upward trend continues oil’s recovery from its yearly low of US$19.33 on 21 April.

The demand destruction caused by the Covid-19 pandemic had led to a sharp decline in the price of oil since late February. Recent oil production cuts by oil producing nations have led to a slow recovery in pricing, but lingering weak demand has resulted in steep spending cuts by ExxonMobil, Royal Dutch Shell, Saudi Aramco, Chevron, BP and Total, averaging upwards of 25% of their capex.

Globally, during week 26 of 2020 there were 329 contracted jack-up rigs and 111 floaters – semi-submersibles, drillships and mobile offshore drilling rigs, according to energy analysts Westwood Global Energy Group.

In the Middle East, jack-up drilling activity had risen over the last 10 weeks, with the number of contracted units edging up from 117 to 120, according to Westwood Global Energy Group’s RigLogix. That trend could change, however, in the coming weeks.

International drilling contractor Shelf Drilling reported on 19 June that it had received a notification from a customer on early termination of the Trident 16 jack-up contract. The contract end date for the jack-up rig has been changed from February 2021 to early August 2020.

According to Oslo-listed Shelf Drilling’s latest fleet status report, the customer for Trident 16 is Petrobel, which had contracted the jack-up for offshore Egypt.

On 15 June, Shelf Drilling was notified by a customer on a suspension of operations for High Island IV jack-up rig for up to 12 months. “The foregoing suspension at zero day rate will be effective upon the completion of work currently in progress and will automatically extend the term of the contract for a period equal to the suspension period,” said Shelf Drilling in a statement. High Island IV is under contract in Saudi Arabia to Saudi Aramco, from February 2020 to February 2030, with a planned out of service for Q3 2020/Q4 2020, according to the fleet status report.

Shelf Drilling has reported early termination notices from Dubai Petroleum for Shelf Drilling Tenacious, with an early termination date of September 2020, and Shelf Drilling Mentor, with an early termination of October 2020. Both are contracted for the UAE.