Positive gains were registered in the offshore drilling sector for the second consecutive week, with both jack-up and floater levels hitting new highs for the year, according to a leading energy analyst
Shallow water activity in the North Sea, southeast Asia and Middle East remained stable, but overall the offshore jack-up drill rig fleet rose four units to 337, reports Westwood Global Energy’s RigLogix. Led by a rise in deepwater activity in the North Sea, contracted floaters climbed to 117 during week 18 2021.
Sentiment in the oil market remained cautiously optimistic, with traders pushing Brent crude oil futures for July close to US$70 per barrel. Bloomberg reported Brent crude oil (ICE) was trading at US$69.74, up US$0.84 or 1.25% for July 2021 contracts as of EDT 5:53 AM.
Rystad Energy reported that oil prices are increasing this week as a result of market expectations that oil demand is about to rise globally. Forecasts for a dip in US crude stocks and a weaker dollar are also helping prices to grow.
“After last week’s cautious approach, the oil market this week is getting increasingly optimistic that an oil demand uptick is getting closer in Europe and the US, where Covid-19 restrictions are in the process, or just about to be lifted, and as gasoline consumption is on the rise,” said Rystad Energy oil markets analyst Louise Dickson.
“The pandemic might be hitting India hard, but in other parts of the world vaccination campaigns are progressing and should allow key economies to increasingly open up again, for both more business and travel,” she added.
Ms Dickson has a bullish outlook on oil prices and demand, which she expects to continue to grow in the northern hemisphere summer. “Demand is forecast to rise by several million barrels per day from the summer onwards, making up for any losses from India and supply increases by OPEC+.”
Valaris emerges from bankruptcy
In a positive sign, Valaris, one of the world’s largest offshore drillers, reported several long-term contracts for its global fleet in the North Sea, southeast Asia, Australia, Brazil and the US Gulf of Mexico. The Big Board-listed driller and its subsidiaries completed their financial restructuring in late April, emerging from Chapter 11 bankruptcy protection. The restructuring eliminated US$7.1Bn of debt and secured a US$520M capital injection by issuing US$550M of new secured notes maturing in 2028.
ConocoPhillips, DNO, Equinor, Harbour Energy, Shell and Spirit Energy all either extended or awarded new contracts for Valaris jack-up rigs for the North Sea. Harbour Energy chartered Valaris JU-121 (ex Ensco 121) for two years, from July 2021 to July 2023 and extended Valaris JU-120 (ex Ensco 120) for another year, from July 2022 to July 2023. Valaris JU-247 (ex Gorilla V) will drill for DNO in the North Sea for 400 days between May 2021 and June 2022.
Valaris continued to rationalise its fleet, selling and retiring three drill ships, five semi-submersibles and six jack-ups.
In the Americas, Maersk Drilling was awarded a contract valued at US$34M with Karoon Energy Ltd for semi-submersible rig Maersk Developer. Notably, this is the first time one of the Danish driller’s semi-submersibles will operate offshore Brazil. The rig will perform well intervention on four wells at the Baúna field offshore Brazil starting in H1 2022, with a firm duration of 110 days. The contract contains options to add up to 150 days of drilling work at the Patola and Neon fields.
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