Rigs report: drillers bullish as day rates and contracted backlogs climb

In its Q2 results, offshore contractor Diamond Drilling reported revenue of US$282M and a backlog that currently stands at US$1.6Bn, boosted by US$229M of new orders in the second quarter. 

Drillship Ocean BlackHawk secured more work and Ocean Patriot bagged a two-well contract, both at higher day rates. Ocean BlackHawk successfully completed its campaign in Senegal in early July and has mobilised to Las Palmas for its upgrades and preparation for its return to the Gulf of Mexico.

Ocean Endeavor has added two more wells to its extended contract, while BP exercised an option for the recently reactivated semi-submersible Ocean GreatWhite.

Diamond Drilling’s day rate averaged US$299,000 in this quarter compared with US$272,000 in Q1, and fleet utilisation stood at 70% at the end of Q2, up from 63% in Q1. Operationally, the company’s rigs continued to perform well, logging revenue efficiency of at least 96% for the fifth consecutive quarter.

Newly merged with Maersk Drilling, Noble Corp has seen the improving ultra-deepwater rig market raise its backlog to US$5Bn as of 2 August. Contract drilling services revenue for Q2 2023 totalled US$606M, up from US$575M in Q1.

Diamond Drilling chief executive Robert W Eifler credited an improving ultra-deepwater rig market, adding the company is “increasingly encouraged by the expanding geographic breadth of ultra-deepwater rig demand worldwide.”

90% of Noble Corp’s fleet of 16 floaters were contracted through Q2 with what Noble termed “strong visibility for future follow-on opportunities,” while utilisation remains tempered slightly by gaps between contracts and planned survey-related downtime. 

Mr Eifler echoed the upbeat views of his competitors, who all expect the tight deepwater market to improve dayrates, “Offshore fundamentals remain exceptionally strong, supporting a steady upward progression in contract status across our fleet. We expect ultra-deepwater rig market tightness to persist and drive further upward pressure on day rates going forward.” 

Day rates for its deepwater rigs in Q2 averaged US$363,167 and US$128,885 for its jack-ups. The floater fleet has added approximately US$750M in total contract backlogs. 

Petrobras awarded Noble Faye Kozack a 2.5-year contract valued at US$500M which is expected to commence Q1 2024. Noble Voyager secured a one-well deal for an exploration well in Mauritania with Shell, keeping the rig engaged until the end of this year. Shell also exercised three options on Noble Viking with a contract value of approximately US$49M and estimated total duration of 111 days. The first of these three option wells is scheduled to commence in December following the rig’s survey, and the rig’s firm backlog is now extended into Q2 2025.

Noble Discoverer was awarded a one-well deal worth US$43M with Petronas in Suriname, expected to commence August 2023, with an estimated duration of 90 days. In Australia, Noble Deliverer received a nine-month extension from Inpex which kicks in July 2024 through April 2025 at a day rate of US$451,500.

However the jack-up fleet was subdued in H1 2023. Only 59% of Noble’s 13 marketed jackups were utilised in Q2, down from 67% in the previous quarter; Noble Tom Prosser, Innovator and Interceptor all logged downturns.

But this has recently begun to pick up, and Noble Drilling anticipates an improving market. The warm stacked Noble Intrepid has recently been awarded a 10-month contract with Harbour Energy in the UK North Sea with a total contract value of US$28.5M while Noble Tom Prosser recently commenced a long-term programme in Malaysia in July.

Brazilian antitrust authorities have approved the subsea joint venture between Aker Solutions, Schlumberger and Subsea 7, clearing the path for the transaction to close in Q4 2023. Readers will remember that the venture was announced last August and will see the companies bring their subsea business together.

With clearance from the authorities in Brazil, all regulatory approvals and clearances required to close the transactions have been obtained, including required unconditional clearances in Angola, Mozambique, Australia, Norway, the UK and the US. Schlumberger will have a 70% stake in the joint venture, with Aker Solutions and Subsea 7 owning 20% and 10%, respectively. 

In the UK, another labour dispute is brewing around pay and work rotas. Trade union Unite the union confirmed that offshore workers employed by Petrofac Facilities Management Ltd have voted for strike action in disputes over jobs, pay and conditions. Around 80 Unite members contracted to work on Ithaca Energy’s FPF1 platform, Captain WPP, Captain floating production, storage and offloading facility, Alba FSU and Alba North installations have backed strike action. 50 Unite members are fighting to secure a higher pay offer from Petrofac. In relation to this, Unite said a 24-hour strike will take place on 21, 23 and 28 August on the Ithaca FPF1 installation. A continuous overtime ban will also come into effect on 21 August. The trade union said it will announce days of industrial action involving around 30 members on the Ithaca Captain and Alba installations later this week.

Personnel involved in industrial action include electrical, production and mechanical technicians in addition to deck crew, scaffolders and crane operators.