The Middle East has seen more mobilisation in recent weeks with ADNOC and Saudi Aramco announcing their intent to scale operations over the coming months, and Transocean’s latest fleet report and other rate reports have revealed day rates in excess of US$400,000 for offshore rigs
In week 42 2022, the total number of contracted jack-up rigs stands at a 10-week high of 389 active units, with movement in the Middle East jack-up rig segment particularly notable.
ADNOC Offshore has announced yet another major contract to its subsidiary ADNOC Drilling, with the award of a US$980M contract to hire two jack-ups.
This week’s award brings the total value of awards from ADNOC Offshore to ADNOC Drilling in 2022 to US$5.95Bn. Last week, the company announced US$1.5Bn in contracts to support further offshore drilling.
Saudi oilfield services company Arabian Drilling Company (ADC) is going public. Arabian Drilling operates 45 rigs and the company has an orderbook worth 162Bn riyals (US$43.2Bn).
On 18 October, ADC said it would price its initial public offering at 100 riyals (US$26) a share with the whole offering valued at 2.67Bn riyals ($712M). The final price is at the top end of a price range announced in late September, which will value the company at 8.9Bn riyals (US$2.37Bn) at listing. The company is offering a total tranche of shares worth 30%, which comprises of a primary offering of 10.11% or 9M new shares, and a secondary offering of 19.89% of share capital (some 17.7M existing shares).
ADC, along with Egypt-headquartered Advanced Energy Systems Group (ADES) are each taking two bareboat charters on four KFELS B Class jack-up rigs which will be deployed on bareboat charters in Saudi Arabia later this month. Saudi Aramco is employing all four rigs.
ARABDRILL 110 and ARABDRILL 120 are intended for ADC on bareboat charter contracts for three years with options for a year’s extension, each. ADES’ rigs, ADMARINE 683 and ADMARINE 684, completed modification works earlier this month, and are on a five-year charters. Singapore’s Keppel Offshore & Marine (Keppel O&M) completed the modification works on the rigs, which are expected generate total charter revenue of about S$250M (US$176M) over the three to five-year contracts.
The rigs and their bareboat charter agreements form part of Keppel O&M’s legacy rigs and will be transferred to Asset Co, which is majority-owned by external investors, upon completion of the proposed merger between Keppel O&M and Sembcorp Marine.
ADES has also, along with Bermuda-based rigowner Seadrill Ltd, completed a share purchase agreement for the purchase of the Seadrill-related entities that own and operate seven jack-up rigs in Saudi Arabia. With the deal completed, ADES now owns the rigs and their contracts and employs the crews operating the rigs.
In September, Seadrill announced the agreement to sell AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida and West Leda to ADES Arabia Holding Ltd. The total for the deal with ADES – a leading provider of rigs to Saudi Aramco – was for US$628M in cash.
Another Keppel client, Borr Drilling, has agreed to change the terms for the deliveries of five jack-up rigs. Borr Drilling’s last fleet report indicated Tivar, Vale, Var, Huldra and Heidrun were scheduled to arrive in 2025, but Keppel will accelerate the delivery of three rigs which will now arrive between October 2022 and June 2023.
The three jack-ups will be delivered with full payments on delivery, amounting to at least US$352M in aggregate, out of which at least US$158M will be payable in 2022. The other two rigs will have their scheduled deliveries deferred to 2025 and Borr Drilling will pay holding costs and cost cover in respect of the deferred deliveries.
Borr Drilling will also sell its jack-up Gyme for US$120M to an unrelated third party which went unnamed. Gyme, built in 2018 by Sembcorp Marine subsidiary PPL Shipyard, has not been activated or contracted since its delivery and is currently warm stacked. The transaction is expected to close Q4 2022.
In the US Gulf of Mexico, an undisclosed operator has awarded Transocean’s drillship Deepwater Conqueror a two-year contract at US$440,000 per day. The rig was previously contracted to Chevron. Another Gulf of Mexico rig, Deepwater Asgard, will match that figure after the award of a year-long contract and has clinched another one-well deal from Texan firm Murphy Oil at US$395,000 per day.
Transocean published its quarterly fleet status report last week, posting the impressively high day rates. The company has been bullish on rising rates and expects some rigs to even breach the US$500,000 mark as producers continue to drill for more oil to replace Russian crude.
In Norway, Equinor exercised a one-well option for semi-submersible Transocean Spitsbergen at US$316,000 per day and Wintershall DEA awarded Transocean Norge a 17-well contract in Norway at day rates between US$350,000 and US$430,000, though much of this work is subject to regulatory approval.
The units Transocean Equinox and Transocean Nautilus are now idle, having concluded their contracted terms. In all, Transocean’s total backlog stands at approximately US$7.3Bn as of 13 October.
In Brazil, Petrobras 10000 won a five-year contract at US$399,000 per day escalating annually to US$462,000 per day.
TotalEnergies has awarded semi-submersible Development Driller III a one-well contract at US$345,000 per day. The rig is expected to be used in Block 58 offshore Suriname.
In India, Reliance exercised a one-well option for the drillship Dhirubhai Deepwater KG1 at an improved day rate of US$330,000 per day. The rig’s day rate under the current option, which ends in November, is US$227,000. The new option will run from November until December 2022.
Harbour Energy exercised two 100-day options in the UK at US$175,000 per day for Paul B Loyd Jr. The rig begins its contract with Harbour Energy in December and the options start from June 2023 until September 2023.
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