Offshore drilling contractor Valaris has won new contracts and extensions for its rig fleet with jack-up rigs taking the highest portion of the latest batch of deals.
As the offshore drilling market emerged from the slowdown imposed by the COVID-19 pandemic and the global energy crisis took the world by storm, the demand for rigs surged as countries and companies took measures to search for more hydrocarbons in a bid to secure and strengthen their energy security.
As a result, offshore drilling contractors reaped the benefits from the rising demand and higher day rates. However, there is some deviation in the latest contract awards for the Valaris fleet and those recently announced by its rivalTransocean.This is illustrated by the type of rigs that secured new jobs, as Transocean landed multiple new semi-submersible deals while Valaris disclosed mostly new jack-up deals.
Within itsfleet status reportreleased on Friday, Valaris did not disclose the day rates for many of its rigs while Transocean revealed that the new contracts came with higher day rates.
Furthermore, Valaris confirmed afour-well contractwith BP offshore Egypt for the Valaris DS-12 drillship. This deal was secured after Valaris released itsprevious fleet status reportfrom October 2022. According to the rig owner, the contract is scheduled to start late in the third quarter or early in the fourth quarter of 2023. The estimated duration of this deal is 320 days while the estimated total contract value, inclusive of a mobilisation fee, is $136 million.
The 2013-built rig has a history of working for BP. Previously, the rig got an assignment in Angola from this oil major and carried it out from September 2021 to March 2022. The drillship inked another contract with the UK-headquartered energy giant foroperations offshore Senegal and Mauritania in July 2021. The dealstarted in April2022 and is expected to end in February 2023, as outlined in Valaris’fleet status report.
Another rig which got more work added to its backlog is the Valaris DS-15 drillship thanks to an option exercised by TotalEnergies in Brazil. Following the exercise of this option, the rig is expected to be under contract through December 2023. The French energy giant has one more priced option left with an estimated duration of 100 days. This drillship has been working for TotalEnergies since June 2021 and the contract includes MPD services.
Moreover, Valaris highlights that Harbour Energy exercised two one-year options in the UK North Sea for the Valaris 120 heavy-duty harsh environment jack-up rig. Based on the firm’s data, the first option period is expected to start in July 2023 in direct continuation of the existing contract. This 2013-built rig has been working for Harbour Energy since July 2017.
Furthermore, the rig owner won a one-well contract with Petrofac in the UK North Sea for the Valaris 121 heavy-duty harsh environment jack-up rig. The contract is slated to begin early in the third quarter of 2023 and has an estimated duration of 70-100 days. This deal is expected to end in September 2023.
Afterwards, the rig is due to embark in October 2023 on a 210-day contract with Shell in the UK North Sea. This deal has an expected total value of over $25 million and contains four priced options. The 2013-built rig worked for Harbour Energy from July 2021 until November 2022 in the UK.
Valaris also secured a 90-day contract with Kistos in the Dutch North Sea for theValaris 123heavy-duty harsh environment jack-up rig, which started in November 2022. The rig will use its selective catalytic reduction (SCR) system during this contract to significantly reduce NOxemissions. The jack-up rig’s previous contract was with Capricorn Energy in the UK and it ran from June until September 2022.
In addition, Valaris won a 195-day contract with ONE-Dyas in the Dutch North Sea for the Valaris 123 rig, which is expected to begin in the first quarter of 2023 in direct continuation of the rig’s current contract. The rig owner says that the selective catalytic reduction system is expected to be utilised during the contract to significantly reduce NOx emissions from the rig.
As explained by the offshore drilling contractor, a 180-day contract was inked with Perenco in the UK North Sea for theValaris 247heavy-duty ultra-harsh environment jack-up rig. This contract is scheduled to start in the first quarter of 2023 and has one 60-day option. The rig has been working with DNO in the UK North Sea since May 2021 and is slated to bring this assignment to an end in January 2023.
The rig owner further reported that a 90-day option was exercised by Cantium in the U.S. Gulf of Mexico for theValaris 144 standard-duty modern jack-up rig. The option period is expected to begin in March 2023 in direct continuation of the existing contract, which started in December 2022. The operating day rate for the option period is $85,000. Cantium has one more extension option with an estimated duration of 90 days, which it can use to extend the rig’s contract.
Additionally, a one-well option with an estimated duration of 30 days was exercised by Talos in the U.S. Gulf of Mexico for this jack-up rig in direct continuation of the existing programme, which is expected to start in July 2023. The operating day rate is $86,900.
According to Valaris, North Sea Natural Resources hired the Valaris Norway heavy-duty ultra-harsh environment jack-up rig for a one-well contract in the UK North Sea. The operating day rate is $105,000. Previously, the 2011-built rig carried out operations for BP in the UK from May 2022 until November 2022. Currently, this rig is working for Centrica and it is expected to finish this assignment in April 2023.
Meanwhile, Valaris was awarded contract extensions by Saudi Aramco for two jack-up rigs and intends to bareboat the charters of these rigs to ARO Drilling, a 50/50 joint venture between Saudi Aramco and Valaris.
The offshore drilling contractor underlines that the Saudi giant exercised a three-year contract extension for theValaris 147standard-duty modern jack-up rig for operations offshore Saudi Arabia. The extension started in December 2022, in direct continuation of the rig’s existing contract, which started in September 2019. This deal is currently scheduled to end in December 2025.
Valaris also secured a three-year contract extension for theValaris 148standard-duty modern jack-up rig for work offshore Saudi Arabia. This extension period is expected to begin in February 2023 in direct continuation of the rig’s existing contract, which started in November 2019. Currently, this contract is expected to be finished in February 2026.
Valaris currently has three drillships stacked in Spain. These are the 2013-built Valaris DS-11 of the DSME 12000 design, the 2015-built Valaris DS-8 of the Samsung GF12000 design, and the 2013-built Valaris DS-7 of the Samsung 96K design.
One heavy-duty harsh environment jack-up rig – the 2002-built Valaris 102 of the KFELS MOD V-A design – is stacked in the U.S. Gulf of Mexico along with one standard-duty modern jack-up rig – the 1999-built Valaris 75 of the LT Super 116-C design.
Aside from these two, three heavy-duty modern jack-up rigs – the 2003-built Valaris 111 of the KFELS MOD V-B design, the 2008-built Valaris 109 of the KFELS MOD V-Super B design, and the 2002-built Valaris 104 of the KFELS MOD V-B design – are stacked in Croatia, Namibia and the UAE, respectively.
The rig owner also has two stacked semi-submersible rigs in the U.S. Gulf of Mexico: the 2012-built Valaris DPS-6 of the ENSCO 8500 Series design and the 2010-built Valaris DPS-3 rig.
Valaris further underscores that it has the option to purchase two drillships – Valaris DS-13 and Valaris DS-14 – by year-end 2023. Back in March 2021, Valaris announced that it had reached an agreement with Daewoo Shipbuilding & Marine Engineering to amend its two newbuild drillship contracts to delay the delivery of the rigs.
Both of these drillships are of the DSME 12000 design. The final payments for theValaris DS-13andValaris DS-14are estimated to be approximately $119 million and $218 million, respectively, assuming a 31 December 2023 delivery.
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