Maersk Drilling inks rig renewal deal worth around $1 bln with Aker BP

Danish offshore drilling contractor Maersk Drilling and Norwegian oil and gas company Aker BP have agreed to renew a frame agreement for two jack-up rigs. The estimated value of this deal is around $1 billion and it will enable the two rigs to carry out operations offshore Norway for five more years.

Maersk Drilling and Aker BP have entered into a Heads of Agreement to renew and extend the frame agreement that establishes Maersk Drilling as the jack-up rig drilling partner. Previously, Maersk Drilling, Aker BP and Halliburton entered into a joint jack-up alliance in November 2017 to lower the cost per barrel and increase profitability for the partners. At the time, the alliance was formalised in a five-year agreement with the option to extend for an additional five years.

Jørn Madsen, CEO of Maersk Drilling, remarked: “We are absolutely delighted to re-affirm our commitment to Aker BP for another five years and to secure major scope additions during these five years. Working in such a collaboration has long since proved its worth by setting new standards for what is achievable in offshore drilling, producing remarkable efficiency gains in many stages of drilling campaigns and in this way adding significant value creation for all parties involved.”

This agreement confirms Aker BP’s and Maersk Drilling’s commitment to renew the frame agreement by a five-year period and includes a commitment from Aker BP for the provision of the ultra-harsh environment jack-up rigs Maersk Integrator and Maersk Invincible for activities offshore Norway during this period.

Tommy Sigmundstad, SVP Drilling & Wells in Aker BP, commented: “This commitment by Aker BP to renew the frame agreement with Maersk and a long-term horizon for both the Maersk Invincible and Maersk Integrator reflects the value of our relationship, as we work together with our strategic partners to reduce waste and carbon footprint whilst lowering the cost per barrel. Strategic alliances in addition to the digitalization strategy are key enablers to our ambitious improvement agenda.”

According to the companies’ statements from Saturday, the revised set-up will allow Aker BP to assign the two rigs to multiple operations with multi-purpose use of the rigs during the frame agreement period.

While different rate structures will apply during the period reflecting different operating modes, agreed incentive schemes, and market developments, the five-year commitment for the two rigs is expected to have a combined total contract value of approximately $1 billion.

Aker BP has awarded a conditional letter of award (LOA) under this renewed frame agreement for the provision of Maersk Integrator and Maersk Invincible for different work scopes on campaigns offshore Norway, with varying durations in the period from mid-2023 to end-2027.

Both companies confirmed that the contracts would be delivered under the terms of the renewed frame agreement, entailing the provision of integrated services and performance bonus schemes rewarding operational efficiency and emission reductions.

Aker BP and Maersk Drilling have further committed to a hybrid investment case, under which Maersk Drilling will outfit the ultra-harsh environment jack-up Maersk Invincible with hybrid, low-emission upgrades similar to that previously installed on Maersk Intrepid and Maersk Integrator. The Maersk Invincible rig was delivered in 2016 and is currently operating for Aker BP offshore Norway.

The two companies say that the upgrades combine the use of hybrid power with NOx conversion units, adding energy efficiency software to further monitor and reduce energy consumption and CO₂ emissions. 

Based on Maersk Drilling’s records, during its first month of operations with the equivalent full set of upgrades installed, Maersk Intrepid produced an initial data point of reducing fuel consumption and CO₂ emissions by approximately 25 per cent compared to the baseline average for the rig. In addition, NOx emissions were reduced by approximately 95 per cent.

Maersk Integrator is an ultra-harsh environment CJ70 XLE jack-up rig, designed for year-round operations in the North Sea and featuring hybrid, low-emission upgrades. Delivered in 2015, it is currently warm-stacked in Åmøyfjorden outside Stavanger, Norway after recently completing a drilling campaign for Aker BP.

“It is evident that we are able to raise the performance across the board when we collaborate closely as trusted partners, and by building further on our now well-established groundwork, we will be able to achieve even greater results,” concluded Madsen.

It is worth reminding that Maersk Drilling announced its intention to merge with its rival Noble Corporation last month. However, Standard Drilling, as a shareholder in Noble Corporation, said it would consider voting against the proposed merger.

If the merger goes through, the combined company will be named Noble Corporation and the Maersk Drilling shareholders and Noble shareholders will each own approximately 50 per cent of the outstanding shares of the combined company, which will have a high-end fleet comprising of 20 floaters and 19 jack-up rigs.