Equinor takes over TotalEnergies’ slot for Valaris drillship contract

Offshore drilling contractor Valaris has secured new contracts and extensions, with an associated contract backlog of $181 million. A notable update from the rig owner relates to a drillship contract in the Gulf of Mexico, which has now been novated from TotalEnergies to Equinor.

Valaris informed on Wednesday that it has secured two-year contract extensions with BP in the U.S. Gulf of Mexico for managed rigs Mad Dog and Thunder Horse. The contract extensions were effective on 27 January 2022 as the expiration date was set for February 2022.

Furthermore, a one-well contract extension has been awarded by TotalEnergies offshore Brazil for drillship Valaris DS-15. The option well is in direct continuation of the current firm programme – scheduled to end in August 2022 – and has an estimated duration of 100 days.

In addition, ARO Drilling has been awarded a three-year contract with Saudi Aramco for standard duty modern jack-up Valaris 140. This contract relates to the previously disclosed three-year bareboat charter agreement between Valaris and ARO Drilling.

As explained by Valaris, the contract backlog associated with the bareboat charter agreement is included in the total contract backlog of $181 million awarded subsequent to issuing the company’s most recent fleet status report on 21 February 2022.

In addition, the previously disclosed contract awarded to Valaris DS-11 for an eight-well job for a deepwater project in the U.S. Gulf of Mexico has been novated from TotalEnergies to Equinor. No material changes to the contract resulted from the novation, including with respect to the termination provisions in the event the project does not receive a final investment decision (FID).

As a reminder, Valaris said last February that its customer, TotalEnergies, had decided not to sanction and therefore withdraw from the project.

This was related to TotalEnergies’ exit from the North Platte deepwater project in the U.S. Gulf of Mexico where Norway’s Equinor is a partner. Before announcing its withdrawal in February, TotalEnergies held a 60 per cent operated interest in the project alongside its joint-interest owner Equinor with a 40 per cent interest.

TotalEnergies’ contract with Valaris for this project contained early termination provisions should the project not receive a final investment decision. Following the discussions between Valaris, TotalEnergies, and Equinor, it has now been decided that Equinor will replace TotalEnergies as the client for the project.

The North Platte field straddles four blocks of the Garden Banks area, 275 kilometres off the coast of Louisiana in approximately 1,300 meters of water. The reservoir is of high quality, both in porosity and permeability, with thickness in places exceeding 1,200 meters. The discovery was made in 2012.

Finally, the Valaris 67 jack-up rig, which has been stacked in Indonesia, has now been sold and retired from the offshore drilling fleet.