Odfjell Drilling strengthens ties with Equinor and confirms two rig deals

Norwegian offshore drilling contractor Odfjell Drilling has inked contracts related to two letters of intent (LOIs), which were received earlier this year for one of its semi-submersible rigs to carry out drilling activities in the North Sea. In addition, the rig owner also entered into a strategic collaboration agreement with Equinor.

This agreement is expected to provide the framework for a joint effort and longer-term collaboration with a focus on safety, drilling efficiency, and lower emissions. According to Odfjell Drilling, it has also signed contracts related to the two letters of intent from March 2023 for the Deepsea Atlantic semi-submersible rig with Equinor to conduct operations in the North Sea region.

These contracts have a combined firm duration of 23 months and a value of approximately $290 million, excluding integrated services, upgrades/modifications or mobilisation fees. The contracts also include provisions for performance bonuses and fuel incentives.

Aside from the firm contract periods, there are four priced one-well options as well as three further optional periods of approximately one year each, with the rates for each period to be mutually agreed prior to exercising the options.

Furthermore, the work will start immediately following the completion of the special periodic survey for the Deepsea Atlantic rig, which is currently planned for the first half of 2024. Thanks to these deals, the rig is now signed up for firm contracts until mid-2026, with options that could extend the rig’s assignment to 2029.

Currently, the rig is working for Equinor thanks to a letter of intent, which was awarded in July 2022 for the drilling of 12 wells, as part of Phase 2 of the Johan Sverdrup field development in Norway. In November 2022, the Norwegian state-owned oil and gas player extended the rig’s stay offshore Norway until the first quarter of 2024 with five additional wells on the Johan Sverdrup Phase 2 development.

Kjetil Gjersdal, Chief Executive Officer of Odfjell Drilling, commented: “We are pleased to confirm that the Deepsea Atlantic will continue to work with Equinor under the new contract which could see the rig in continuous operation until 2029, delivering strong, predictable cash generation from the unit.

“Having worked with Equinor on many project developments through the years, we are pleased to have signed a strategic collaboration agreement to further develop our combined capabilities to deliver safe and efficient operations. Continuous development of our workflows and technologies is a key focus for
Odfjell Drilling and we look forward to seeing the results of this initiative.”

The 2009-built Deepsea Atlantic is a sixth-generation deepwater and harsh environment semi-submersible, dual derrick, dynamic-positioned rig of enhanced GVA 7500 design.