Fresh contracts pour in for offshore rig owners as market continues to recover

With oil prices having a direct impact on the state of the offshore drilling market, making every oil price crisis also a crisis for owners of offshore drilling rigs, the offshore drilling market has seen some tough times over the last years marked by several crashes.

Now, with the recovery of oil and gas prices, offshore rig owners are reaping the benefits as more and more E&P players are moving forward with their exploration plans and hiring more rigs as a result. Transocean and Valaris, the two of the biggest offshore rig owners, last week revealed their latest contract awards, which will see a number of rigs getting back to work.

According to Transocean’s latest fleet status report, the Deepwater Conqueror drillship has been awarded a three-well contract by Chevron for operations in the U.S. Gulf of Mexico. The contract is scheduled to start in January 2022 and end in October of the same year with a day rate of $335,000.

The drillship is already under contract with Chevron and has been since December 2016. This deal is set to expire in December this year after which the new three-well contract will continue. The current day rate is higher compared to the latest award, amounting to $579,000.

Furthermore, the drillship Deepwater Asgard has secured a one-well contract from an undisclosed operator for operations in the U.S. Gulf of Mexico. The contract starts in January 2022 and ends in April 2022 with a day rate of $295,000. The offshore rig’s previous contract, where the day rate was $280,000, expired in October 2021.

Also in the U.S. Gulf of Mexico, BHP has awarded a one-well contract extension to the Deepwater Invictus drillship, starting in March and ending in May 2022 with a day rate of $295,000.

In addition, BHP has exercised a one-well option offshore Trinidad for the Development Driller III semi-submersible with a day rate of $220,000. The contract is now set to expire in November 2021.

Finally, South Korea’s POSCO exercised a one-well option for the Deepwater Nautilus semi-submersible rig, starting in November 2021 and expiring in December 2021. The day rate is set at $135,000.

In addition to recent contract awards for three of its drillships from Shell, Petrobras, and ExxonMobil, Valaris has secured further contracts for its rigs, which were revealed in the rig owner’s latest fleet status report.

The semi-submersible rig Valaris MS-1 has been awarded a four-well P&A contract with Eni for operations offshore Australia. The contract is expected to start in November 2021 with an estimated duration of 90 days and with expected completion by February 2022. The rig will then continue working for Santos, also offshore Australia, until August 2023.

Valaris has also secured fresh deals for three of its jack-up rigs. First up, the Valaris 107 has been awarded a two-well contract with Vermilion Oil & Gas offshore Australia. The contract is expected to start in April 2022 with an estimated duration of 60 days.

Next up is the Valaris 144 jack-up rig, which has secured a 30-day contract with an undisclosed operator in the U.S. Gulf of Mexico. The contract is expected to start late in the fourth quarter of 2021 or early in the first quarter of 2022.

Moving on, the Valaris Norway jack-up has won a contract for accommodation work with Harbour Energy in the UK North Sea. The contract is expected to begin in November 2021 and end in January 2022. The rig’s previous contract was with ConocoPhillips offshore Norway and it expired in August 2021.

The rig owner is also getting rid of its older rigs, with three jack-ups now sold. The 1980-built Valaris 22 and the 1987-built Valaris 100 have been sold and retired from the offshore drilling fleet while the 2008-built jack-up Valaris 142 has been sold to an operator and can only be utilized on specific assets.