Valaris drillships and jack-ups scoop up over $1 billion for new rig deals

Offshore drilling contractor Valaris has tucked $1.14 billion under its belt, thanks to multiple new contracts and extensions for its drillships and jack-up rigs in Brazil, the U.S. Gulf of Mexico, the UK North Sea, Trinidad, and Australia.

Valaris’ wave of new deals and extensions, with an associated contract backlog of approximately $1.14 billion, were awarded after the firm issued its most recent fleet status report on November 1, 2023. This contract backlog excludes lump sum payments such as mobilization fees and capital reimbursements.

Anton Dibowitz, Valaris’ President and Chief Executive Officer, commented: “We are delighted to announce these contract awards and extensions, which add well over $1 billion of contract backlog at attractive economics, providing further evidence of the positive outlook for Valaris. These awards include two multi-year drillship contracts and several jack-up contracts across the North Sea, Trinidad, and Australia.”

Valaris confirmed a 1,064-day contract for its Valaris DS-4 drillship with Petrobras offshore Brazil. Based on the firm contract term, the total contract value is approximately $519 million, inclusive of mobilization fees and additional services. This assignment is anticipated to start late in 4Q 2024, following the completion of the rig’s current contract with the Brazilian giant, which is expected to finish in September 2024. Upon completion of its current contract, the rig is set to be out of service for around 90 days to complete customer-required capital upgrades before the beginning of the new contract.

The new contract with Petrobras will enable the drillship to carry out operations at the Búzios deepwater field. The current development concept for this field encompasses 11 platforms. At the moment, six units are under construction, including the FPSO Almirante Tamandaré, P-78, P-79, P-80, P-82, and P-83. Petrobras is the operator of the field, with an 88.99% stake with CNOOC (7.34%) and CNODC (3.67%) as partners.

The 2010-built Valaris DS-4 drillship is of Samsung 96k design and it was constructed at Samsung Heavy Industries, Geoje, South Korea. With a maximum drilling depth of 40,000 ft, the rig is capable of operating in water depths of 12,000 ft and can accommodate 200 people.

Furthermore, Valaris has secured a two-year contract extension with Anadarko Petroleum Corporation, a wholly owned subsidiary of Occidental (Oxy), in the U.S. Gulf of Mexico for the Valaris DS-16 drillship, commencing in June 2024 in direct continuation of the existing firm program. This extension replaces the one-year priced option which was agreed in July 2021. An additional day rate will be charged when MPD services are provided.

The 2014-built Valaris DS-16 drillship is of GustoMSC P10000 design. Constructed at Hyundai Heavy Industries, the rig is capable of operating in water depths of 12,000 ft and can accommodate 210 people. The drillship’s maximum drilling depth is 40,000 ft.

The rig owner also got its hands on a 60-day priced option offshore Brazil exercised by Equinor for the Valaris DS-17 drillship. This is expected to kick off in March 2025 in direct continuation of the existing firm contract. The operating day rate for the priced option period is about $447,000 including MPD and additional services. The Valaris DS-17 drillship shares the same specifications as the Valaris DS-16 drillship.

“The contract awards for Valaris DS-4 and Valaris DS-16 are great examples of how we are executing on the operating leverage inherent in our business, with day rates transitioning from legacy rates in the low $200,000s to market rates. We are also beginning to see early signs of a recovery in the North Sea jack-up market from 2025 as evidenced by several awards at improving day rates,” added Dibowitz.

The offshore drilling player has won a three-year contract extension with Harbour Energy in the UK North Sea for the Valaris 120 heavy-duty harsh environment jack-up rig. This is anticipated to commence in the third quarter of 2025 in direct continuation of the existing firm program. With a maximum drilling depth of 40,000 ft, the 2013-built Valaris 120 rig, which can accommodate 150 persons, has been working for Harbour Energy since July 2017.

A rig contract with TotalEnergies in the UK North Sea has been secured for the Valaris JU-291 (Stavanger) heavy-duty ultra-harsh environment jack-up rig. The new deal is expected to begin in March 2024 and has an estimated duration of 330 days excluding options. The approximate total contract value is $48 million, including minor rig modifications. The 2011-built JU-291 jack-up rig is of Keppel FELS N-Class design and can accommodate 140 people. The rig’s maximum drilling depth is 35,000 ft.

Moreover, two one-well-priced options were exercised by Shell in the UK North Sea for the Valaris 121 heavy-duty harsh environment jack-up rig. The options are expected to start in the summer of 2024, in direct continuation of the existing firm program, and have an estimated duration of 406 days. The priced option periods have an estimated total contract value of approximately $55 million. Prior to its assignment with Shell, the rig worked for Petrofac. The 2013-built rig also worked for Harbour Energy from July 2021 until November 2022 in the UK. The Valaris 121 jack-up rig can accommodate 150 people. The rig’s maximum drilling depth is 40,000 ft.

Valaris also landed a one-well contract with Ithaca Energy in the UK North Sea for the Valaris 123 heavy-duty harsh environment jack-up rig, which is slated to commence in April 2024 and has an estimated duration of between 45 and 72 days. The minimum total contract value is $6.3 million. The rig also won a six-well contract with TAQA on the Porthos carbon capture and storage (CCS) program in the Dutch North Sea last year. The 2019-built Valaris 123 Keppel FELS, Ultra-Enhanced Super ‘A’ Class jack-up rig comes with a maximum drilling depth of 40,000 ft and can accommodate 145 people.

A one-well contract was handed out by Eni for the Valaris 247 heavy-duty ultra-harsh environment jack-up rig. The contract is scheduled to begin in the third quarter of 2024 in direct continuation of the rig’s current program, with another operator, and has a minimum duration of 45 days. The operating day rate is $180,000. Previously, the rig worked for Perenco in the UK North Sea. The Valaris 247 rig can accommodate 140 people and its maximum drilling depth is 35,000 ft.

Valaris revealed that a one-well option was exercised by an undisclosed operator offshore Trinidad for the Valaris 249 heavy-duty ultra-harsh environment jack-up rig, which will extend the firm term of the contract by a minimum of 35 days. The operating day rate for the option period is $137,500.

A 300-day contract with an undisclosed operator offshore Trinidad was also secured for the Valaris 249 rig. The new deal is anticipated to begin in the fourth quarter of 2024 in direct continuation of a program with another operator. The operating day rate is $162,500. The 2001-built Valaris 249 LeTourneau Technologies Super Gorilla Class jack-up rig can accommodate 120 people and its maximum drilling depth is 35,000 ft.

In conjunction with the contract extension and award for the Valaris 249, a previously disclosed one-well contract with the same operator offshore Australia for the Valaris 107 heavy-duty modern jack-up rig has been terminated. The terminated contract was expected to start in the first quarter of 2024 with an estimated duration of 60 days. The operating day rate for the terminated contract was $120,000.

According to Valaris, the Valaris DS-8 drillship kicked off a three-year contract with Petrobras offshore Brazil on December 31, 2023. The backlog associated with this contract is not included in the incremental backlog that has been awarded since the company’s most recent fleet status report.

The 2015-built Valaris DS-8 drillship, which is of Samsung GF12000 design, was constructed at Samsung Heavy Industries, Geoje in South Korea. The rig is capable of operating in water depths of 12,000 ft and can accommodate 200 people. The drillship’s maximum drilling depth is 40,000 ft.

Recently, the offshore drilling player exercised its options and took delivery of two newbuild drillships, Valaris DS-13 and DS-14, for an aggregate purchase price of approximately $337 million. The rigs are being mobilized from South Korea to Las Palmas, Spain, where they will be stacked until they are contracted for work.

Valaris’ fleet status report from November 2023 points out that the Valaris DS-17 drillship has been working on a day rate of $447,000 since September 2023. As a result, this was the company’s best-paid rig in 2H 2023 based on the available day rate information.

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