Valaris hauls in sixteen new contracts and extensions

The now restructured and debt-relieved offshore drilling contractor Valaris has been awarded sixteen new contracts and extensions with more than a dozen different oil and gas companies.

In its latest fleet status report, the offshore driller said that its 2014-built drillship Valaris DS-15 (Renaissance) was awarded a contract with Total offshore Brazil with an expected duration of 400 days with a start date in June 2021. The deal is supposed to end in August next year.

Several other drillships snatched deals with supermajors. The Valaris DS-18 (Relentless) was hired by Chevron to work in the Gulf of Mexico for approximately 320 days – from March 2021 to January 2022.

The Valaris DS-12 and DS-10 were given extensions by BP off Angola and Shell offshore Nigeria, respectively. The deal for the former was extended by 100 days and will last from September 2021 to December 2021 while the latter will stay with Shell for another 90 days, from March 2021 to June 2021.

Australian firm Santos was one of two firms to go for a Valaris’ semi-sub drilling rig. The MS-1 won a contract for work offshore Australia with an expected duration of 450 days from May 2022 to July 2023 while Eni gave an extension to the 8505 for Mexico work. The extension will begin in October and end in December.

The company’s largest fleet, the jack-up fleet, which has over 40 rigs has been the most fruitful in contract terms. Harbour Energy, a company formed through the merger of Premier and Chrysaor, gave out two deals for jack-ups. The Valaris JU-121 was given a two-year deal in the North Sea from July 2021 to July 2023 while the existing contract for the JU-120 was extended by one year from July 2022 to July 2023. The rig will also operate in the North Sea.

The Valaris JU-247 and JU-249, or the previously named Gorilla V and VII, were given deals with DNO and OMV, respectively. DNO chose to dish out a deal of 400 days to JU-247 for work in the North Sea. The deal is set to start this month and end in June the following year. The JU-249 will be going to the other side of the world and work offshore New Zealand for the same number of days. It will start work in December 2021 and end in January 2023.

The company won two new fresh deals with Mubadala offshore Thailand and with Spirit Energy offshore Norway. Mubadala awarded the Valaris JU-115 a 240-day deal from February 2021 to September 2021 and Spirit Energy awarded the JU-290 the shortest deal of the bunch for just 30 days from November to December this year.

Apart from the Harbour Energy extension, there were four others. The Valaris JU-67 will stay on with Petramina off Indonesia until June 2021, the JU-291 (Stavanger) will continue working off Norway for Equinor for another 280 days – from January 2021 to October 2021 while Shell will keep the JU-122 in the North Sea for 205 days from July 2021 to February 2022. The final extension was awarded to the JU-292 (Norway) by ConocoPhillips. It will remain off Norway for another 90 days from June 2021 to September 2021.

Worth noting that the company, as of 30 April 2021, has a contract backlog of $1.17 billion. For 2021, the backlog is $656.1 while its backlog for 2022 and 2023 is $417.8 and $97.5, respectively.

It was not all rainbows for the offshore driller as it also got two terminations. The Valaris DS-7 drillship was supposed to drill five-wells offshore Senegal and Mauritania from September 2020 to August 2021 but the termination by BP put that deal to a halt and the rig is now stacked in Spain.

The contract for the Valaris DPS-1 semi-sub with Woodside offshore Australia was scheduled to be completed in early September 2021 but also got terminated. The rig is still available for hire and is in Malaysia.

Some of the rigs were not terminated but rather got modifications to their deals. Such was the case with the JU-117 (Ralph Coffman) which will be on standby rate from January 2021 to September 2021. The rig is under contract with Eni but will begin work after the standby time is over. The work will be done in the U.S. Gulf of Mexico and off Mexico. The deal is expected to last until September 2023.

The Valaris JU-107 deal for operations offshore Australia, previously expected to start in May 2020, is now expected to begin in May 2021. Between May and June 2021, it will work for SapuraOMV and between June and October, it will be working for Jadestone.

The deepwater drilling spar Mad Dog is expected to be on a standby rate from April 2020 to October 2021, before returning to operating day rate until the end of the contract in January 2022. The spar is under contract with BP in the U.S. Gulf of Mexico.

The company also decided to shed some ‘dead weight’ by selling and retiring some of its rigs. The offshore driller sold three drillships, five semi-submersibles, and six jack-ups.

The drillships in question were the Valaris DS-3, DS-5, and DS-6 while the sold and retired semi-subs were the Valaris 5004, 8500, 8501, 8502, and 8504.

Two of the semi-submersibles had quite an unusual but high-profile buyer. Namely, Elon Musk’s SpaceX bought the 8500 and 8501 rigs to convert them into floating launchpads for its Starship rockets.

The remaining sold rigs were the Valaris JU-71, JU-84, JU-87, JU-88, JU-101, and JU-105. After all the sales, the company now has an offshore drilling rig fleet consisting of 11 drillships, 5 semi-submersibles, and 44 jack-ups.

ARO Drilling, a joint venture between oil and gas giant Saudi Aramco and Valaris, also got a good batch of deals for its rigs. The ARO 2001, ARO 2003, ARO 3001, ARO 3002, and ARO 4001 were all awarded five-year contract extensions with Saudi Aramco. They will all operate offshore Saudi Arabia from the first quarter of 2021 until the first quarter of 2026.

The past week has also seen some improvements for the company as it was able to complete its financial restructuring and emerge from Chapter 11 bankruptcy by eliminating $7.1 billion of debt.

Also, recently reported it had booked a $910 million loss in the first quarter of 2021 compared to a net loss of $71 million in the fourth quarter of 2020.

The company’s first-quarter 2021 results included a non-cash asset impairment charge of $757 million related to two floaters.