Equinor hires Odfjell’s Deepsea Atlantic rig on $160M contract. Pens agreement for more rigs

Norway’s Odfjell Drilling has signed a firm contract for its Deepsea Atlantic semi-submersible drilling rig with its compatriot oil company Equinor – formerly Statoil.

The contract is for six firm wells with an estimated total duration of 18 months, scheduled to start in early first quarter 2019.

Deepsea Atlantic is a sixth generation deepwater and harsh environment semi-submersible capable of operating at water depths of up to 3,000 meters.

According to Odfjell, the contract contains the option to continue operations for Equinor after the firm period, and such options will be based on market pricing.

The contract value is estimated to $160 million (including some third-party services, e.g. casing running services by Odfjell Well Services) plus potential income from the contract incentive model.

Currently on contract with Equinor and its license partners, Deepsea Atlantic will complete a drilling programme for the Visund and Utgard licenses before it undergoes 10-year-classification.

First, the rig will drill three so-called dual multilateral wells on the Fram field. Each of these wells will have two branches radiating from the main wellbore. Then the rig will proceed to Askeladd to drill three production wells.

The contract with Deepsea Atlantic is a confirmation of the letter of intent announced by Odfjell Drilling in April.

First of many contracts?

What is more, Odfjell has signed an important Master Frame Agreement for all the drilling units in the fleet, which will be the foundation for any future rig requirements which may be agreed between the parties.

Simen Lieungh, CEO Odfjell Drilling: “A long-term co-operation with Equinor is a key cornerstone in Odfjell Drilling’s long-term strategy for growth on the NCS. The Master Frame Agreement formalizes this co-operation and allows the parties to work closer in developing new technologies and new ways of working to achieve even more efficient operations.

“The drilling contract for Deepsea Atlantic is hopefully the first of many opportunities to be realized under the Master Frame Agreement. Odfjell Drilling looks forward to being a key contributor to Equinor’s ambitious targets for drilling on NCS.”

Pål Eitrheim, senior vice president for Procurements said the long-term agreement with standard terms will ensure more efficient procurement processes for future assignments with Odfjell.

The established work programme is scheduled to start in January 2019, Equinor said.

Geir Tungesvik, senior vice president for Drilling & Well: “We are very pleased to secure a rig that has recently completed an efficient campaign for us on the Johan Sverdrup field. We have cooperated with this contractor for a long time with good results. We expect the contract to provide up to 18 months of work before we move to the framework agreement, aiming to find new assignments for the rig on a continuous basis. This is a performance-based contract aiming to promote safe and efficient operations, and it includes an incentive to reduce CO2 emissions.”