Ocean GreatWhite rig - Diamond Offshore

New gigs for Diamond rigs in North Sea, Gulf of Mexico, and Australia

Offshore drilling contractor Diamond Offshore has secured new work for its rigs in the North Sea, Australia, and the Gulf of Mexico. Due to one of these contracts, a previously stacked rig is coming back to operational mode.

Ocean GreatWhite; Source: Kishorn Port

In its 2Q 2022 report on Wednesday, Diamond Offshore announced contract awards for the harsh environment semi-submersible Ocean GreatWhite in the UK North Sea, the semi-submersible Ocean Apex in Australia, and two 7th generation drillships – the Ocean BlackHornet and a Diamond-managed rig – in the U.S. Gulf of Mexico.

These new contracts added approximately $610 million of backlog for the company and they are in addition to the $995 million backlog as of 1 July 2022.

The Ocean GreatWhite was awarded five wells in the North Sea with an unnamed client. The contract has an estimated duration of 300 days, starting in the first quarter of 2023. The total contract value of the committed scope is approximately $80 million. The contract also includes priced options for up to eight additional wells.

Back in March 2022, when Diamond Offshore’s last fleet status report was published, the Ocean GreatWhite was reported as stacked in the Canary Islands.

Bernie Wolford, Jr., President and Chief Executive Officer, commented, “With the rig now contracted, we will have three assets working in the UK sector of the North Sea, allowing us to better serve our customer base while growing our presence in an established market.”

The other two rigs in the UK are the 1983-built Ocean Patriot and the 2007-built Ocean Endeavor, contracted by Apache and Shell, respectively. Both rigs have recently completed their shipyard stays.

Furthermore, the Ocean Apex rig has been awarded three new contracts for work on the Northwest Shelf of Australia. The first new award begins in the second quarter of 2023, with an estimated duration of 75 days. The second award is also for an estimated duration of 75 days, starting in direct continuation of the previous award. The third award has an estimated duration of 150 days with a start date in 2024. The combined awards add approximately $90 million of backlog to the Ocean Apex.

Following a return to operations in May 2022, the rig completed an exploration well in Australian waters for SapuraOMV in June but found no commercial hydrocarbons. Since then, the 2014-built rig has been working for Woodside and will be completing this contract in 1Q 2023.

“A potential fourth new contract currently under negotiation would fill out the remaining availability in 2023, and combined, keep the rig fully contracted until late 2024,” Wolford added.

Furthermore, the Ocean BlackHornet drillship has secured a two-year extension with its current client, BP, in the U.S. Gulf of Mexico in direct continuation of the rig’s current term. The two-year extension will keep the rig working until early 2025. The total contract value for the extension is approximately $290 million.

During the second quarter, the 2008-built Ocean Monarch semi-sub completed its contract and was cold stacked. The rig worked for Posco Daewoo in Myanmar.

Finally, a Diamond-managed rig has been extended by its current client for work in the U.S. Gulf of Mexico for an additional one-year term in direct continuation of the rig’s current term. The contract value for this extension is approximately $150 million.

Diamond manages two drillships, Auriga and Vela, on behalf of Aquadrill Offshore, formerly known as Seadrill Partners.

The Auriga has been working for BP in the Gulf of Mexico since 1Q 2022 with the firm period end date set for January 2023 after which an option is available from February 2023 until January 2024, according to Aquadrill’s fleet status report from July 2022.

Vela, on the other hand, is scheduled to start working for BHP Petroleum, now Woodside, in the Gulf of Mexico starting in September 2022. This contract was announced in March 2022.

Diamond Offshore’s contract drilling revenue for the second quarter totalled $177 million compared to $150 million in the first quarter of 2022 primarily driven by the Ocean Apex returning to active service, the completion of shipyard stays for the two UK rigs, and a full quarter of drilling operations for the Auriga.

Commenting on the outlook for the offshore drilling market, Wolford concluded, “The market continues to improve, as reflected by our recent fixtures for both semi-submersibles and drillships across multiple regions. Visible demand, energy security concerns, and tight supply could lead to sustainable demand for our drilling services for years to come.”