Valaris DS-9 drillship; Source: Valaris

New rig deals lift Valaris’ contract backlog to $4 billion

Offshore drilling contractor Valaris has expanded its contract backlog, thanks to a series of new contract awards and extensions in Angola, Brazil, the UK sector of the North Sea, and the U.S. Gulf of Mexico with ExxonMobil, Equinor, TotalEnergies, BP, and an undisclosed operator.

Valaris DS-9 drillship; Source: Valaris

Valaris’ fleet status report from Monday, May 1, 2024, spotlights more work that has been secured for its floater and jack-up fleet, which was obtained after its previous fleet status report from February 2024, when the firm disclosed new contracts and extensions with an associated contract backlog of about $1.2 billion, which raised the company’s total contract backlog to $3.9 billion.

The latest batch of contracts and extensions, with an associated contract backlog of approximately $480 million, excluding lump sum payments such as mobilization fees and capital reimbursements, enabled the offshore drilling player to boost its contract backlog to around $4 billion.

Two floaters staying longer in Angola and Brazil

ExxonMobil has exercised a six-month priced option for the Valaris DS-9 drillship in Angola, which is slated to begin in January 2025 in direct continuation of the existing firm program. However, two more six-month options remain on the table. The 2015-built Valaris DS-9 drillship is of Samsung 78k design and can accommodate 200 people. The rig is capable of operating in water depths of 12,000 ft and its maximum drilling depth is 40,000 ft.

Valaris has also secured a 60-day priced option with Equinor for the Valaris DS-17 drillship offshore Brazil. This will start in May 2025, in direct continuation of the existing firm contract. The operating day rate for the priced option period is approximately $497,000, including MPD and additional services. The Valaris DS-17 drillship is of GustoMSC P10000 design. Constructed at Hyundai Heavy Industries, the rig can accommodate 210 people.

One jack-up moving to Angola while another stays in UK

The offshore drilling giant has won a 13-well contract offshore Angola for the Valaris 144 jack-up rig with an undisclosed operator. The new deal, anticipated to commence in the second quarter of 2025, has an estimated duration of between 730 and 770 days. The total contract value is calculated to be between $149 million and $156 million, including a mobilization fee from the U.S. Gulf of Mexico, where it worked for Talos.

Valaris expects about 140 days out of service for contract preparations and mobilization across 4Q 2024 and 1Q  2025 for the 2010-built LT Super 116-E jack-up rig. The rig can accommodate 120 people and comes with a maximum drilling depth of 35,000 ft.  

TotalEnergies has decided to make use of a one-well priced option in the UK North Sea for the Valaris Stavanger heavy-duty harsh environment jack-up rig. With an estimated duration of 30 days, the well will be added to the existing firm program, increasing the total contract value by approximately $4 million.

The total contract value is around $52 million, including minor rig modifications. There are also two priced options with an estimated duration of 270 days each. 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.

More time in Gulf of Mexico for two managed rigs

BP handed out three-year contract extensions in the U.S. Gulf of Mexico for the Valaris-managed Mad Dog deepwater spar drilling rig and Thunder Horse deepwater semi-submersible, effective January 27, 2024.

These three-year extension periods have a combined estimated total contract value of approximately $259 million. While the total contract value is around $106 million for the first rig, the second rig’s total contract value is about $153 million.

Two rig suspensions

ARO Drilling, a 50/50 joint venture between Valaris and Aramco, received in April 2024 a suspension for one of its 19 contracted rigs working for the Saudi energy heavyweight. In line with this, the contract between ARO and Saudi Aramco for the Valaris 143 jack-up rig is expected to be suspended with an effective date in May 2024.

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Since ARO has provided notice to Saudi Aramco to terminate the contract effective seven days after the contract suspension date, the bareboat charter agreement between Valaris and ARO will also be terminated, and the rig will return to the rig owner.

Moreover, Valaris has confirmed a contract suspension notice for the Valaris 92 rig, estimated to take effect from February 26, 2025, at the end of the operator’s planned work scope. The deal was previously scheduled to end in February 2026, thus, the contract suspension resulted in a reduction to the contract backlog of approximately $35 million.

Multiple offshore drilling players have found themselves on the receiving end of temporary suspensions of operations in the Middle East for one or more jack-ups in their fleets. All suspended rigs are rumored to be working for Aramco. These suspensions are perceived to be the consequence of Saudi Arabia’s efforts to stop increasing its maximum sustainable capacity (MSC) from 12 million barrels per day (MMBD).

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Aside from Valaris, ADES, COSL, Arabian Drilling, Borr Drilling,  and Shelf Drilling were also presented with contract suspensions.