Oil price war and coronavirus bite into Noble’s rig contracts

The oil price war and the coronavirus pandemic are already taking their toll on the oil and gas services market, with offshore drilling contractors among the most affected segments. One of the major drillers, Noble Corporation, has seen its contracts shortened, rigs stacked and put on standby, and day rates slashed.

Rystad Energy, an energy intelligence firm, has recently estimated that drillers will see up to 10% of their contract volumes cancelled in 2020 and 2021, representing a combined loss of revenue of about $3 billion.

Back to Noble Corp., the drilling contractor and ExxonMobil last February executed a unique commercial enabling agreement (CEA) for drilling services in the Guyana-Suriname Basin.

The ultra-deepwater drillships Noble Bob Douglas, Noble Tom Madden, and Noble Don Taylor, which were executing drilling assignments for ExxonMobil offshore Guyana, were included in the framework agreement, and it was also agreed that other drilling rigs might be added to the agreement.

It is worth noting that the contract term awarded under the CEA framework agreement allowed for the repricing of day rates in March and September.

In its fleet status report on Thursday, Noble revealed changes to the status of these drilling rigs.

The Noble Tom Madden drillship is on standby effective 2 April 2020, for a period of up to 90 days. The rig’s day rate has been reduced to 50 per cent of operating day rate through the standby period, which will not count against the contract term.

The rig has received a three-year award under the CEA framework agreement, starting in mid-December 2020 and ending in mid-December 2023.

The Noble Bob Douglas has received a six-month award under the CEA agreement, starting in late March 2021 and ending in late September 2021.

Noble’s previously announced assignment of the Noble Sam Croft rig to the CEA framework agreement has been cancelled and a one-year contract term transferred to the Noble Don Taylor drillship.

The Noble Don Taylor’s contract is starting in mid-November 2020 at a mutually agreed day rate.

The Noble Clyde Boudreaux semi-sub has won a new gig with an undisclosed operator in Vietnam, starting in early June and ending in late July 2020.

The day rate has not been disclosed. The rig is currently under contract with Berlanga in Myanmar, which is set to end in mid-April. The day rate is $135,000.

Noble has cold-stacked two rigs. The Noble Bully II drillship is cold-stacked in Oman and the Noble Paul Romano in the U.S. Gulf of Mexico.

In the jack-up business, the Noble Mick O’Brien has won a contract extension with Qatar Gas. The rig’s contract, which was previously supposed to end in late March, is now set to continue until late August 2020.

Further, in the jack-up business, the Noble Lloyd Noble, which is currently working for Equinor off the UK, is on standby effective 15 March for an estimated period of 30 days. The day rate has been reduced to 97 per cent of operating day rate through the standby period.

The Noble Sam Hartley completed its contract with Total in the UK on 7 April and it has been warm-stacked.

The Noble Sam Turner has also completed its contract with Total and also been warm-stacked. The rig’s contract ended on 25 March 2020.

Noble has been informed by RockRose Energy in the UK that the contract for the Noble Houston Colbert, which was supposed to end in late May, could end as early as mid-April.

The Noble Tom Prosser is expected to be on standby effective mid-April 2020 for a period of up to 365 days. The rig’s day rate has been reduced to $47,000-$50,000 through the standby period. The contract is with ExxonMobil in Australia.

The Noble Hans Deul has been warm-stacked following completion of its contract with Spirit Energy in the UK.

Saudi Aramco has requested a reduction to the operating day rate for four jack-up rigs, the Noble Scott Marks, Noble Roger Lewis, Noble Joe Knight, and Noble Johnny Whitstine. Noble said these requests are under review. The current day rate for the first two rigs is $159,000. The day rate for the other two rigs has not been disclosed.

In addition, Saudi Aramco’s contract for the Noble Joe Beall was completed on 20 February 2020, and the rig will be retired.