Photo: One of Shelf Drilling-owned rigs; Source: Shelf Drilling

Shelf Drilling expects jack-up rig utilisation and pricing to surpass pre-pandemic levels in 2022

UAE-based offshore drilling contractor Shelf Drilling had 28 out of 30 of its rigs contracted at the end of the first quarter of the year. Following the end of the quarter, the company secured more work for its rigs and it expects the global jack-up rig utilisation and pricing to beat pre-pandemic levels this year.

Shelf Drilling published its fleet status report on Thursday, detailing the latest contract awards for its fleet of jack-up rigs. According to the report, the Shelf Drilling Mentor rig has secured a 225-day contract with an undisclosed operator in Nigeria. The contract includes options for additional wells and is expected to begin in June 2022 and end in February 2023. The rig is currently under contract with Mercuria in Congo. This job started in late January 2022.

Furthermore, the Rig 141 secured a six-month firm contract with an additional six-month option period with PetroGulf. The rig is currently working for Gempetco in Egypt under a contract expected to end this month. After that, the rig is scheduled to start its new contract with PetroGulf from June until November 2022.

The Key Singapore rig has also secured an additional six-month firm contract plus option to extend with Cairn India. The rig is currently in Malta/India where it is being prepared for the contract with Cairn, which is expected to start in June 2022. As a result of the latest award, the contract with Cairn will end in May 2023 instead of November 2022.

The Shelf Drilling Scepter rig has been awarded a short-term contract with Cuu Long JOC (CLJOC) in Vietnam, which is expected to start in July and last until September 2022. The rig completed its previous contract with Chevron Thailand in April 2022 and is currently undergoing contract preparation in Singapore.

Finally, the Shelf Drilling Enterprise completed its contract with Chevron Thailand in April 2022. The rig is currently undergoing contract preparation for its three-year contract with PTTEP Thailand which was awarded earlier this year. The contract is expected to begin in July 2022 and end in July 2025.

Shelf Drilling also released its 1Q 2022 results, posting revenues of $156 million, a 14.7 per cent increase compared to 4Q 2021 primarily due to higher effective utilisation. In 1Q 2021, the company’s revenues totalled $129.7 million. The company booked a net loss of $4.6 million in 1Q 2022 compared to a loss of $17.2 million in 4Q 2021.

The rig owner’s contract backlog was $1.7 billion at the end of March 2022 across 28 contracted rigs.

David Mullen, Chief Executive Officer, commented: “Tendering and marketing activity in the jack-up sector continues to improve in all geographies where we operate, and we have seen an acceleration over the past two months.

“As of March 31, 2022, our contract backlog was $1.7 billion with 28 of our 30 rigs under contract, representing a marketed utilisation of 93 per cent. We anticipate that our recent contract awards coupled with other contracts and extensions that are in advanced discussions will drive a further increase in our backlog during the second quarter of 2022.”

Mullen added: “The significant improvement in the commodity price backdrop, combined with our strong customer relationships and proven operating track record will position Shelf Drilling very well. We expect global jack-up utilisation and pricing to surpass pre-pandemic levels during 2022.”