Suspension of gigs for four jack-up rigs deals a blow but Shelf Drilling’s fleet outlook still ‘optimistic’

Offshore drilling contractor Shelf Drilling has acknowledged the issues arising from a suspension of operations for four jack-up rigs in the Middle East. As the rig owner is confident in its ability to overcome these stumbling blocks, its outlook regarding future opportunities for its fleet remains positive.  

Harvey H. Ward jack-up rig is currently working in Middle East for Aramco (for illustration purposes); Source: Shelf Drilling

A notice of suspension of operations for four jack-up rigs, which Shelf Drilling has received from an undisclosed operator in the Middle East, does not reveal the names of the affected rigs. As a result, the drilling player is currently engaged in talks with its customer to determine which rigs will be suspended and the exact timing of the suspensions.

Commenting on the suspension, David Mullen, Shelf Drilling’s CEO, highlighted: “We are disappointed with the decision to suspend four of our rigs, particularly in light of the outstanding operating performance of our rigs and teams over many years in the Middle East.”

Based on Shelf Drilling’s interpretation of the suspension, the rig owner will have the right to actively market the rigs to other customers and opportunities during the suspension period and terminate the applicable contracts.

The offshore drilling player anticipates that these suspensions will impact the financial guidance given in its 4Q 2023 reports, thus, once precise details on the rigs and timing are known, the firm intends to assess the impact and provide an update to the guidance as part of its 1Q 2024 reporting.

“This recent development will create near-term challenges, but we remain optimistic on the long-term outlook for the business. We have a leading position in multiple regions and see opportunities across our geographic footprint for our fleet of rigs,” emphasized Mullen.

Recently, Shelf Drilling secured a contract extension for a jack-up rig working on an assignment in the Gulf of Suez off the coast of Egypt with Gemsa Petroleum Company (Gempetco).