Valaris expects Australian contract suspension to have no impact on earnings

Offshore drilling contractor Valaris has revealed that some more work has been awarded to its rigs but another contract has been suspended due to an issue with a project the rig was supposed to be working on.

As detailed in Valaris’ quarterly fleet status report on Monday, the heavy-duty harsh environment jack-up Valaris 123 has secured a 90-day contract with an undisclosed operator in the North Sea. The contract is expected to begin in November 2022 and run until February 2023.

The jack-up rig’s previous contract was with Capricorn Energy in the UK and it ran from June until September 2022.

Furthermore, BP has exercised a 14-day option for the heavy-duty ultra-harsh environment jack-up Valaris Norway. The option will be in direct continuation of the existing firm program. The rig has been working for BP in the UK since May 2022. It is expected to start a contract with Centrica in November 2022.

In September 2022, the Australian Federal Court set aside an environmental plan covering the drilling and completion activities related to Santos’ Barossa gas project.

As a result of the decision, Santos suspended drilling activities being performed by Valaris MS-1 semi-submersible and the rig was moved to a standby location.

Valaris does not expect a material impact on revenues and earnings during the contract suspension period, the duration of which is currently unknown. Santos’ hearing to appeal the court’s decision is scheduled to occur in November 2022.

The rig started its contract with Santos in July 2022 and it was expected to complete it in October 2023. ]The rig is then expected to work for an undisclosed operator, also in Australia, until August 2024.