Valaris’ new rig deals bring total backlog of $275 million

Offshore drilling contractor Valaris has been awarded new contracts for a drillship and three jack-up rigs and contract extensions for three more rigs, subsequent to issuing its fleet status report in October 2022. These new deals and extensions have an associated contract backlog of approximately $275 million.

Valaris disclosed on Friday that this contract backlog excludes lump sum payments such as mobilisation fees and capital reimbursements.

Following its fleet status report from October 2022, the rig owner was awarded a four-well contract offshore Egypt by BP in November 2022 for the drillship Valaris DS-12. This deal is expected to start late in the third quarter or early in the fourth quarter of 2023. It has an estimated duration of 320 days while the estimated total contract value, inclusive of a mobilisation fee, is $136 million.

Previously, the 2013-built rig worked for BP in Angola from September 2021 to March 2022. The rig also secured another contract with the oil major for operations offshore Senegal and Mauritania, with an estimated duration of 285 days, in July 2021. The deal started in April 2022 and is expected to end in December 2022, as outlined in Valaris’ fleet status report.

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Moreover, the offshore drilling contractor secured a 90-day contract with Kistos in the Dutch North Sea for the Valaris 123 heavy-duty harsh environment jack-up rig. This deal started in November 2022 and the rig is expected to utilise its selective catalytic reduction (SCR) system during this contract to significantly reduce NOemissions from the rig. The jack-up rig’s previous contract was with Capricorn Energy in the UK and it ran from June until September 2022.

Additionally, Valaris secured a 195-day contract with ONE-Dyas in the Dutch North Sea for the Valaris 123 rig, which is expected to begin in the first quarter of 2023 in direct continuation of the rig’s current contract.

Furthermore, the rig owner won a 210-day contract with Shell in the UK North Sea for the Valaris 121 heavy-duty harsh environment jack-up rig. The contract will kick off early in the fourth quarter of 2023. This deal has an expected total value of over $25 million and contains four priced options. The 2013-built rig worked for Harbour Energy from July 2021 until November 2022 in the UK.

Valaris has also secured a 180-day contract with Perenco in the UK North Sea for the Valaris 247 heavy-duty ultra-harsh environment jack-up rig. This contract is scheduled to start in the first quarter of 2023 and has one 60-day option. The rig has been working with DNO in the UK North Sea since May 2021 and is slated to bring this assignment to an end in December 2022.

Valaris’ new rig deals to bring total backlog of $275 million
Valaris 247 jack-up rig; Source: Valaris

The rig owner underlined that a 90-day option was exercised by Cantium in the U.S. Gulf of Mexico for the Valaris 144 standard-duty modern jack-up rig. The option period is expected to begin in March 2023 in direct continuation of the existing contract, which started in December 2022. The operating day rate for the option period is $85,000. Cantium has one more extension option with an estimated duration of 90 days, which it can use to extend the rig’s contract.

In addition, Valaris secured contract extensions with Saudi Aramco for two jack-up rigs and intends to bareboat the charters of these rigs to ARO Drilling, a 50/50 joint venture between Saudi Aramco and Valaris. The expected revenue from such bareboat charters is included in the $275 million additional backlog.

Based on Valaris’ statement, the Saudi giant exercised a three-year contract extension for the Valaris 147 standard-duty modern jack-up rig for operations offshore Saudi Arabia. This extension is expected to start in December 2022, in direct continuation of the rig’s existing contract.

The offshore drilling contractor further outlined that a three-year contract extension was also secured for the Valaris 148 standard-duty modern jack-up rig, enabling it to continue working offshore Saudi Arabia. According to Valaris, the extension period is slated to begin in February 2023 in direct continuation of the rig’s existing contract.

Regarding Valaris’ other recent activities in connection with ARO, it is worth noting that the firm expressed its excitement a few months ago over growth prospects arising out of a 20-rig newbuild programme, for which ARO Drilling was pursuing financing options.

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When it comes to recent deals secured with ARO Drilling, it is worth noting that Valaris announced a three-year bareboat charter agreement in July 2022 for the Valaris 141 rig.

This latest batch of contracts for Valaris’ rigs comes shortly after the rig owner added $95 million to its contract backlog following new contract extensions for a drillship and four jack-up rigs.

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