Valaris sells jack-up and secures more work for multiple rigs

Valaris sells jack-up and secures more work for multiple rigs ‘across several geographies’

Offshore drilling contractor Valaris has been awarded new deals and contract extensions – with an associated contract backlog of $466 million – for operations in Brazil, Australia, Brunei, the UK North Sea, and the U.S. Gulf of Mexico. The firm also sold a jack-up rig, which worked in Saudi Arabia for years.

Valaris DS-17 drillship; Source: Equinor

Valaris revealed a set of new awards for its rigs on Tuesday, which were obtained by landing new assignments and prolonging existing ones. The company explained that the associated contract backlog of $466 million was awarded subsequent to its most recent fleet status report from May 2022 and excludes lump-sum payments such as mobilisation fees and capital reimbursements.

Anton Dibowitz, Valaris’ President and Chief Executive Officer, remarked: “We continue to see a constructive outlook for the offshore drilling industry as evidenced by these recent contract awards for both floaters and jack-ups across several geographies.”

Drillship deals

As disclosed by Valaris, the most recent deal is a 540-day contract with Norway’s state-owned energy giant Equinor offshore Brazil for the drillship Valaris DS-17. The offshore drilling contractor explains that the rig will be reactivated for this contract, which is expected to start in mid-2023. The total contract value is approximately $327 million, including an upfront payment totalling approximately $86 million for mobilisation costs, a contribution towards reactivation costs and capital upgrades.

The remaining contract value relates to the operating day rate and additional services, including managed pressure drilling (MPD), remote operating vehicle (ROV), casing running, slop treatment and cuttings handling.

“We are particularly pleased to have been awarded another contract for one of our preservation stacked drillships, Valaris DS-17, and look forward to partnering with Equinor on their flagship Bacalhau project in Brazil. We expect Brazil to be a significant growth market for high-specification floaters over the next several years and we are well-positioned to benefit by now adding a third rig to this strategic basin,” explained Dibowitz.

In a separate statement, Equinor confirmed the award, elaborating that the Valaris DS-17 ultra-deepwater drillship, capable of operating in water depths of more than 3,600 metres, was tasked with drilling an appraisal well, plugging an old exploration well and conducting additional drilling scope in Brazil.

Veronica Rezende Coelho, country manager in Brazil, commented: “The second rig in Bacalhau will expand our drilling capacity in Brazil and will further enhance our understanding of Bacalhau North through an ADR (Reservoir Data Acquisition) well. The decision to bring in DS-17 demonstrates our commitment to create value in Brazil, where we have a long-term presence perspective.”

Partners in the Bacalhau project are Equinor (40 per cent interest, operator), ExxonMobil (40 per cent), Petrogal Brasil (20 per cent) and Pré-sal Petróleo (production sharing agreement manager, not an investor).

Furthermore, Valaris has also secured a contract extension with TotalEnergies offshore Brazil for the drillship Valaris DS-15. The drilling contractor says that this extension option is in direct continuation of the current firm deal, which started in June 2021 and was due to end in December 2022, based on the firm’s fleet status report.

Semi-submersible gigs

Woodside awarded a two-well contract extension offshore Australia for the semi-submersible Valaris DPS-1 with an estimated duration of 38 days. This will be in direct continuation of the existing firm program for Woodside’s Enfield plug and abandonment campaign (18 wells in total).

alaris DPS-1; Source: Valaris
Valaris DPS-1; Source: Valaris

Additionally, Valaris reported another one-well contract extension for the rig with Woodside also offshore Australia. The extension has an estimated duration of 60 days and will be executed within Woodside’s Scarborough development campaign sequence.

Jack-up assignments

Brunei Shell Petroleum, a subsidiary of the UK-headquartered energy giant, Shell, picked Valaris 115, a heavy-duty modern jack-up, for a four-year contract offshore Brunei. This deal is expected to start in April 2023 and has a total contract value of approximately $159 million.

Moreover, Valaris won a one-well contract extension with Shell in the UK North Sea for the Valaris 122 heavy-duty harsh environment jack-up with an estimated duration of 150 days, which will be in direct continuation of the existing firm contract, which started in January 2020 and was expected to end in October 2022.

An undisclosed operator in the U.S. Gulf of Mexico hired the offshore drilling contractor’s standard-duty modern jack-up Valaris 144 on a four-well contract. The work is expected to take place during the third quarter of 2022 with an estimated duration of 60 days and an estimated contract value of approximately $5 million.

In addition, Cantium handed out a 90-day contract also in the U.S. Gulf of Mexico to this jack-up. The deal is expected to start in the fourth quarter of 2022 at the operating rate of $80,000 per day.

GB Energy awarded a one-well contract offshore Australia for Valaris 107, a heavy-duty modern jack-up, which is expected to start either late in the fourth quarter of 2022 or early in the first quarter of 2023 with an estimated duration of 20 days. The operating rate is $118,000 per day.

Meanwhile, Valaris has sold the standard duty jack-up Valaris JU-36, which was leased to ARO Drilling. The rig, which was under contract with Saudi Aramco in Saudi Arabia from September 2018 up to May 2022, has been sold to another drilling contractor with restricted use provisions for $9 million.

Valaris JU-36 (Charles Rowan); Source: Valaris
Valaris JU-36 (Charles Rowan); Source: Valaris

Dibowitz concluded: “We have demonstrated our ability to successfully contract and reactivate stacked rigs while continuing to deliver the strong safety and operating performance that our customers have come to expect from us.

“We have now won contracts for five stacked floaters since the middle of last year, with three already on rate and the fourth expected to commence work soon, and we retain additional operating leverage to the improving market with eleven high-quality stacked rigs, including three uncontracted drillships, and options on two additional newbuild drillships.”

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