Valaris’ $428m drillship deal in limbo as TotalEnergies exits US Gulf of Mexico project

New York-listed offshore driller Valaris may have to slash its contract backlog by more than $400m after French operator TotalEnergies pulled out of its flagship US Gulf of Mexico asset earlier this month.

TotalEnergies, which held a 60% operating interest alongside its joint-interest owner Equinor with 40%, decided not to sanction and to withdraw from the North Platte deepwater project some 275 km off the coast of Louisiana “as the company has better opportunities of allocation of its capital within its global portfolio.”

The French energy major booked the 2013-built drillship Valaris DS-11 last year for an eight-well contract on the North Platte development. The three-and-a-half-year contract, which was expected to commence in mid-2024, contains early termination provisions should the project not receive a final investment decision (FID).

“Approximately $428m of backlog as of February 21, 2022, is attributable to our contract awarded to Valaris DS-11. In February 2022, the customer decided not to sanction and therefore withdraw from the project. As of the date hereof, the customer has not terminated the contract, but may do so upon the payment of an early termination fee should the project not receive a final investment decision (FID). The project has not received FID. We are in discussions with the customer and its partner on the project to determine next steps, Valaris said in its latest fleet update report.

Meanwhile, several fresh deals have been secured for Valaris’ offshore rig fleet, including a five-well contract for semisub Valaris MS-1 with an undisclosed operator offshore Australia, expected to commence in the second half of 2023 and also subject to FID. In the jackups segment, a four-well contract for the Valaris 118 stands out. BP offshore Trinidad has booked the rig for 270 days, with operations expected to commence in the second half of 2022.