Offshore driller Valaris has been awarded a batch of new contracts and contract extensions, with an associated contract backlog of approximately $1.14bn.
In the floater department, Valaris won a two-year contract extension with Anadarko Petroleum in the U.S. Gulf of Mexico for Valaris DS-16 drillship, starting in June 2024 in direct continuation of the existing firm program. This extension replaces the one-year priced option which was agreed in July 2021. An additional day rate will be charged when MPD services are provided.
The second drillship deal is a 60-day priced option exercised by Equinor offshore Brazil for the Valaris DS-17. The option is expected to begin in March 2025 in direct continuation of the existing firm contract. The operating day rate for the priced option period is approximately $447,000 including MPD and additional services.
As for jack-ups, the company won a three-year contract extension with Harbour Energy in the UK North Sea for the heavy-duty harsh environment jack-up Valaris 120. The extension period is expected to begin in the third quarter of 2025 in direct continuation of the existing firm program.
Another came from TotalEnergies in the UK North Sea for heavy-duty ultra-harsh environment jack-up Valaris Stavanger. The contract is expected to begin in March 2024 and has an estimated duration of 330 days excluding options. The approximate total contract value is $48m including minor rig modifications.
Shell exercised two one-well-priced options exercised by Shell in the UK North Sea for heavy-duty harsh environment jack-up Valaris 121. The options are expected to commence in the summer of 2024, in direct continuation of the existing firm program, and have an estimated duration of 406 days. The priced option periods have an estimated total contract value of approximately $5m.
Ithaca Energy awarded the driller with a one-well contract in the UK North Sea for heavy-duty harsh environment jack-up VALARIS 123. The contract is expected to begin in April 2024 and has an estimated duration of between 45 and 72 days. The minimum total contract value is $6.3m.
Eni picked the heavy-duty ultra-harsh environment jack-up Valaris 247 for one well. The contract will start in the third quarter of 2024 in direct continuation of the rig’s current program with another operator and has a minimum duration of 45 days. The operating day rate is $180,000.
An undisclosed operator exercised a one-well option offshore Trinidad for the Valaris 249. The one-well option will extend the firm term of the contract by a minimum of 35 days. The operating day rate for the option period is $137,500.
The same operator awarded a new 300-day contract offshore Trinidad for the same rig. The contract is expected to start in the fourth quarter of 2024 in direct continuation of a program with another operator. The operating day rate is $162,500.
In conjunction with the above-mentioned contract extension and award for Valaris 249, a previously disclosed one-well contract with that operator offshore Australia for Valaris 107 has been terminated.
Apart from these deals, Valaris exercised its options and took delivery of newbuild drillships Valaris DS-13 and DS-14 for an aggregate purchase price of approximately $337m. The rigs are being mobilized from South Korea to Las Palmas where they will be stacked until they are contracted for work.
It is worth noting that the $1.14bn backlog includes the recently announced long-term contract from Petrobras for its Valaris DS-4 drillship. It will work on the upcoming Buzios program offshore Brazil for 1,064 days in a deal worth around $519m, including mobilisation fees and additional services.
“The contract awards for Valaris DS-4 and DS-16 are great examples of how we are executing on the operating leverage inherent in our business, with day rates transitioning from legacy rates in the low $200,000s to market rates. We are also beginning to see early signs of a recovery in the North Sea jack-up market from 2025 as evidenced by several awards at improving day rates,” President and CEO of the company Anton Dibowitz said.
