Having established itself as the largest independent provider of onshore drilling services in Russia, Eurasia Drilling Company is now looking to have a bigger say in the developing CIS offshore market. David Morgan reports.
Eurasia Drilling Company's (EDC) immediate attention is focused on the Caspian Sea, where it sees genuine signs of rig market expansion and a substantial opportunity for its core area of expertise: exploration, appraisal and development well drilling.
EDC's Trident XX, purchased from Transocean earlier this year, is on long-term contract with Petronas in the Caspian.EDC sees the demand for jackups growing in each of the Caspian sectors it serves – from the current three active rigs to six or seven by 2013. This part of the world has disappointed drillers in the past, but EDC marketing vice president Kim Kruschwitz sees plenty of prospects there and doesn't envisage work drying up this time. ‘The Caspian's finally coming on,' says Kruschwitz, a former Baker Hughes hand.
As a presence booster, the company is in the process of adding more jackup rigs to its fleet in the landlocked sea. Its Astra jackup rig is already there on long-term assignment. In February EDC acquired the Trident XX from Transocean for $260 million; built in 2000 at Azerbaijan's Caspian Shipyard, the KFels CS Mod V jackup is on longterm contract in the region with Malaysian operator Petronas. EDC has ordered another independent three leg cantilever rig – this time a LeTourneau Super 116E – from Lamprell's shipyard in Sharjah specifically for Caspian work; the newbuild is due for completion in Astrakhan, Russia in early 2013.
EDC is providing the drilling services on Lukoil's ice-resistant production platform in the Yuri Korchagin field, which produced first oil last year. The seven wells completed since drilling began in Q2 2010 included several complicated extended reach wells. EDC expects its operations on the platform to continue for several more years. Lukoil has made a number of other discoveries in the Russian sector and has several appraisals/prospects to drill.
Astra mobilized to the Kazakh sector in mid-March to drill an exploration well and then returned to Russian waters where it is committed to an appraisal and exploration well program for Lukoil that started in June and will continue at least until the end of 2011. Various other blocks in Kazakh waters are in the exploration and appraisal phase, and some large-scale field developments are being planned.
Offshore Turkmenistan, several fields are currently in the development phase using land drilling rigs on small platforms, as well as the Trident XX and Iran Hazaar jackup rigs. A number of potential operators are looking at licensing new exploration blocks in the Turkmen sector.
EDC, traded on the London Stock Exchange, is in buoyant mood following the acquisition of drilling assets from Schlumberger and Slavneft; deals expected to add 3-4% and 4-5%, respectively, to its current 24% Russian landdrilling market share. The strategic alliance bolted on to the Schlumberger transaction (OE June) – under which they will cooperate in supplying EDC with high-volume oil & gas services for the next five years – is seen as a ‘win-win' opportunity that will enable both companies to deploy the latest technologies for more complex onshore and offshore markets.
The total value of the transaction is around $260 million, and includes a cash consideration of $173 million from EDC to Schlumberger.
Although it effectively exited the rig market some years back, Schlumberger did hold on to some drilling and well servicing assets, notably in Western Siberia where its 19 existing drilling rigs with 17 drilling crews, 34 workover rigs with 25 related crews and 23 sidetracking rigs with 20 related crews – all now in the EDC stable – mainly worked for the likes of Rosneft, TNK-BP, Lukoil and GazpromNeft. Schlumberger in turn purchased EDC drilling services lines associated with directional drilling, cementing and drilling fluids engineering and materials supply, including 24 cementing crews, 57 directional drilling/ telemetry crews and 50 crews for drilling fluids.
As EDC's Kim Kruschwitz puts it: ‘Schlumberger has rigs in certain parts of the world where required. It is a reluctant driller. Eurasia had some of their own internal services but was a reluctant service company. Looking at each other across the table, we said let's trade assets, but let's work together.'p>
And Maurice Dijois, president of Schlumberger Russia, says of the deal: ‘The combination of Eurasia's drilling rig footprint with Schlumberger drilling services offers a unique solution to customers in Russia. The integration of Smith International and Schlumberger drilling technologies will lead to fit-forpurpose drilling assemblies as well as to additional drilling services and drilling fluids services for the Russian market – both on land and offshore.' OE
DRAGON DELIVERY: Also destined for Caspian Sea service, but not part of the Eurasia Drilling fleet, is this Friede & Goldman Super M2 jackup. It is under construction at Russian shipyard Kransnye Barrikady in Astrakan for the Dubai_headquartered, Irish-registered drilling contractor Momentum. The Caspian Driller, due for delivery in 4Q 2011, will go into service with Momentum and its partners CIMC_Raffles and TSC Offshore on the Dragon Oil project offshore Turkmenistan.
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