Offshore drilling company Valaris has secured approximately $1.14 billion in new contracts and contract extensions for its drillships and jack-up rigs across the Americas, Europe and Australia.
The $1.14 billion worth contracts were awarded in the last two months of 2023, with the backlog excluding lump sum payments such as mobilization fees and capital reimbursements.
These include three new drillship contracts with Petrobras, Anadarko Petroleum and Equinor.
With Petrobras, Valaris signed a 1,064-day contract for drillship VALARIS DS-4 for work offshore Brazil.
Based on the firm contract term, the total contract value is approximately $519 million, inclusive of mobilization fees and additional services.
The contract is anticipated to start late in the fourth quarter 2024, following completion of the rig’s current contract with Petrobras, which is expected to finish in September 2024.
Upon completion of its current contract, the rig is expected to be out of service for approximately 90 days to complete customer-required capital upgrades prior to commencement of the new contract.
Valaris also agreed two-year contract extension with Anadarko Petroleum Corporation, a wholly owned subsidiary of Occidental, in the U.S. Gulf of Mexico for drillship VALARIS DS-16, 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.
Valaris secured 60-day priced option for drillship VALARIS DS-17 exercised by Equinor for work offshore Brazil. The 60-day option is expected to begin in March 2025 in direct continuation of the existing firm contract.
Valaris’ Jack-up Contracts
Valaris agreed three-year contract extension with Harbour Energy in the UK North Sea for heavy duty harsh environment jack-up VALARIS 120. The extension period is expected to commence in the third quarter 2025 in direct continuation of the existing firm program.
A rig contract with TotalEnergies in the UK North Sea for heavy duty ultra-harsh environment jack-up VALARIS Stavanger has also been put in place. The contract is expected to start in March 2024 and has an estimated duration of 330 days excluding options. The approximate total contract value is $48 million including minor rig modifications.
Valaris benefited from two one-well priced options exercised by Shell in the UK North Sea for heavy duty harsh environment jack-up VALARIS 121 as well. The options are expected to start 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 $55 million.
One-well contract with Ithaca Energy in the UK North Sea for heavy duty harsh environment jack-up VALARIS 123. The contract is expected to commence in April 2024 and has an estimated duration of between 45 and 72 days. The minimum total contract value is $6.3 million.
With Eni, Valaris secured one well contract for heavy duty ultra-harsh environment jack-up VALARIS 247.
The contract is expected to commence in the third quarter 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.
In addition, one-well option was exercised by an undisclosed operator offshore Trinidad for heavy duty ultra-harsh environment jack-up 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.
Furthermore, a 300-day contract with an undisclosed operator offshore Trinidad for heavy duty ultra-harsh environment jack-up VALARIS 249. The contract is expected to commence in the fourth quarter 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 the same operator offshore Australia for VALARIS 107 has been terminated. The terminated contract was expected to start in the first quarter 2024 with an estimated duration of 60 days. The operating day rate for the terminated contract was $120,000.
Other Fleet Status Updates from Valaris
Drillship VALARIS DS-8 started a previously disclosed three-year contract with Petrobras offshore Brazil on December 31, 2023. The backlog associated with this contract is not included in the above-mentioned incremental backlog that has been awarded since the company’s most recent fleet status report from November 2023.
As previously announced, Valaris has taken delivery of newbuild drillships VALARIS DS-13 and DS-14 for an aggregate purchase price of approximately $337 million. The rigs are being mobilized from South Korea to Las Palmas, Spain, where they will be stacked until they are contracted for work.
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