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Offshore accommodation rig provider Floatel International believes that the demand for accommodation rigs is starting to recover but, due to market oversupply, it still remains below levels in late 2019 before the Covid-19 pandemic, resulting in prices continuing to be under pressure. As a result, Floatel expects the overall utilization of the accommodation fleet to remain at modest levels in the near term.
Floatel saw an increase in its vessel utilization in the third quarter of 2021, which is in line with an increase in the worldwide semi-submersible accommodation fleet. Namely, in its quarterly update on Monday, Floatel revealed that the utilization for the worldwide semi-submersible accommodation (ASV) fleet was 74 per cent in Q3 2021, up from 41 per cent in Q3 2020.
In comparison, Floatel’s utilization in Q3 was 63 percent – with four out of five vessels active – up from 40 per cent in the same period last year. The global ASV fleets’ utilization year to date 2021 was 58 percent compared to 43 percent in 2020.
The company’s total firm contract backlog, excluding options, is approximately $134 million as of the end of September 2021 and it was $32 million in the same period last year.
Revenues for the third quarter were $30.4 million compared to $18.7 million for the same period in 2020. The net result for the third quarter was a loss of $11.2 million compared to a loss of $32 million in the same period last year.
There were no new contracts signed in the quarter, with the tendering activity reasonably buoyant with several tenders outstanding. Three vessels are currently idle with one being marketed for new work and the other two waiting for their upcoming charters in 2022.
The contract for Floatel Superior with Var Energi at the Balder FPU, which started at the end of May 2021, was extended to 9 October 2021, whereafter the charter ended. The unit is now idle in Skipavika, Norway, awaiting the charter for Equinor expected to start in April 2022.
Floatel Reliance is idle in Tenerife in the Canary Islands awaiting the next assignment. The vessel is actively marketed for new charters.
Floatel Victory was in operations at the Unity platform, in the UK sector of the Central North Sea until 25 July 2021, whereafter the rig steamed toward Las Palmas in the Canary Islands, Spain to prepare for the Equinor charter in Brazil. The unit transited to Brazil and started the contract with Equinor in late September, providing Maintenance and Safety Unit (MSU) services at Peregrino FPSO with six months duration and options after the firm period.
Floatel Endurance completed the charter for Equinor at the Martin Linge field in late August 2021 and is now idle in Skipavika, Norway, awaiting the charter for Equinor expected to start in March 2022.
Floatel Triumph started the charter for Shell in the Philippines at the Malampaya field on 1 September 2021, for three months.
Modest utilization in near term
According to Floatel, the overall offshore market was slowly improving from the downturn during 2019 driven by oil price development combined with continued pressure to reduce cost levels for the operators, however, the Covid-19 pandemic stalled the gradual improvement. The Covid-19 outbreak and the drop in the oil price have increased the uncertainty within the accommodation market.
However, Floatel believes that the outlook has improved because oil production has been kept under control by the producing countries after the previously agreed cuts and the development of vaccines. This, in combination with demand starting to recover, albeit levels remain below those levels reached in late 2019 before the Covid-19 pandemic as the market continues to be oversupplied resulting in prices continuing to be under pressure, the company explained.
Although the oil price has recently recovered to $70-80 per barrel, Floatel noted that the oil companies globally have adjusted their activities for the short to medium term. Additionally, the strong shift in the energy discussion towards renewable sources has created a discussion about energy composition for the future.
Floatel consequently expects the overall utilization of the accommodation fleet to remain at modest levels in the near term, particularly for those areas with high overcapacity, however, it still believes that the market will recover once the situation stabilizes.
The worldwide operating purpose-built semi-submersible accommodation fleet presently comprises 21 vessels following recent announcements by competitors to scrap older vessels plus two vessels yet to be delivered. 17 vessels are built since 2005, including the 2 new buildings, and it is expected that the older vessels will exit the market in the coming years.
Source: Floatel
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Valaris Limited announced new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023. Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee. 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023. 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million. President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.” Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.” Updated Guidance As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023. First Quarter 2023 Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million. Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Full-Year 2023 Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call. Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion. Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million. Source: Valaris Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Seadrill Limited announced that the West Neptune has executed approximately six months of term extensions with LLOG Exploration Offshore, L.L.C in the US Gulf of Mexico. The extensions will commence in direct continuation of the existing term, and will keep the rig busy until Q3 2024, furthering Seadrill and LLOG’s long-term association. Total contract value for the extension is approximately $79 million. Source: Seadrill Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
Semisub rig owner Dolphin Drilling has inked a new contract with Peak Petroleum in Nigeria for its 1974-built Blackford Dolphin. The firm contract, which follows the letter of award in January, gives the Euronext Growth-listed owner of three rigs the potential to extend the unit’s backlog by a minimum of 120 days and up to 485 days. The deal adds to and will be a direct continuation of the previously announced 12-month contract with General Hydrocarbon Limited (GHL). Øystein Stray Spetalen-backed company said the effective dayrate associated with the minimum firm period of the contract is $325,000, including the mobilisation fee. “The final award of the contract for Blackford Dolphin shows the opportunities in Nigeria at a strong dayrate, in addition to building on the backlog for the rig. It also underlines the attractiveness of our assets, and we look forward to returning to revenue-generating operations in 2023,” noted Bjørnar Iversen, CEO of Dolphin Drilling. Source: Dolphin Join our mailing list here We are #1 on Google and Bing for the "Largest Mobile Energy Network" Come join our community! Download the Rig Lynx app here
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