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A recent surge in final investment decisions (FIDs) on offshore oil and gas projects has set the scene for a healthy increase in offshore investments next year, thus preventing the shale industry from overtaking offshore for the first time, according to Rystad Energy’s latest analysis. This is due to a 50 percent year-on-year rise in the number of offshore projects that were sanctioned in 2017, with 62 FIDs, followed by similar growth this year with close to 100 offshore projects to be sanctioned. With that we will finally see offshore investment levels rise again in 2019, after four straight years of contraction.
“Our offshore activity index is pointing to annual growth rates of about 6 percent towards 2022, thereby returning to the high activity levels seen in 2014. Coupled with annual service price inflation of 5 percent, offshore oilfield service purchases are projected to grow by 11 percent per year towards 2022,†says Audun Martinsen, Head of Oilfield Research at Rystad Energy.
At the same time, the rise in offshore spending will coincide with a sequence of factors that will slow growth levels in the shale sector. “Logistical challenges, takeaway capacity bottlenecks and growing oversupply in the proppant and fracking market are all contributing to pull shale’s growth trajectory downward,†says Martinsen.
US well fracturing activity surpassed 50 wells per day in April 2018 but since then it has flattened out at just north of 50 wells per day. Although demand for frack sand in the US is expected to grow at 21 percent CAGR from 2018 to 2021, this is expected to be eclipsed by an even greater jump in supply, which is forecast to increase by 47 percent in 2018 and 27 percent in 2019. This oversupply will have a negative impact on prices.
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“In-basin sand mines are being built out in the Permian, Eagle Ford, Mid-Con, Haynesville and DJ basins. Northern white sand prices have been declining rapidly, and we have observed Permian In-Basin Sand minegate prices falling below $40per ton,†Martinsen says.
Rystad Energy sees the net effect of these factors being that investment levels in shale will grow at a slower pace than previously expected and end up at about $120 billion in 2018. For 2019, about 22,000 shale wells are forecast to be drilled and completed in North America, which will likely translate to about 16 percent growth in investments in the sector.
“Shale has thus lost some momentum at a time when investors have again found an appetite for the offshore domain, stimulated by a steep reduction in offshore costs and breakeven levels, which in turn have been driven by favorable unit prices,†Martinsen adds.
Rystad Energy data shows that global offshore capital investment fell by 16 percent in 2017 and is projected to fall by another 10 percent this year, reaching only about $160 billion, less than half the $350 billion invested at the peak in 2014. Offshore purchases are, however, projected to rise at an accelerating rate over the next three years.
Original Article Here- Oilprice.com
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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