Valaris has won a contract for just under three years for its DS-4 rig – and at a much higher price.
The rig has been under contract with Petrobras in Brazil and the new agreement will see it remaining there. The 1,064 day contract will see Petrobras pay $519 million, including mobilisation and additional service fees.
The current contract will end in September 2024. It will then be out of service for around 90 days to undergo capital upgrades.
The DS-4 will then be back in service with Petrobras late in the fourth quarter of 2024.
Valaris president and CEO Anton Dibowitz welcomed the agreement with Petrobras on the upcoming Buzios work.
“We look forward to continuing to partner with Petrobras on their programs offshore Brazil, a market where we expect to see continued growth over the next several years,” Dibowitz said.
“We have previously stated that we expect Valaris’ earnings and cash flow to increase meaningfully as rigs are recontracted at market rates.”
Day rate
The rig has repriced from a rate in the “low $200,000s”, the executive said. Now, it is priced at “an effective day rate in the high $400,000s”. The price suggests a day rate of around $488,000.
Petrobras contracted the DS-4 in October 2021. At that time, the rig had been preservation stacked in the UK. Valaris did not, at the time, announce the contract value for the 548 days.
In November 2023, Valaris said Petrobras had exercised an option for the DS-4 for another six months for around $41mn, suggesting a day rate of $228,000.
The Brazilian company also booked the DS-8 rig in 2023. Valaris agreed to reactivate the rig and send it to work for a $500mn price tag over three years, or a day rate of $428,000. The DS-8 will begin work in Brazil in February this year.
Buzios is in the pre-salt Santos Basin. The fifth phase on Buzios started up in 2023. Between 2025 and 2027, six more phases on the field will start up in water depths of around 2,000 metres. By 2028, Buzios should be producing around 1.6 million barrels of oil equivalent per day.
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