Odfjell Drilling’s Deepsea Stavanger has been awarded a firm, five-year contract with Aker BP (OSLO:AKRBP) for work beginning in early 2025.
Announced on Wednesday, Odfjell (OSLO:ODL) said the base contract value would fall in the range of $620 million to $730m.
The award is subject to license partner approval and Norwegian governmental approvals of Aker BP’s planned projects, though specific projects were not specified.
Day rates for the contract will be market-based, within a pre-agreed range, and will be set by by two brokers nine months prior to each calendar year.
The ceiling of the range will be adjusted based on an inflation adjustment formula beginning from June 2023.
In addition to these day rates, Aker BP will also pay the drilling group performance and fuel savings incentive bonuses.
Odfjell chief executive Kjetil Gjersdal said: “This long term contract confirms our strong relationship with Aker BP. I am confident that Deepsea Stavanger is the right rig to deliver on the high environmental and operational ambitions on the major field development projects Aker BP is planning to execute.”
Delivered in 2010, the semi-submersible Deepsea Stavanger is designed for operations in harsh environments and at water depths of up to 3,000 m. The 7,500 mt loading capacity in all operating conditions ensures efficiency, with a reduced need for supply.
The award adds to a rapidly filling calendar for the Deepsea Stavanger, with Odfjell having recently secured an optional extension with Equinor to drill a further eight wells – likely to busy the unit until Q3 2023.
The long duration of the Aker BP award suggests operators are looking to book up long-term capacity years in advance, with rig analytics firm Esgian warning earlier this year that the North Sea rig market is set to tighten in the coming years.
The UK in particular has a “very limited” supply of semi-subs, analysts noted, and could quickly sell out if demand increases.
Meanwhile, Aker BP recently completed its acquisition of Lundin Energy’s E&P business, creating a combined business with production of around 400,000 barrels of oil equivalent (boe) per day.
It now intends to grow that over the next five years, targeting production of around 525,000 boepd by 2027, through a mix of sanctioned and unsanctioned developments.
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