Offshore drilling contractor Valaris (NYSE:VAL) has announced a swathe of new contracts and extensions, with its order backlog rising to $1.14 billion.
Valaris secured contracts for its drillships and jack-up rigs in Brazil, the US Gulf of Mexico, the UK North Sea, Trinidad and Australia.
The company said the deals were awarded after it issued its fleet status report in November 2023.
Valaris president and chief executive officer Anton Dibowitz said the deals provided “further evidence of the positive outlook” for the company.
“These awards include two multi-year drillship contracts and several jackup contracts across the North Sea, Trinidad, and Australia,” Mr Dibowitz said.
“The contract awards for Valaris DS-4 and Valaris DS-16 are great examples of how we are executing on the operating leverage inherent in our business, with day rates transitioning from legacy rates in the low $200,000s to market rates.
© Supplied by Valaris“We are also beginning to see early signs of a recovery in the North Sea jackup market from 2025 as evidenced by several awards at improving day rates.”
The announcement comes as analysis from Westwood Global Energy Group shows the global offshore rig market is set to tighten in 2024, with the sector predicted to reach as high as 96% marketed utilisation.
The contract awards also follow Valaris taking delivery of two newbuild drillships, last month for an aggregate purchase price of approximately $337 million.
Valaris jack-up deals
Among the UK North Sea jack-up contracts awards secured by Valaris is a three-year contract extension with Harbour Energy for the Valaris 120.
Valaris said the extension period is expected to commence in the third quarter 2025 in direct continuation of the existing firm program.
The company also secured a rig contract with TotalEnergies for the Valaris Stavanger.
Valaris said the contract is expected to commence in March 2024 and has an estimated duration of 330 days excluding options, while the approximate total contract value is $48 million including minor rig modifications.
Also included were two one-well priced options exercised by Shell in the UK North Sea for the Valaris 121.
The options are expected to commence in the summer of 2024, in direct continuation of the existing firm program, and have an estimated duration of 406 days.
The Shell deals have an estimated total contract value of approximately $55 million.
Finally, Valaris secured a one-well contract with Ithaca Energy for the Valaris 123.
© ValarisExpected to commence in April 2024, the contract has an estimated duration of between 45 and 72 days and a minimum total contract value of $6.3 million.
Elsewhere, Valaris secured a one-well contract with Italian firm Eni for the Valaris 247.
Expected to commence in the third quarter 2024 in direct continuation of the rig’s current program, with another operator, the contract has a minimum duration of 45 days while the operating day rate is $180,000.
In Trinidad, the Valaris 249 has been contracted to an undisclosed operator for a one-well option, extending the firm term of the contract by a minimum of 35 days. The operating day rate for the option period is $137,500.
A separate 300-day contract with an undisclosed operator offshore Trinidad for the Valaris 249 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.
Meanwhile, Valaris said a previously disclosed one-well contract with the same operator offshore Australia for Valaris 107 has been terminated.
The terminated contract was expected to commence in the first quarter 2024 with an estimated duration of 60 days. The operating day rate for the terminated contract was $120,000.
More work for Valaris floaters
A previously announced 1,064-day contract for drillship Valaris DS-4 with Petrobras 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 commence late in the fourth quarter 2024, following completion of the rig’s current contract with Petrobras, which is expected to finish in September 2024.
© Supplied by PerencoUpon 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 secured a 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, commencing 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.
Finally, Equinor exercised a 60-day priced option offshore Brazil for drillship Valaris DS-17.
The 60-day option is expected to commence in March 2025 in direct continuation of the existing firm contract.
In other fleet status updates, Valaris said drillship Valaris DS-8 commenced 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.
As previously announced, Valaris has exercised its options and 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.
The operating day rate for the priced option period is approximately $447,000 including MPD and additional services.
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