Equinor ends $428 million offshore drilling

Norwegian oil and gas company Equinor has terminated a $428 million drilling contract with drilling company Valaris for the Valaris DS-11 drillship.

The drillship, stacked in Las Palmas, Spain, was scheduled to begin contract in July 2024 and remain on contract until December 2027.

As a reminder, Valaris had stated in April that the Valaris DS-11 (formerly Atwood Advantage/Ensco DS-11) drilling agreement for an eight-well contract for a deepwater project in the Gulf of Mexico in the United States had been transferred from TotalEnergies to Equinor. .

Valaris said at the time that there were no material changes to the contract resulting from the novation, including with respect to termination provisions in the event the project did not receive a final investment decision. (IDF).

Although Valaris did not share more details about this project, it is likely that it is related to the North Platte project in the US Gulf of Mexico from which TotalEnergies decided to withdraw in February.

In a June 1 update, Valaris said Equinor had served notice to terminate the drilling contract. The termination will take effect at the end of June.

“Our total backlog of $2.5 billion as of May 2, 2022, included approximately $428 million related to this contract,” Valaris said.

“Following the termination of the contract, Valaris will receive an early termination fee more than sufficient to cover the expenses and commitments incurred by Valaris on the project,” Valaris said, without giving details on the amount of the termination fees. .

President and CEO Anton Dibowitz said: “While we are disappointed that this contract has been terminated, the float market and daily rates have improved significantly since the conclusion of this contract in July 2021, and we anticipate that there will be further projects attractive for a high specification drillship like Valaris DS-11 with similar or earlier start dates.”

Committed to advancing North Platte

Credit: EquinorOffshore Engineer contacted Equinor to get more information about the termination of the contract and what it meant for the North Platte project.

A spokesperson for Equinor said: “As you know, we took over operations and some contracts when TotalEnergies pulled out. [from the North Platte project]. What I can say is that we are committed to moving the North Platte project forward, but unfortunately I cannot give details at this time.”

The North Platte is a Paleogene oil discovery covering four blocks in the Garden Banks region of the Gulf of Mexico. It is located 275 kilometers off the coast of Louisiana in waters over 1,300 meters deep. The North Platte discovery was part of the portfolio of Cobalt International Energy, a company that went bankrupt in 2017. Total and Equinor (then Statoil) acquired Cobalt’s stake in April 2018.

TotalEnergies had planned to develop the project using a semi-submersible floating production unit, with the development expected to produce 75,000 barrels of oil per day at the shelf. The North Platte field straddles four blocks of the Garden Banks area. According to information previously shared by TotalEnergies, the reservoir is of high quality, both in porosity and permeability, with a thickness in places exceeding 1,200 meters.

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