Deepwater drill companies Maersk Drilling and Noble Corporation have agreed to a merger that will position them to better pursue opportunities in growing oil and gas exploration hotspots, including Guyana.
The Noble Tom Madden, one of Noble Corp’s drillships that have been operating in Guyana
According to a statement from S&P Global, an agreement was made on Wednesday to merge and would see them holding one of the youngest and highest specification fleets of drill ships in the world. Already, they, pro forma, had 33 of their combined 39 deepwater floaters and jack-up rigs working under contracts.
It was explained that combined, the companies’ average utilisation from 2015 to 2020 was 76 per cent, nearly 10 per cent higher than their nearest rival driller. This is according to an IHS Markit study featured on a presentation slide accompanying the webcast that announced the merger. Additionally, their average fleet age was 10 years, several years younger than their nearest peers.
Noble Corp President and Chief Executive Officer (CEO) Robert Eifler further explained in the statement that each drill ship is a top performer on its own, according to several key metrics and that combined, they lead the pack among drill companies.
“A high level of utilisation is extremely important when it comes to generating free cash flow. Both companies have a history of keeping rigs contracted,” said Eifler, who will be CEO of the combined company after the transaction closes in mid-2022.
One location the companies hope to grow their operations in is the Guyana-Suriname Basin. In Guyana, oil giant ExxonMobil has made more than 20 major discoveries as the operator in the Stabroek Block.
In all, six ExxonMobil-operated Guyana producing projects are predicted by 2027, with plans for an eventual 10 in total. The current estimated resource potential on the Stabroek Block, where all the discoveries are sited, is 10 billion barrels of oil. Meanwhile, Total Energies and APA Corp have made four big discoveries in neighbouring Suriname.
Noble currently has four contracted deepwater drillships active in Guyana. One, the Tom Madden, has a contract that runs until January 2027. In addition, Noble recently inked a deal for a drillship with APA Corp in Suriname for one firm well and two well options. In addition, Maersk currently is running one deepwater rig in Guyana.
Guyana, with ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being banked in the New York Federal Reserve Bank, where it is earning interest.
Developmental drilling has started on Exxon’s second development, the Liza Phase 2 project. Back in May 2019, Exxon was granted approval by the Environmental Protection Agency (EPA) to go ahead with its Liza Phase 2 development offshore Guyana.
The oil company had said that the project would have the capacity to produce 220,000 barrels of oil per day. Exxon had also revealed that the Liza Phase 2 development was funded at the cost of some US$6 billion, including a lease capitalisation cost of approximately $1.6 billion, for the Liza Unity Floating Production, Storage and Offloading (FPSO) vessel. For the Phase 2 development, six drill centres were planned, along with approximately 30 wells – 15 production, nine water injection and six gas injection wells.
The US$9 billion Payara development, the third development, will meanwhile target an estimated resource base of about 600 million oil-equivalent barrels and was, at one point, considered to be the largest single planned investment in the history of Guyana.
The Yellowtail development, which will be ExxonMobil’s fourth development in Guyana’s waters, will be the single largest development so far in terms of barrels per day of oil, with a mammoth 250,000 bpd targeted. (G3)
