With a marketed utilization of 92%, Shelf Drilling’s weighted average day rate on June 30, 2024, across 33 contracted rigs was $88.600. The company’s Q2 2024 adjusted EBITDA of $71.5 million represents a margin of 31%, including a loss of $14 million from Shelf Drilling North Sea (SDNS) and $85.5 million from the rest of the business.
David Mullen, Chief Executive Officer, commented: “Since the beginning of the year, we have continued to deliver safe and efficient operations for our customers with a year-to-date TRIR of 0.10 and uptime performance of 99.4%. Our results in the second quarter of 2024 were impacted by lower utilization in Saudi Arabia with the suspension of four of our rigs and the delayed start-up for the Shelf Drilling Barsk, partially offset by our efforts to reduce operating costs.
“Following the announcement of contract suspensions in early April, we immediately initiated marketing efforts and commenced mobilization of two rigs to West Africa shortly after, with both rigs expected to commence new contracts before the end of 2024. We were disappointed with the delayed regulatory approval for the Shelf Drilling Barsk in Norway, however, we are confident that we will complete this process and commence the rig’s contract in the fourth quarter of 2024.”
The offshore drilling player has provided highlights about its jack-ups’ moves. The rig owner’s Main Pass IV and Shelf Drilling Achiever rigs’ contracts with Saudi Aramco have been terminated, thus, both rigs are being mobilized to West Africa where they are due to arrive in September 2024 for contract opportunities starting in Q4 2024.
A $60-million agreement to sell the Baltic rig, which has completed its contract in Nigeria and is held for sale, has been executed with a buyer who intends to deploy the rig on a multi-year plug and abandonment program in Southeast Asia. This transaction is expected to close in September 2024.
“The pending sale of the Baltic standard jack-up rig is a significant positive for the company, representing a favorable asset value and indirectly creating contract opportunities in that region for other rigs in our fleet with near-term availability,” added Mullen.
The firm’s Shelf Drilling Mentor rig secured a two-well contract with an undisclosed customer in Nigeria due to begin in August 2024. Shelf Drilling’s Trident VIII rig is currently out of service in Luba, Equatorial Guinea, following extensive structural leg damage and the firm is currently pursuing an insurance claim.
The Shelf Drilling Tenacious rig secured a 15-month extension with CABGOC in Angola in direct continuation of its current contract, with a total added contract value of around $66 million. The Shelf Drilling Resourceful rig has been mobilized to Tunisia for a short program with Eni.
Shelf Drilling’s Harvey H. Ward rig received a notice of suspension from Saudi Aramco for up to one year. The firm has the right to market the rig during the suspension, expected to begin in September 2024.
The Shelf Drilling Barsk rig’s contract commencement date with Equinor in Norway has been delayed, prompted by the pending approval of the acknowledgment of compliance (AoC) from the regulatory authority. A new AoC application has been submitted and the contract is slated to kick off in Q4 2024.
The Shelf Drilling Winner rig secured a new 17-month contract and two seventh-month options with TotalEnergies in Denmark, expected to begin in April 2025, in direct continuation of the rig’s current contract with the same customer. The total value for the new firm term is around $68 million.
The Shelf Drilling Perseverance rig began a new 12-well contract with PVEP in Vietnam in August 2024, with an estimated firm term of approximately 16 months. The Shelf Drilling Fortress rig completed its contract with CNOOC in the UK and has commenced a new contract with TotalEnergies in August 2024
“As announced in February 2024, I will now step down as Chief Executive Officer and move into my new role as Executive Chairman. I am excited about what lies ahead for the company with Greg O’Brien as CEO, and I look forward to continued success for Shelf Drilling,” highlighted Mullen.
