VALARIS HIT BY A FLOOD OF REDUCED RATES AND CONTRACT TERMINATIONS

April 24, 2020

The last fleet status report released by Valaris brought little good news with a few short term contracts:
• Semi-submersible VALARIS MS-1 awarded a three-well contract with Santos offshore Australia that is expected to commence in first quarter 2021, with an estimated duration of 155 days
• Semi-submersible VALARIS 8505 awarded a one-well contract with Lukoil Upstream Mexico that is expected to commence in mid-November, with an estimated duration of 80 days
• Jackup VALARIS JU-118 (Joe Douglas) awarded a three-well contract with Fieldwood offshore Mexico that commenced in mid-March, with an estimated duration of 425 days
• Jackup VALARIS JU-144 (EXL II) awarded a two-well contract with Fieldwood offshore Mexico that is expected to commence in May, with an estimated duration of 200 days; contract previously announced with ENI offshore Mexico expected to commence in September 2020 transferred to VALARIS JU-102
• Jackup VALARIS JU-87 awarded a one-well contract with Cox in the U.S. Gulf of Mexico, with an estimated duration of 30 days from March 2020 to April 2020, and then extended to May 2020 for another well with an estimated duration of 30 days
Unfortunately, the report highlighted a significant number of contract terminations and dayrate reductions which include several last generation drillships:
• Drillship VALARIS DS-8 contract, which was scheduled to be completed in November 2020, was early terminated and ended in late March 2020
• Drillship VALARIS JU-109 contract, which was scheduled to be completed in July 2021, was early terminated and ended in mid April 2020
• Drillship VALARIS DS-7 contract for operations offshore Ghana from April 2020 to mid-May 2020 has been terminated
• Semi-submersible VALARIS 5004 operated on a reduced day rate from mid March 2020 to mid April 2020, at which point the contract was terminated
• VALARIS JU-249 (Gorilla VII) ended its contract with Chrysaor in early April 2020
• Drillship VALARIS DS-16 (Resolute) expected to end its contract with Fieldwood in late June 2020
• Semi-submersible VALARIS 8503 expected to end its contract with Kosmos in late April 2020
• Jackup VALARIS JU-100 expected to end its contract with DNO in late April 2020
• Drillship VALARIS DS-10 expected to operate on a reduced day rate from late April 2020 to mid-July 2020
• Jackup VALARIS JU-120 expected to operate on a reduced day rate from late April 2020 to late September 2020
• Jackup VALARIS JU-92 expected to operate on a reduced day rate from mid May 2020 to late September 2020
• Jackup VALARIS JU-72 expected to operate on a reduced day rate from April 2020 to July 2020
The company also advised that the drillships VALARIS DS-4, VALARIS DS-11, VALARIS DS-17 & the demi-submersible VALARIS 8504 are in the process of being preservation stacked.
(Source: Valaris – Image: Valaris 8503)