Guyana paying over $320M daily to rent four drill ships in Stabroek Block

Mar 03, 2023 News

Kaieteur News – American drilling company, Noble Corporation is being paid over $80M (US$400,000) daily for each of its four drill ships that is being utilised in the Stabroek Block, by ExxonMobil Guyana.

The four Noble drill ships being utilised by Exxon in Guyana (Photo credit: Noble Corporation)

Owing to the 2016 Production Sharing Agreement (PSA) Guyana signed onto with Exxon – all of the company’s expense will be recovered. Under the deal, Exxon receives profits after 75 percent is withdrawn to cover operational expenses. In Noble’s latest results review, the company disclosed that their day rate per rig is low-to-mid US$400,000, which is $80M Guyana Dollars or more. For every day that the four drill ships work, Guyana will have to foot the bill of $320M.

This is as a result of contract that Exxon awarded to Noble during the fourth-quarter of 2022, for an additional 7.4 rig years for ultra-deepwater drill ships Noble Tom Madden, Noble Sam Croft, Noble Don Taylor and Noble Bob Douglas to work in Guyana until November 2025.

However, it should be noted that market-based day rates are reset twice per year (March 1, and September 1 each year) to the projected market rate at that time.  On Wednesday, this publication contacted ExxonMobil Guyana to ascertain the exact rate the company is paying Noble for the four drill ships and how many days will each drill ships be working each year. Up to press time, no response was received from the oil major.

The rig market has been experiencing a revival after years of doldrums and Noble is eyeing a big payday as it expects an increase in the demand for ultra-deepwater rigs of between 12 and 15 units around the globe within the next 18 months, especially in places like Brazil and Guyana.

Noble’s operating highlights and backlog revealed that the company marketed fleet of 16 drilling rigs was 91 percent during the fourth quarter of 2022. This included seven ultra-deepwater rigs added following the merger that ended with Maersk Drilling. It was stated that Tier 1 drill ships area commanding increased day rates, around US$400,000, and that the company secured since early November 2022, 24 months of additional work for four sixth generation (6G) and seventh generation (7G) drill ships at an average rate above US$420,000 per day – the company did not mention if the four 6G and 7G drill ships are the ones deployed for Exxon’s Guyana operations.

Commenting on Noble’s outlook, the company’s Chief Executive Officer (CEO), Robert Eifler stated, “We continue to see a very promising fundamental setup for the offshore drilling business, governed by increasingly tight industry utilisation, robust customer economics and demand growth visibility and, not least, rational capital allocation in our industry. As the market improves, we remain focused on execution across all facets of our business, and are committed to returning capital to shareholders.”

• Noble Corporation, Noble Don Taylor, Noble Sam Croft, Production Sharing Agreement (PSA), Stabroek Block