Valaris continues actively working to get well or substitute the blowout preventer (BOP) stack on Valaris DS-Eight following a non-drilling incident earlier this month. On March 19, 2020, the corporate acquired a termination discover for the drilling contract for Valaris DS-Eight. The Company is in discussions with the client (Total) relating to the discover. The drilling contract represents roughly $150 million of the Company’s contracted income backlog of $2.5 billion as of December 31, 2019. The working day price for Valaris DS-Eight is roughly $620,000 per day. The Company has lack of rent insurance coverage for $602,500 per day after the expiration of a 45-day deductible ready interval by means of the tip of the contract in November 2020. If the contract is terminated, the Company will search to get well losses incurred in accordance with the phrases of this insurance coverage coverage, which might largely offset the misplaced backlog famous above. There will be no assurance as to the timing or quantity of insurance coverage proceeds paid to the Company.
The Company has acquired a discover of contract termination from Chevron for Valaris JU-109, which was scheduled to function offshore Angola till July 2021. As a results of this termination, the rig’s contract is now anticipated to finish in mid-April 2020 and contracted income backlog shall be diminished by roughly $50 million. The Company expects to obtain extra notices of contract terminations and requests to renegotiate contract day charges and phrases in gentle of elevated market uncertainty.
Since the start of March, Valaris JU-87 was awarded a one-well contract with Cox within the U.S. Gulf of Mexico that commenced in mid-March, with an estimated period of 30 days that added roughly $1 million of contracted income backlog. Additionally, a beforehand introduced contract for ValarisS DS-Four with Amni offshore Ghana has been transferred to Valaris DS-7 and is anticipated to begin in April 2020, and the beforehand introduced contract for Valaris JU-144 (EXL II) with ENI offshore Mexico has been transferred to Valaris JU-102 and is anticipated to begin in September 2020.
For the interval between the Company’s fleet standing report that was filed on February 13, 2020 and the start of March, the Company executed the next new contracts and contract extensions with related income backlog of roughly $100 million:
• Valaris MS-1 awarded a three-well contract with Santos offshore Australia that’s anticipated to begin in first quarter 2021, with an estimated period of 155 days.
• Valaris 8505 awarded a one-well contract with Lukoil Upstream Mexico that’s anticipated to begin in mid-November, with an estimated period of 80 days.
• Valaris JU-118 (Joe Douglas) awarded a three-well contract with Fieldwood offshore Mexico that commenced in mid-March, with an estimated period of 425 days.
• Valaris JU-144 (EXL II) awarded a two-well contract with Fieldwood offshore Mexico that’s anticipated to begin in April, with an estimated period of 200 days.
(Source: Valaris – Image: Valaris DS-Eight)
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