Oslo-listed Shelf Drilling, a prominent player in the international offshore drilling sector, has announced the signing of a significant contract for its jack-up rig, Main Pass IV, to operate offshore Nigeria.
The contract, scheduled to commence in December 2024, is expected to last for approximately two years, bolstering the company’s presence in the African offshore drilling market. This announcement underscores Shelf Drilling’s resilience and adaptability despite recent industry challenges.
In statements, Greg O’Brien, Shelf Drilling’s Chief Executive Officer acknowledged the “short-term challenges and uncertainty” but emphasized the company’s ability to “capitalize on the right long-term opportunities in our sector.”
The latest string of contracts in Nigeria highlights the company’s focus on diversifying its client base and strengthening its market position in regions with stable and growing energy demands.
The Main Pass IV, a jack-up rig designed for shallow-water operations, will be deployed at a Nigerian offshore site under the newly secured deal. The agreement builds upon Shelf Drilling’s existing operations in Nigeria, where the company has a strong foothold.
O’Brien noted that while financial terms of the contract have not been disclosed, the deal is part of Shelf Drilling’s broader strategy to expand its portfolio in West Africa, a region rich in hydrocarbon resources.
“This latest agreement follows closely on the heels of two other notable contracts the Dubai-headquartered drilling contractor secured in Nigeria earlier this year.”
Greg O’Brien, Shelf Drilling’s Chief Executive Officer
The company contracted its Shelf Drilling Achiever for a three-year term that began in October 2024, and also secured a two-year extension for its Adriatic I jack-up rig, set to start in February 2025.
As of September 30, 2024, Shelf Drilling reported a contracted backlog of $2 billion, a strong indicator of its operational stability and future revenue stream.
The company revealed that 32 out of its 35 rigs were under contract, representing a marketed utilization rate of 91%. This is a remarkable achievement in an industry where utilization rates can fluctuate significantly due to volatile oil prices and geopolitical factors.
The Nigerian Offshore Market
Nigeria, Africa’s largest oil producer, offers significant opportunities for offshore drilling contractors like Shelf Drilling.
“The country’s offshore oil and gas fields account for a substantial portion of its production.
“The ongoing investments in exploration and production will drive demand for drilling services in the coming years.”
Greg O’Brien, Shelf Drilling’s Chief Executive Officer
However, operating in Nigeria is not without its challenges. The region is often associated with political instability, regulatory hurdles, and security concerns, particularly in areas near the Niger Delta. Additionally, fluctuating global oil prices can impact investment levels in the Nigerian oil and gas sector.
Despite these challenges, Shelf Drilling’s continued investment in the region suggests confidence in Nigeria’s long-term energy prospects.
The recent contracts in Nigeria align with Shelf Drilling’s broader strategy to secure long-term growth in high-potential markets. The company’s ability to adapt to industry headwinds, coupled with its focus on operational efficiency, positions it well to navigate an increasingly complex energy landscape.
Moreover, the growing demand for oil and gas in emerging markets, combined with the gradual recovery of global energy demand post-pandemic, bodes well for offshore drilling contractors.
Shelf Drilling’s robust backlog and high utilization rates provide a strong foundation for sustained growth.
While challenges such as market volatility and geopolitical risks persist, Shelf Drilling’s strategic approach and proven track record suggest it will continue to play a pivotal role in meeting global energy needs, particularly in shallow-water regions like West Africa.
Shelf Drilling’s new contract for the Main Pass IV jack-up rig in Nigeria marks another milestone in the company’s growth journey. By securing multiple long-term agreements in a challenging market environment, the company has demonstrated resilience and adaptability.
With a strong backlog, high utilization rates, and a focused strategy, Shelf Drilling is well-positioned to capitalize on emerging opportunities in the offshore drilling industry.
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