Oil and gas driller Advanced Energy Services (ADES) has mutually agreed with its client in Saudi Arabia to temporarily suspend operations on five of its 33 offshore jack-ups operating in the country for up to 12 months.
One of the suspended rigs will be deployed to work on a recently awarded $94m campaign for PTTEP in Thailand that is slated to begin operations in the second half of 2024. The company stated that a second rig was set for another imminent opportunity in the region. According to ADES, the new contract award in Thailand and the second imminent award in the region come at higher daily rates compared to the drillers’ current offshore average daily rates.
The temporary suspensions for the five rigs in Saudi Arabia will be effective seven days from the signing date of the mutually agreed suspension notice, or when the work currently in progress is completed and the drilling unit is released, whichever is later.
Although ADES did not reveal the client, or which rigs are suspended for that matter, it is likely Saudi Aramco. The company’s website claims that all 33 jackups working in Saudi Arabia are contracted to the Saudi giant.
The suspension mechanism does offer flexibility for the suspended rigs to complete the firm and optional terms of new deployments before resuming work in Saudi Arabia post-suspension. Also, the original term of the suspended contracts will automatically be extended for a period equal to the suspension for each rig, preserving the remaining backlog for all five rigs.
Company management did again confirm that its 2024 financial guidance will have an increase of around 35- 42% year-over-year, regardless of these suspensions.
This is not the first company to be hit with a suspension this month. Shelf Drilling received a notice of suspension of operations from a Middle Eastern customer for four of its rigs.
The company also has the right to actively market the rigs to other customers, but it can also terminate the contracts for the rigs during the suspension period. Even though the rigs and the client were not disclosed, Shelf Drilling’s fleet status report also points to Saudi Aramco as the possible client as it is the only Middle Eastern client with four or more Shelf jackups working for it.
