Dubai-headquartered Shelf Drilling has boosted its order book by than half a billion dollars and remains upbeat on the future despite the recent suspensions of rig charters in Saudi Arabia.
“While the rig suspensions in Saudi Arabia have created some short-term challenges and uncertainty, we are confident that our strong customer relationships, proven operating track record and leading position in key markets will allow us to capitalise on the right long-term opportunities in our sector,” Shelf chief executive, Greg O’Brien, said on Wednesday.
The shallow-water drilling specialist in the third quarter secured firm contract awards and extensions totalling $558 million including with unnamed operators in Nigeria, Chevron in Thailand and Equinor in the North Sea. These awards included a multi-year contract which commenced in late October for one rig redeployed from Saudi Arabia to West Africa, where the company sees additional attractive opportunities for its rigs.
Shelf also has the right to market its soon-to-be suspended rig High Island IV during its time off charter from Saudi Aramco. The state giant has issued a notice of suspension for up to one year for the High Island IV, which is expected to come into effect late this month.
Shelf in Q3 closed the $60 million ($56.5 million net) sale of its rig Baltic. While another subsequent bright spot saw the drilling contractor obtained regulatory approvals for the Shelf Drilling Barsk rig in Norway, where its charter with Equinor is expected to commence this month and run through June 2026.
Oslo-listed rig owner Shelf’s Q3 adjusted EBITDA was $114 million — virtually unchanged from one year prior — primarily due to $45.2 million for the acceleration of mobilisation revenue for the two suspended rigs in Saudi Arabia.
However, the drilling contractor’s top line was impacted by a lower level of utilisation as a few drilling units were preparing for new contracts.
Shelf’s effective fleet utilisation decreased to 77% in the third quarter from 80% in the previous three months, primarily due to the suspension of five rigs in Saudi Arabia, planned maintenance and shipyard for one rig in Saudi Arabia, and the sale of the Baltic that had been operating in West Africa.
This was partially offset by the commencement of a new contract for one rig in Vietnam in August.
As of 30 September, the company’s contracted backlog was $2 billion with 32 of 35 rigs under contract representing a marketed utilisation of 91%.
Shelf Drilling’s third quarter average earned dayrate was $81,800, down marginally from the prior three months, while the contractor’s Q3 total operating and maintenance expenses decreased 6% to $132.6 million over the same period.
The sequential decrease in expenses was primarily due to lower operating costs for four suspended rigs in Saudi Arabia, two rigs in West Africa, one that suffered structural leg damage and one that was sold in September 2024, and lower shipyard costs for the jack-up Shelf Drilling Perseverance that in August commenced operations for PetroVietnam offshore Vietnam.