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Archer wins majority of new Statoil drilling contracts

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Out of the eighteen contracts to supply drilling services on Statoil offshore rigs on the Norwegian continental shelf (NCS), Archer, a Norwegian ‘oil services company’, has won twelve. The firm value of the contracts is NOK 6 billion (€622 million) with the maximum value is estimated by Archer to be up to NOK 15 billion (€1.5 billion).

The contracts are effective from 1 October 2018 and last until at least 2022, with scope for contract extensions. As part of the agreement, Archer is required to ‘further integrate, collaborate and assume additional responsibilities on location’ with Statoil and its service contractors to improve efficiency.

“We look forward to continuing our working relationship with Statoil both in Norway and Brazil and being an integral part of this dynamic industry shift to integrated operations, maintenance and well services in combination with Statoil’s nominated Service Contractors. The eventual integrated scope will require engineering and rental services, and thus increase our projected revenue and profitability in Norway going forward,” said John Lechner, Archer’s CEO.

Statoil says that the long-term contracts will increase predictability and ensure stable operating conditions for the company and its suppliers.

“The contracts provide us with a good foundation for close and predictable collaboration. We thus facilitate safe and efficient operations. The contracts are aimed at improving our joint competitiveness and enabling a sound level of activities,” says Statoil’s chief procurement officer, Pål Eitrheim.

Altogether, the eighteen contracts are expected to employ approximately 2000 people.

Mid-January 2018, Statoil announced that it had been offered interests in 31 exploration licenses on the NCS. The interests came as part of the Norwegian government’s 2017 Awards in Predefined Areas (APA), a round of licencing used to ‘facilitate exploration of geologically mature parts of the shelf using current methods’. The Norwegian government is the majority shareholder of Statoil. The company currently operates over forty assets on the NCS.

Jez Averty, Statoil’s senior vice president for exploration in Norway and the UK said in a statement: “The NCS is the core of Statoil’s business, and we are pleased with the awards in the 2017 APA round. Licenses awarded through the APA-rounds give access to acreage that can provide important resources. We saw that in 2017 when we made a significant discovery in the Norwegian Sea – Cape Vulture – in a license awarded in the APA 2015 one year before we made the discovery. The APA-rounds are important to maintaining the exploration activity on the NCS. New discoveries are needed in order to offset the declining production on existing fields”.