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Valaris (VAL) Receives Rig's Suspension Notice From Aramco
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Valaris Ltd. (VAL - Free Report) , an offshore driller, stated that its joint venture (JV) in Saudi Arabia, ARO Drilling, has received a suspension notice for one of its 19 contracted rigs. The Valaris 143 jack-up rig got a suspension notice from Aramco for a period of up to twelve months. The contract was previously slated to end in December 2024.
The rig, Valaris 143 (EXL I), has been leased to ARO under a bareboat charter contract. ARO Drilling is a JV between Valaris and Saudi Aramco. ARO Drilling is in discussion with Aramco to determine the effective date of suspension. Valaris also mentioned that ARO can opt to terminate the drilling agreement with Aramco during the suspension period.
The suspension notice came after Aramco received a directive from Saudi Arabia’s Ministry of Energy in January 2024. The directive instructed Saudi Aramco to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day (MMBD) and discontinue plans to further increase it to 13 MMBD.
Apart from ARO Drilling, Borr Drilling also received a suspension notice from Saudi Aramco. Furthermore, four Shelf Drilling jack-ups, five ADES jack-ups, three Arabian Drilling jack-ups and four COSL jack-ups have also been affected by these suspensions. Along with these jack-ups, three Saipem jack-ups and two Egyptian Drilling jack-ups may also be hit.
Aramco is taking a staggered approach to the suspensions. This means that some rigs will be suspended this month, while some other notices will arrive in the first quarter of 2025.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Hess Midstream LP owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.
Helmerich & Payne is primarily involved in the contract drilling of oil and natural gas, with operations in all major U.S. onshore basins as well as South America, Australia and the Middle East. In the past months, the company has secured eight new rig contracts with Saudi Aramco, thereby expanding its presence in the Middle East. With plans to capitalize on unconventional drilling growth opportunities, HP’s outlook seems positive.
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Valaris (VAL) Receives Rig's Suspension Notice From Aramco
Valaris Ltd. (VAL - Free Report) , an offshore driller, stated that its joint venture (JV) in Saudi Arabia, ARO Drilling, has received a suspension notice for one of its 19 contracted rigs. The Valaris 143 jack-up rig got a suspension notice from Aramco for a period of up to twelve months. The contract was previously slated to end in December 2024.
The rig, Valaris 143 (EXL I), has been leased to ARO under a bareboat charter contract. ARO Drilling is a JV between Valaris and Saudi Aramco. ARO Drilling is in discussion with Aramco to determine the effective date of suspension. Valaris also mentioned that ARO can opt to terminate the drilling agreement with Aramco during the suspension period.
The suspension notice came after Aramco received a directive from Saudi Arabia’s Ministry of Energy in January 2024. The directive instructed Saudi Aramco to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day (MMBD) and discontinue plans to further increase it to 13 MMBD.
Apart from ARO Drilling, Borr Drilling also received a suspension notice from Saudi Aramco. Furthermore, four Shelf Drilling jack-ups, five ADES jack-ups, three Arabian Drilling jack-ups and four COSL jack-ups have also been affected by these suspensions. Along with these jack-ups, three Saipem jack-ups and two Egyptian Drilling jack-ups may also be hit.
Aramco is taking a staggered approach to the suspensions. This means that some rigs will be suspended this month, while some other notices will arrive in the first quarter of 2025.
Zacks Rank and Key Picks
Currently, VAL holds a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Archrock Inc. (AROC - Free Report) , Hess Midstream LP (HESM - Free Report) and Helmerich & Payne (HP - Free Report) .Archrock presently sports a Zacks Rank #1 (Strong Buy), while Hess Midstream and Helmerich & Payne carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Hess Midstream LP owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.
Helmerich & Payne is primarily involved in the contract drilling of oil and natural gas, with operations in all major U.S. onshore basins as well as South America, Australia and the Middle East. In the past months, the company has secured eight new rig contracts with Saudi Aramco, thereby expanding its presence in the Middle East. With plans to capitalize on unconventional drilling growth opportunities, HP’s outlook seems positive.