Oslo Stock Exchange-listed oil services company Archer has tucked a long-term contract extension under its belt with Equinor, a Norwegian state-owned energy giant, for platform drilling services off the coast of Norway. This assignment comes with an estimated contract value of NOK 8 billion (nearly $762.67 million).
Thanks to the four-year contract extension, Archer will provide platform drilling services to nine out of Equinor’s 19 installations on the Norwegian Continental Shelf (NCS), enabling it to service Gullfaks A, B and C, Sleipner A, Snorre A and B, and Statfjord A, B and C.
Dag Skindlo, CEO of Archer, commented: “This is a large and important contract win for Archer. It provides us with excellent activity level and visibility over the next four years. Archer remains the largest platform drilling services provider for Equinor with close to 50 percent of the platforms offshore Norway. This contract underlines our ability to deliver safe and efficient platform drilling operations.”
This contract extension is slated to begin on October 1, 2024, in direct continuation of the current contract. Until then, Archer will operate under the current contract, servicing 12 rigs on the NCS. The company estimates 15-20% EBITDA growth in 2024 and a further reduction of leverage ratio between 2.4 and 2.7 at year-end 2024.
While Archer’s order backlog stood at $1.7 billion, equivalent to approximately NOK 18 billion at year-end 2023, the contract extension with Equinor has boosted the firm’s order backlog by approximately 40%.
Last year was productive for Archer, as the company got hold of multiple new assignments, including a multi-million-dollar decommissioning contract with Repsol Sinopec to execute the plug and abandonment (P&A) work covering 32 wells in the UK North Sea.