Offshore staff
NEW YORK CITY – A total of 34 drilling rig contracts were confirmed in December, down sharply from 87 in November and 40 a year ago, according to Evercore ISI’s “Offshore Rig Market Snapshot” of January 2020.
However, the report notes that these 34 contracts accounted for an “impressive” 60 rig years (vs. 65 in November and 45 a year ago) as 12 contracts (34%) were signed for a year or more.
Saudi Aramco renewed six jackups as the Middle East continues to drive jackup demand, with contract terms averaging more than 2.5 years, the highest since February 2014.
Meanwhile four floaters were signed for a year or more in Norway (2), Trinidad & Tobago, and Nigeria. Dayrates were disclosed for a sixth-generation drillship off Trinidad at $250kpd, and an UDW harsh environment semisubmersible off Norway received more than $350kpd.
Overall, offshore rig contracting activity ended the year up 11%, with jackups up 13% and floaters up 8%. The 13% increase in the number of new jackup contracts is equivalent to a 50% increase in rig years, while floater rig years increased by 6% as contract terms weakened slightly but have likely bottomed.
Commenting on the “strong momentum extending into 2020,” the report noted that a total of 17 term contracts have been signed thus far, accounting for 56% of the 30 total contracts announced to date (flat from a year ago) for 55 rig years.
Contract terms for jackups have continued to improve, with 13 (of 18) contracts for a year or more as ADNOC renewed 10 standard spec units and Saudi Aramco renewed two additional jackups. Shelf Drilling also secured a two-year plus a one-year option contract for offshore Thailand with Chevron. On the floater side, 4 of 12 units were signed to term work offshore Brazil, China, UK and the US GoM.
The report further commented: “We are encouraged by the broad and geographically diverse demand for floaters, which combined with lengthening contract terms signal a steadily improving market. Dayrates are clearly off the bottom and should march higher as the market continues to tighten.”
01/20/2020
