Report sees drilling rig contracts increasing
Evercore ISI’s Oilfield Services, Equipment & Drilling Group has released its most recent Global Offshore Rig Market Snapshot.
NEW YORK – Evercore ISI’s Oilfield Services, Equipment & Drilling Group has released its most recent Global Offshore Rig Market Snapshot.
Seven contracts (all new mutuals) have been announced thus far this month, slightly below pace of eight at this point in September, the analyst found.
Contracting accelerated slightly in the back half of last month as a total of 19 contracts were signed, above 17 a year ago but below the September totals of 29 in 2014 and 40 in 2013.
A total of 15 jackup contracts were signed last month, but only two were for terms of a year or more (ENSCO 84 and Egyptian Drilling’s Senusret to Saudi Aramco). All four floater contracts were short-term, averaging only 40 days.
So far in October, three floater contracts have been signed averaging 246 days versus four jackup contracts averaging only 52 days.
Utilization continues to trend lower for rigs rolling off contract and early contract terminations; three floaters and two jackups were received early contract terminations, Evercore reported. Overall, the contracted global floater fleet fell by three units or 2% to 150 while the contracted jackup fleet fell by two units or 70 basis points (bps) to 295. Average day rates edged up 90 bps for floaters to around $414,000/d but fell 3.7% for jackups to $126,000/d.
In its previous report, Evercore said thatENSCO 8506 and Ocean Rig Mylos would be cold stacked. Ensco announced in its Oct. 14 fleet status report the DS-3 will also be preservation stacked. Officially over the past 30 days, the industry cold stacked one floater (Ocean Rig Mylos) and two jackups (Hercules 350, Transocean Honor), and the analyst expects that figure to increase as 25 floaters and 25 jackups are rolling off contract by the end of this year.
Contract coverage for 2017 slipped by 90 bps to 34% for the global floater fleet but improved by 30 bps to 29% for the global jackup fleet. This compares unfavorably with the forward year coverage of 48% for floaters and 34% for jackups from this time last year, despite the industry retiring 23 floaters and 14 jackups in the last 12 months.
Floater coverage was unchanged or declined for all companies in our universe due to early contract terminations, but jackup coverage improved slightly forNoble, Ensco, and Rowan, and Paragon Offshore.
Overall, the forward one-year coverage improved relative to a year ago for Diamond’s floater and jackup fleet, as well as Seadrill’s and Vantage’s jackup fleets.