Mid-term outlook strong for jackup construction

Lamprell says the jackup rig construction sector remains extremely competitive, despite a substantial increase in the number of rigs ordered last year, including those commissioned on a speculative basis.

May 1st, 2014

Offshore staff

DUBAI, UAE – Lamprell says the jackup rig construction sector remains extremely competitive, despite a substantial increase in the number of rigs ordered last year, including those commissioned on a speculative basis.

Demand is likely to tail off this year as operators focus on putting to work units being delivered over the next 18 months.

Although thedeepwater drilling segment is experiencing capex budget pressures, the fabricator adds, global shallow-water fleet utilization remains close to record levels. Average jackup day rates remain strong, with reasonable growth over the past year.

On average the age of theglobal jackup fleet is more than 25 years, with the economics of aging rigs leading to a divergence of day rates between older and newer units. As a result, Lamprell foresees fleet replenishment to bolster demand and drive a return to order growth in 2015 and 2016.

Demand for rig refurbishment should also stay strong, Lamprell says, with older assets either being maintained until they are replaced or converted for alternative use. But there is growing competition at the lower end of the market in particular, with increased numbers of new entrant yards to this market.

Lamprell itself has a $2.2-billion backlog of jackup newbuilds.

The fabricator is seeing increased competition from yards inAsia that appear to be willing to offer clients back-ended payment terms.

05/01/2014

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