NEW YORK CITY – Offshore drilling rig contracts continue to lengthen according to Evercore ISI’s latest “Offshore Rig Market Snapshot.”
A total of 16 rig contracts have been announced in April thus far, tracking above 10 as of this time a year ago, according to the report. Contracting activity slowed in the back half of March, as only 27 contracts were announced all month as compared to 36 a year ago.
“However, contract terms are clearly lengthening as 27 contracts were announced for 18 rig years versus 36 contracts for 20 rig years in March 2021,” the report noted, “with the average contract term increasing to 250 days from 201 days.”
This trend has extended into April as 8 of the 16 contracts announced so far are for terms of a year or more, with the 509-day average tracking above the 1Q 2022 average of 338 days, says Evercore. Jackups continue to lead floaters on an absolute basis, with seven of eight term contracts driving the segment to account for 75% of all rig contracts and 91% of all rig years.
Notably, three term contracts were signed for Egypt; as well as two for Saudi Arabia and one each in Iran and the Netherlands, “with the broad geographic distribution of term demand a positive indicator for the overall market, in our view,” the report said.
There have been 20 term jackup contracts announced year to date, with 14 in the Middle East, four in the North Sea, and two in Asia. There have also been 13 term floater contracts announced year to date, with nine in South America, two in the North Sea, and one each in West Africa and the Indian Ocean.
04.18.2022
