NEW YORK CITY — Contracting activity has accelerated since mid-March with 15 term contracts announced over the past 30 days, according to Evercore ISI’s latest Offshore Rig Market Snapshot.
The Middle East continues to drive jackup demand, accounting for four of five term jackup contracts thus far in April and 14 of 33 term contracts year to date, Evercore says.
Mexico trails in a distant second place with five term contracts year to date while demand appears to be picking up in Southeast Asia with five jackups securing nearly five rig-years' worth of work over the past month.
Overall, jackups made up 75% of all contracts announced thus far in April but 90% of all rig days awarded, lifting the year-to-date average contract term to a new high of more than 800 days or up 26% year-over-year.
On the floater side, Evercore says that average contract terms continue to be weighed down by operators exercising pre-existing options and a highly contracted sixth and seventh-generation drillship fleet. Only 38 floater contracts have been announced year to date for a total of 33 rig-years, resulting in an average contract term of 319 days that is in line with the 2021 average and slightly below 2016 levels.
Notably, harsh environment semisubmersibles have made up all of the floater contracts announced over the past 30 days, with eight units securing nearly six rig-years' worth of work, according to the report.
The firm noted: “We believe that the harsh environment semisub market may be tighter than it appears, particularly with two Odfjell units contracted for Namibia.” Evercore also commented that “Shell is likely to exercise a six-month option to mid-2024 for the Deepsea Bollsta since it recently filed plans to drill up to 10 new exploration and appraisal wells near its promising Jonker, La Rona and Graff discoveries” offshore Namibia.
Meanwhile, Vantage Drilling’s Tungsten Explorer drillship is currently drilling the first appraisal wells for TotalEnergies on its Venus discovery, also offshore Namibia, and had the first of three options exercised, keeping her contracted through 1Q 2024.
The report also noted that the Deepsea Mira is expected to commence a 300-day contract for Total in May and has options that could keep her contracted through 2024.