Offshore rig market recovery underway, says new report

Aug. 22, 2021
But August year-over-year contracting activity levels may see a decline.
Offshore staff

NEW YORK CITY – Offshore rig contracting activity has cleared “easy” year-over-year comps for five straight months from March through July, according to Evercore’s August 2021 Offshore Rig Market Snapshot.

The report notes, however, that “the streak could be at risk with 18 contracts announced for August thus far [as of August 16] tracking below the year ago total of 35.” A total of 10 jackup and eight floater contracts have been confirmed this month, as of August 16, versus a total of 19 and 16 respectively a year ago.

Jackups continue to slightly outpace floaters on a contract count basis, but floaters currently make up 44% of all contracts announced year-to-date (YTD) vs. the recent peak of 39% in 2018. “More importantly on a rig-year basis,” the report notes, “floaters are on track to beat the recent 2019 peak by 13% for the best year since 2014.”

With three term contracts announced for Valaris including a 3.5-year contract from TotalEnergies for the DS-11, floaters account for 68% or 8 of the 12 rig years announced this month, which is only slightly below the 17 total rig years booked a year ago, according to the report. Overall, floaters have led on a rig-year basis for three of seven months this year and account for 30% of the YTD total.

“With contractors retiring another semisub and three jackups over the past month, bringing the YTD total to 16 floaters and 24 jackups, the offshore rig market recovery appears to be finally underway,” the report concludes.