Offshore drilling contracting activity cools off in September

Oct. 18, 2021
But positive signs of market recovery also seen.

Offshore staff

NEW YORK CITY – The offshore drilling contracting market cooled off in September and remains slower through the first half of October compared to this time last year, according to Evercore’s latest Offshore Rig Market Snapshot.

Only 18 rig contracts were announced in September, says Evercore, with the slow month extending into October where only 12 contracts have been announced to date versus 16 a year ago.

The split between jackups and floaters is about even on a contract count basis (five jackups versus seven floaters), “but floaters are leading on term with more than seven rig-years contracted versus less than three years for jackups,” the report noted.

According to the report, this trend is “due to a new almost three-year, $245,000/day contract from Petrobras for Seadrill’s West Jupiter.” The seventh-generation drillship completed its maiden contract for TotalEnergies off Nigeria in late 2019 and was briefly cold stacked in the Canary Islands from June 2020 to June 2021.

Evercore says that its sees “a couple of positive signs for the offshore recovery” from this new contract:

* Petrobras is back in the market and has contracted nine floaters this year for a total of 21 rig years

* The new $245,000/day dayrate is a step up from the recent dayrates of $190,000 to 215,000/day for ultra-deepwater drillships in Brazil

* Contract terms are clearly lengthening with the year-to-date average for floaters of 264 days up 20% year over year and 37% from the 2018 trough.

“We believe dayrates are poised to rise higher as Petrobras is a savvy operator known to lock into longer-term contracts while dayrates remain low,” the report concluded.