Offshore rig market starts new year on a positive note

Jan. 28, 2022
Longer contract terms are a sign of a tightening offshore rig market, says Evercore ISI.

Offshore staff

NEW YORK CITY – With Brent flirting with a new eight-year high, the offshore rig market is kicking off 2022 with good momentum, according to Evercore ISI.

In its latest Offshore Rig Market Snapshot, the firm notes that new multi-year contracts have been signed by Aker BP for Norway, APA for the UK North Sea, and Chevron for Thailand; and NOCs such as Petrobras, Saudi Aramco, QatarEnergy and ONGC have all signed new contracts over the past month.

“We believe [that] lengthening contract terms are signs of a tightening offshore rig market, with the diverse customer and geographic mix highlighting a broad offshore recovery has commenced,” the firm said.

Valaris and Maersk were the “clear winners,” Evercore said, booking 10 and 9 rig years in net backlog additions since mid-December, from Saudi Aramco and Aker BP, respectively.

Dayrates remain largely private, but Maersk’s extended frame agreement with Aker BP has an estimated value of $1 billion for two harsh-environment, high-spec jackups over five years, which implies an average dayrate of $275kpd or about $40MM in annual EBITDA per rig.

TotalEnergies also exercised a priced option for the ultra-deepwater drillship Maersk Valiant for another well off Suriname at $205kpd (+$5kpd), while ConocoPhillips secured the 400-ft Icon Caren for three wells offshore Malaysia at $75kpd. APA also renewed Diamond Offshore’s Ocean Patriot (midwater harsh environment semisubmersible) for two years offshore the UKNS for an undisclosed price.