Report: Rig contract terms are lengthening

March 16, 2022
Some 54% of the global jackup fleet contracted for the remainder of 2022.

Offshore staff

NEW YORK CITY A total of 15 rig contracts have been announced in March thus far, tracking in line with 14 as of this time a year ago, according to Evercore ISI’s latest Offshore Rig Market Snapshot.

“But on a rig year basis, nearly 12 rig years have been awarded vs. less than 8 a year ago, supporting our view that contract terms are lengthening for both floaters and jackups,” the report said. Noble Corp. was “the clear winner” over the past month, the report commented, with two jackups awarded new 3.5-year terms each from Qatargas while four floaters working for ExxonMobil in Guyana were awarded a total of 7.4 years of additional term.

Options were also exercised for offshore Norway and the US Gulf of Mexico, with Petrodata Rigbase estimating that Noble increased its floater and jackup contract coverage by a net 6.5 and 7 years respectively over the past month.

Term jackup contracts were also awarded to Valaris by Saudi Aramco; Gulf Drilling International by North Oil Company; and Shelf Drilling by PTTEP for a total of 8 right years as jackups make up 51% of rig contracts and 65% of all rig years, year-to-date.

The global jackup fleet (including 29 newbuilds and 69 cold stacked) is 54% contracted for the remainder of 2022, ahead of the year-ago 48%, while the global floater fleet (including 23 newbuilds and 29 cold stacked) is nearly 50% contracted for the remainder of 2022, about 800 basis points higher than a year ago and on par with levels since in early 2016 and late 2019 and 2021.

The report also said that the forward year contracted status for floaters is 27%, well above the year-ago number of 19% and closer to the forward outlook as of early 2017. “We would not be surprised to find the floater fleet more than 50% contracted heading into 2023, well above the trailing five year average of 39%,” the report added. “Jackup coverage could increase to 48% by year-end, about 600 basis points higher than its five-year average based on recent trends.”