Positive offshore rig market trends seen in 2021

Offshore drillers spent much of the past year working back to where they had been at the start of 2020, according to Evercore ISI’s latest Offshore Oracle report.

Several contractors emerged from restructuring and the industry retired an additional 20 floaters and 35 jack-ups, bringing the total amount retired since 2014 to 178 floaters and 160 jack-ups for a net 40% and 5% decline in global supply, respectively.

Meanwhile demand began to improve, particularly for floater rigs, with their marketed utilisation increasing from 75% to nearly 83%. For jack-ups, the marketed utilisation improved from 79% to 83%. The report notes that day rates are beginning to rise in select markets, most notably for dual-BOP drill-ships in the Gulf of Mexico and high-spec, harsh-environment assets.

While select markets continue to lag the recovery, momentum is building with the Brent oil price stabilising north of US$70/bbl.

The painful and lengthy offshore downturn is inflecting, the report observes; and along with a dramatically smaller fleet, offshore rig contractors have led the OFS consolidation cycle.

Noble Corporation acquired Pacific Drilling at the start of the year and has plans to merge with Maersk Drilling in 2Q 2022, which should drive US$125 million in cost synergies, Evercore says.

Source: Offshore Magazine