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exercise existing contract options, and well still proceed. is reasonable to assume that the number that has already happened in West Africa Looking a bit further into the data, Af- of contracts fnalized during the next few and the UAE. Of course, not every rig will rica, Southeast Asia, and the Middle East months will be minimal. Note, however, have its options declined, but day rates for have the highest dollar amounts at stake, during this writing there was a contract those that are extended will in most cases and the three regions comprise 50% of the signing for a short semi program in the be substantially reduced from where they total options value. In Southeast Asia and North Sea, so not all is lost!

would have been a little over a month ago. the Middle East, the options consist entire- The world has been transformed in the

However, for operators that do not have ly of jackup contracts, whereas the $136.1 past month. Many are predicting a pro- the fnancial wherewithal to withstand the million in the US Gulf of Mexico concerns longed downturn in the oil market but revenue decline that sub $30 oil brings, mainly foating rig options. Rig managers, there remains much uncertainty over its the decision to release a rig will be an easy Valaris ($331 million) and Transocean duration and depth. COVID-19 is having one to make. ($195 million) have the highest dollar a catastrophic impact on oil demand and

In looking at contract options where amounts of options to be exercised and are how long the various travel bans and lock- the term is scheduled to begin this year, the most exposed. Figure 1 shows the cal- downs continue is anyone’s guess. In the

RigLogix has identifed 75 rigs with 95 culated 2020 contract options potentially meantime, Saudi Arabia and Russia’s fall- options (some have more than one) where at risk by region. out over oil production has released more the term is scheduled to begin this year. Most of the nearly 300 drilling programs supply into the market, and even a recon-

Since option rates are not often known, that currently have 2020 start dates will be ciliation there will not be enough to reverse

Riglogix used either the existing rate or an delayed. Riglogix has heard that the plan- the damage caused by the many millions of internally estimated rate for the calcula- ning process for some drilling programs is barrels a day of demand being taken out of tions. The results show total revenues of continuing, but at a much slower pace (as the market. History tells us that eventually, over $1.6 billion tied up in the options. As if that was even possible in some cases). the markets will recover but in the mean- we have already stated, many of these will Conversely, some contract awards, partic- time, operators, rig owners and services not be exercised, but those not scheduled ularly those where drilling is not planned companies will once again have to “hunker to start until later in the year could very until 2021 or later, should continue but it down” and ride out the storm.

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