Page 27: of Maritime Reporter Magazine (June 1999)

Market Reports

Offshore: Gearing Up For The Rebound

Total Rig Count

Source: Baker Hughes www. bakerhughe s. com

While 1998 was difficult for the off- shore drilling service and supply indus- try, but it seems 1999 will be worse.

While the price of oil unquestionably maintained a lower profile throughout 1998, the massive Exploration & Pro- duction (E&P) were not fully felt until this year, and the recent release of 1Q earnings from the industry majors fully reflect this.

While the cyclical nature of industry is expected, it doesn't make it easy. Layoffs, rig can- cellations, drilling postponements — all indicators of turbulent times for the oil industry, as low oil prices continue to alter business from the boardroom to the drilling rig. Utilization of the world's floating rigs has continued to decline in recent months according to Offshore

Data Services, Inc.'s latest forecast released in its Offshore International newsletter. Large reductions in explo- ration and production spending are beginning to take effect, and even with the recent oil price increase, floating rig utilization is destined to trend downward over the coming months.

The offshore rig market continues its slide with worldwide rig demand falling by 32 units from December 1998 to

March 1999, according to Offshore Data

Services. In the first three months of 1999, worldwide rig demand fell from 473 rigs to 441 rigs, the lowest level of demand since August 1992.. While world-wide rig demand has bounced back to 460 in April, a one-year, 122 net decline in rig demand is staggering in its own right, as oil company cutbacks undoubtedly will push demand lower.

The U.S. Gulf of Mexico rig count is the poster child for the ravaging effects of low oil and natural gas prices.

Demand in the region has steadily declined since early 1998 and currently stands at 115 rigs, a 15-rig decrease over the last four months. With a rig fleet of 180, utilization has dropped to 63.9 per- cent. Amazingly, floating rig day rates have held their own since Jan. 1.

Fourth-generation semis continue to sign deals in the $150,000 to $160,000 range, just as they did in January. Day rates for the U.S. Gulf's third-genera- tions semis also have held steady; these rigs continue to earn between $95,000 and $131,500 per day. Second-genera- tion units in the U.S. Gulf are making between $35,000 and $58,000/day, com- pared to a day rate range of $45,000 to $50,000 in January.

June, 1999

In the offshore regions of Latin Amer- ica, day rates for second-generation semis have fallen from a range between $121,600 and $142,200/day in Decem- ber 1998 to between $70,000 and $94,000/day in March. Day rates for third-generation semis also reflect the region's tough market conditions.

When looking at day rates in the North

Sea/NE Europe region, one number — $100,000 — sticks out. That is how far day rates for North Sea third-generation semis have fallen. Rigs that were gar- nering between $102,500 and $135,000/day in early Jan. are signing new contracts in the $30,000 to $51,000 range. The dramatic day rate drop is the result of rigs completing long-term con- tracts and finding new work available, but only at rock-bottom prices. Fourth- generation semis in Northwest Europe are earning between $123,000/day and $157,000/day. The European rig count has showed remarkable

JACK-OF-ALL-TRADES.

The Lang Range is built to suit the varying needs of all types of marine galleys. • Blue and brown water vessels. • Cooktop arrangements: griddles, hot tops, french plates. • Bake and Roast or Convection Cooking.

To learn more about Lang's line of heavy- duty marine galley equipment, call: 1-800-882-6368 6500 Merrill Creek Parkway

Everett, WA 98203

Circle 211 on Reader Service Card

ACL INDUSTRIES, INC.

MANCHESTER, NH USA

Phone: (603) 668-1276 / Fax: (603) 668-1281

E-mail: [email protected]

INDUSTRIES, INC.

See us on the World Wide Web: http://www.aclindustries.com

Afeiv Console

System Technologies for the EOS!

It is designed to fit like a glove in any ECR for refit or new construction with all the advantages of Big

Green's modular technology. These new concepts in console system design lets you select the layout.

We make it modular for one day assembly and the lifetime maintenance access is unparalleled in the marine industry. • ACC certified shown above. • Logger-installed in pull-out draw on left side. • Customer requirements of gauges and annunciator easily accommodated. • Redundant displays CRT, LCD, plasma standard. • Keypad summary alarms. • Lightweight. • Data buss control and monitoring. • 2 wires to the console above monitors every point on the vessel. » Call today |T for more iH information!

ELECTRONIC MARINE

SYSTEMS, INC. 800 Ferndale Place

Rahway, NJ 07065 732.382.4344 732.388.5111 fax [email protected] e-mail http://www.emsmarcon.com

Circle 159 on Reader Service Card 29 Circle 352 on Reader Service Card