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for the next few years, which will keep many of the deepwater rigs idle through 2019. With very little precedence to go by, the true cost of reactivation is still unclear. Publically disclosed estimates of $25-$35 million for reactivation of a 6th genera- tion drillship only covers capex estimates, which are incurred by the drilling contractor and do not re? ect the true overall picture of putting a rig back to work. There are 100 newer

Solutions for the Oil & Gas Industry Solutions for the Oil & Gas Industry generation rigs in hot mode today (fully crewed and operable), but only 20% of the units have ? rm contracts into 2020. Despite efforts to keep rigs as warm as possible, long-term idle time will likely result in fewer economical choices for operators in 2020 versus what is available today.

Survival mode

Keeping a rig hot is not an easy task under current market

SPIR STAR is recognized worldwide as a conditions. With limited opportunities for new ? xtures, there leading provider of high pressure fluid is heavy emphasis to maintain revenue ef? ciency (measure of how much a rig earns while under contract). Every drilling control products. We offer an extensive contractor in the deepwater space must maintain strict ? nan- inventory, as well as a knowledgeable cial and operational discipline in order to keep contracted rigs staff that can assist you with any technical under full rate at the lowest possible cost without compromis- ing safety. So far drillers appear to be up to the task as the issues that you may have.

major contractors are maintaining revenue ef? ciencies above 95% with razor thin margins and no major safety incidents.

Our commitment to providing quality

Over the past two years, as dayrates have continued to free fall, drilling contractors have successfully reduced daily oper- products and outstanding customer ating costs by upwards of 30% by reducing onshore logistics, service has established SPIR STAR as a key manpower, and wages.

supplier to the industries we serve.

Currently, there are 147 ? oating rigs under contract of which roughly 80% are working. Among the working ? eet, 45% are operating in Brazil and US Gulf of Mexico. Total well demand in 2017 is forecast to drop another 10% with declines expected in both exploration and development programs. As a result, rig demand is expected to be somewhere around 110 units average Featured Products for the year, so we expect to see a continuation of rigs going idle at the end of their contracts, and contractors will ? ght to get one well at a time in an effort to keep rigs hot. Long-term fun- • Hose Assemblies up to 46,000psi damentals favor a return to deepwater activity, but the climb up

Working Pressure is poised to be even more challenging than the fall. • Temperature ratings up to 300° F

Leslie Cook is a principal analyst in the • High Pressure Fittings & Adapters

Upstream Supply Chain Group at Wood • Quick Disconnects up to 30,000psi

Mackenzie. She is recognized for her • High Pressure Valves up to 60,000psi sector expertise in the supply and demand • High Pressure Tubing up to dynamics of the offshore drilling market. 60,000psi • Instrumentation Valves • Tube Compression Fittings

Floating rig contract rollovers

Current ?eet status 120

Gen 2-3 Gen 4-5 20 90

Gen 2-3

Gen 6-7

Gen 4-5 18 80 % Older rigs (gen2-5) 100

Gen 6-7 16 % Newer rigs (gen 6-7) 70 14 80 60 12

Service - Selection - Solutions 50 60 10 Specialists in high pressure: 40 8 Hose | Adapters | Quick Disconnects | Valves 40 30 6

Floating rig count 20 4 20

Percentage rollovers

Contract rollover count 10 2 © 2017 SPIR STAR 0 0 0

Q1 2017 Q2 2017 Q3 2017 Q4 2017

Hot Warm Cold Retired

Source: Wood Mackenzie

Source: Wood Mackenzie oedigital.com March 2017 | OE 23 022_OE0217_Feat2_Leslie.indd 23 2/21/17 5:10 PM