Page 8: of Offshore Engineer Magazine (Nov/Dec 2023)

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MARKETS OFFSHORE DRILLING RIGS result in demand growth of up to 36 rigs year-on-year and cial Periodic Survey (SPS) in place and 40 are already over a 3% increase in global marketed utilisation. 40 years old. Despite this, according to Westwood analysis, approximately 14 jackups, 12 drillships and 12 semis could be reactivation candidates. However, infation and supply 2. Little Attrition and Further Supply Growth

As stated in our earlier Offshore Engineer article ‘Rig chain constraints have brought longer shipyard times and

Dayrates Have Risen, So Where Are All The New Rig Or- higher costs associated with restarting a rig, therefore this ders?’, Westwood does not expect a wave of new construc- is not an easy or quick fx for supply concerns.

tion orders in the new year, as drillers continue to focus The lower attrition that has been recorded in 2023 (just on fnancial prudence. However, it is likely that further two rigs removed from the market) will likely continue supply will be added through reactivations and newbuild into next year too, as rig owners hold onto older units in rig deliveries, which offers a more economically practical hopes they may eventually be put back to work, especially option in the short term. since little to no new rigs are being built.

With the anticipated increase in demand next year, and even with some expected higher availability in the frst half 3. Dayrates to Continue North – but don’t of the year, marketed utilisation is forecast to reach as high expect to see all Floater Fixtures at $500,000 as 96%. This will result in a limited choice of rigs for new This year has brought with it continued increases in deals, which could lead to more sublet activity and/or po- dayrates for jackups, semisubs and drillships – with the tential delays to planned campaigns if additional units are latter two foating rig types now both having witnessed not added to active supply. clean dayrates (excluding additional services such as MPD

The number of reactivations and newbuild deliveries or mobilisation) at or above $500,000 per day. decreased by 64% this year in comparison to 2022, which These market leading rates are a positive sign, especially is majorly attributed to national oil companies (NOCs) in for rig owners and managers that have grappled with low the Middle East having sated their near-term jackup ap- dayrates since 2014. However, this is unlikely to be the petites after a contracting feast as part of a bid to ramp up norm for long-term contracts starting in 2024. The ma- domestic supply and production. Though foating rig reac- jority of fxtures in 2023 with dayrates that fell between tivations and deliveries also decreased year-on-year, again $480,000 to $500,000 per day were for relatively short- this was mostly attributed to Brazilian NOC Petrobras term deals (i.e. 1-2 wells, 30 -200 days) or do not begin cutting its award activity by 50% after a slew of long-term until 2025 onwards. deals made in 2022. Next year Westwood expects a continued variance in

However, this is expected to be short lived with Petro- foater dayrates with some long-term deals that could still bras in the market with several long-term foater tenders be fxed in at the mid-to-high $300,000s as well as short- that should result in three to four further rigs on their term deals that we expect will further exceed those leading books, meanwhile ONGC many need as many as six more rates already witnessed this year.

jackups next year, not to mention anticipated increased Meanwhile, the jackup segment has now seen a contract jackup activity in Southeast Asia and foating rig demand fxed with a dayrate of $180,000 for work off Australia, in West Africa. while two contracts have been fxed at over $165,000 per day for work in Southeast Asia. As is the case with the foat- ing rig segment, Westwood forecasts to see more upward

Newbuilds to Remain Highly Sought Afer

Companies such as Valaris and Borr Drilling have al- movement next year in line with the forecast tight market, ready announced plans to take delivery of newbuild rigs, but a likely continued range of rates based on term, loca- some of which have been delayed in yards for as long as a tion and technical specifcations.

decade. It is probable that newbuilds and stranded assets Ultimately, with the ever-tightening supply/demand will continue to be highly sought after in the new year, due balance, costly reactivation and new construction econom- to their modern and high-tech caliber. There are still 16 ics as well as infationary pressures, Westwood expects day- jackups, fve semis and 11 drillships in shipyards with no rates to continue their northward trajectory in 2024 across contracts yet in place. the board. With that in mind, we predict that operators

There are 86 cold stacked rigs in total, of which 39 have will continue locking in rigs earlier for their contracts in been idle for over fve years, only eight have a fve-year Spe- a bid to secure the right assets at as low a price as possible. 8 OFFSHORE ENGINEER OEDIGITAL.COM