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MARKETS OSVs ompared to 2024, the composite dayrates, calcu- operators fnalize rig contracts, procure long-lead items, and lated as a weighted average across size categories, secure specialized support tonnage. Consequently, while the declined by approximately 16% for PSVs and 14% FID and drilling program pipeline is expected to strengthen

C for AHTS vessels. In tandem, utilization also soft- from late 2026, the tangible uptick in deployment and day- ened, with the number of working vessels down 19% and 8% rates for these premium vessels will likely only materialize respectively, a direct refection of weaker underlying demand. meaningfully from 2027 onwards, aligning with the frst

Across geographies, this theme was evident as global phase of active drilling operations in the feld.

markets cooled from the momentum of earlier strong

Macro Backdrop and Structural Drivers years. From the waters of Southeast Asia to the coasts of

Australia, the industry pressed pause on some of its largest This market trajectory, characterized by measured bets with projects such as North Ganal, Lang Lebah, Do- growth, regional divergence, and pending FIDs unfolds rado, and Browse seeing their fnal investment decisions against the broader economic backdrop. As of early Febru- pushed back from their initial planned dates. On the sur- ary 2026, Brent crude is averaging in the high USD 60s face, these headlines may appear negative, but these de- per barrel. The near-term consensus points to a softer 2026 ferrals have also helped spread out the investment cycle, average, likely settling in the USD 60s as inventories build. creating a more balanced pace for the rest of the decade. Crucially, this price range remains a powerful enabler for

Towards 2028, we expect to see a modest but meaning- offshore projects. Thanks to a decade of effciency gains ful uptick in the number of FID announcement, primarily and technological advances, breakeven costs have fallen sig- driven by deepwater FPSO developments in Indonesia and nifcantly. Conventional shelf projects now average around

Australia. These projects are uniquely positioned to lead the USD 40 per barrel, while deepwater projects have reached next growth phase, offering compelling returns and longer a competitive threshold just below USD 40 – securing a lifespans, making them a cornerstone of future investment. comfortable margin within the current pricing window.

This increased focus on deepwater projects will comple- On the supply side, OPEC’s spare capacity stands near ment the ongoing, essential role of conventional shelf proj- four million barrels per day at the end of 2025, a slight de- ects – both remaining vital pillars of the global energy mix cline from the previous year. Current projections, includ- for decades to come. As new projects gain momentum and ing the latest outlook from the US EIA, suggest this buffer deferred developments are eventually revisited, demand is could tighten further through 2026 and 2027. poised to rise. In the near term however, contracting activ- ity will maintain a cautious posture well into mid-2026.

In the medium term, the regional drilling landscape presents a rather nuanced picture. Demand for foating rigs remains on solid ground, supported by ongoing deep- water drilling campaigns across the region that align with the global pivot toward deeper developments. For jack-up rigs, we anticipate a temporary dip before a recovery gath- ers pace later in 2026 and into 2027.

This divergence in the drilling outlook will likely create a clear split in dayrate performance across vessel classes.

For instance, dayrates for standard, shelf-oriented PSVs and AHTS, particularly mid-size PSV and smaller AHTS, are expected to remain soft through the frst half of 2026.

In contrast, demand for high-spec assets such as DP2/3 subsea vessels and large PSVs depends on a more distant catalyst: the frm sanctioning of deepwater FIDs and the revival of previously delayed drilling campaigns.

Critically, neither an FID nor a campaign announcement translates to immediate vessel demand. A typical 12 to 24 months planning and engineering gap follows, during which © Fearnley Offshore Supply

JANUARY/FEBRUARY 2026 OFFSHORE ENGINEER 17