Analyst comments on current rig market, utilization

Offshore staff

HOUSTON Evercore ISI's Oilfield Services, Equipment & Drilling group has released its Global Offshore Rig Market Snapshot, a report that examines trends in contracting activity and day rates, fleet operations, and near-term contract coverage. The analyst firm noted that it sees a challenged offshore rig market until 2017 at least.


The snapshot found a total of seven contracts (five new mutual, one renegotiation, and one priced option) have been announced this month to date, marking the third straight monthly decline from a recent peak of 43 in July. Of the seven contracts announced this month, day rates declined on three contracts and were flat on one contract. For the second straight month, no contract was signed with a day rate increasing and, year-to-date, only 2% of all contracts were signed with day rates trending higher. Within the scope of the report’s coverage, Rowan received a 300-day contract on the jackup Gorilla IV with Arena Energy at $70,000/d (unchanged from the prior rate), while Atwood announced a day rate revision and one-year extension for the ultra-deepwater drillship Atwood Achiever at $495,000/d (down from the prior $595,000/d rate).

Fleet operations

Utilization has deteriorated this month, Evercore ISI found, with the number of jackups under the report’s coverage falling by six units or 5.1% since mid-September. The active floater fleet was down by one or 0.8%. Transocean Barents, and two other Transocean floaters, GSF Rig 140 and GSF Grand Banks, rolled off contract in the past month, while Atwood and Paragon Offshore lost two jackups each (Atwood Mako and Atwood Manta, Paragon C20052, and Paragon L782)

Despite the lower active jackup and floater count, average day rates increased by 3.0% and 1.4% respectively from revised September rates. Of those the report covers, Rowan continues to have the highest floater utilization and average day rate at more than $600,000/d, while North Atlantic Drilling Ltd. has the highest jackup utilization and day rate at almost $300,000/d.

Contract coverage

The global floater fleet is 48% contracted in 2016 and 32% contracted in 2017, unchanged from last month. The one-year extension for the Atwood Achiever is for 2018 and improves the company’s 2018 contract coverage to 11% from 0% previously. On the jackup side, the global fleet is 34% and 21% contracted in 2016 and 2017. Including the new Gorilla IV contract, Rowan’s 2015 and 2016 jackup coverage improved to 67% and 52%, respectively. However, Vantage’s 2016 jackup coverage improved the most for the Topaz Driller which is now expected to complete its Petronas contract on March 31, 2016 instead of Dec. 31, 2015.

In a separate report, Evercore ISI said Noble’s October contract status update contained some news with slightly positive implications for its stock, detailing, among other things, a new short-term contract for the ultra-deepwater Noble Danny Adkins and a two-month extension for the Noble Houston Colbert. The fleet status report confirms the Adkins will be down for about 60 days from late August until early November when it commence a new 2.5 month contract with Talos in the US Gulf of Mexico. The new $206,000/d rate establishes a trough for the ultra-deepwater market in the current downturn. The rig had previously modeled to be cold stacked but now forecast it to operate at 50% utilization at the same rate.


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