NEW YORK – In its most recent fleet status report, Transocean said that it has classified the midwater GSF Rig 135 as held for sale and will recycle it in an environmentally-responsible manner. Evercore ISI’s Oilfield Services, Equipment & Drilling group notes that this action brings the industry's total floaters retired to date to 41. The analyst firm also said that it believes more retirements are likely, with several rigs currently warm- or cold-stacked.
“Recall Diamond Offshore kicked off the industry’s wave of floater retirements last October, when the company announced it would retire six midwater semis (Epoch, New Era, Whittington, Concord, Yatzy, Winner).
“The company recently retired the Ocean Lexington, which was built in 1976 and worked in the Gulf of Mexico, Egypt, Libya, Brazil, and most recently Trinidad and Tobago under a rig-share program between BG and Centrica from June 2013 to July 2015. The Lexington won a hotly contested PEMEX midwater tender in May 2014 and was scheduled to begin a 1,026-day, $160,000/d charter this month. However, PEMEX canceled the job in August and the rig has since been towed to the GoM, where it will be scrapped,” the firm said in a report.
Evercore ISI also said that Diamond retired nine floaters to date, accounting for 22% of the industry’s total, second only to Transocean’s 21 floaters at 53%.
“We believe Diamond and Transocean have another 11 and 22 floaters, respectively, that could be candidates for retirement, making up 8% and 16% of the 138 warm- or cold-stacked floaters in the industry,” Evercore ISI said. “We expect rig retirements to accelerate as we progress towards year end, particularly as the industry faces the prospect of more available newbuilds on the horizon.”
Meanwhile, 27 newbuild floaters scheduled for 2016 delivery. Of these, only 12 are contracted, Evercore ISI pointed out, with the nine Brazilian-built rigs headed to Petrobras “almost guaranteed to be delayed.”
“We expect offshore contractors to continue delaying (and canceling) newbuilds as the cyclical downturn continues. We also expect more floater retirements in the coming months,” Evercore ISI said.
The analysts said it saw positive subsea trends.
“We continue to like the subsea capital equipment space, noting that subsea production equipment orders held up well in 3Q despite the drop in oil prices. We believe deepwater projects like Eni’s Zohr will move forward with industry leaders FMC Technologies [joint venture with Technip] Forsys Subsea and Schlumberger/Cameron [joint venture] OneSubsea bringing down the cost curve for offshore development,” the firm concluded.