This they aim to achieve via revised vendor pricing and a re-design and standardization of planned development programs, the contractor adds.
In the current market, most successful tenders are for drilling contracts at or below cash breakeven levels.
In general, Seadrill’s conversations with its clients are centered on extending existing contracted assets or trade-offs between existing assets and newer rigs.
Most deepwater rigs with contracts expiring this year or next will likely face stacking, it warns.
Over the past 14 months 44 units have been scrapped, more than the total number of retirements over the past 20 years combined. Over the next three quarters, Seadrill adds, 27 of the 43 rigs due to roll off contract are fifth-generation or below units that will probably be priced out of the market by more capable units.
Assets 15 or 20 years old require significant capital investments and there is less economic justification in present conditions to keep these facilities working.
Cold stacked units will typically need a hike in day rates to warrant reactivation costs before re-entering the market. However, Seadrill believes significant cold stacking would be a positive development in reducing marketed supply, thereby helping to stabilize rig usage and pricing until a recovery takes effect.
Currently 205 deepwater rigs are active worldwide, around 73% of total capacity.
Around 70 new rigs are on order, of which 29 are Sete newbuilds. A large number of these orders have been delayed or cancelled and this trend will likely continue, Seadrill predicts, adding that between now and 2018 there will likely be overall contraction in the floater fleet due to delivery delays and scrapping activity.
Tendering for the premium jackup market continues although at low day rates. The market has likely reached the base level of units required to maintain existing decline curves, the contractor claims.
For units built prior to 2006 utilization is currently 71%, rising to 75% for newer units. Clients continue to exhibit a preference for newer and more capable equipment that can provide safer and more efficient operations.
Currently around 66 units older than 30 years are idle out of a total marketed fleet of 476, with 64 units in the same age range coming off contract by the end of 2016. These 130 rigs – 27% of the total marketed fleet – are prime candidates for retirement, Seadrill suggests.
A further 125 jackups are under construction: many of these orders were placed by investors with little or no operating track record, the company points out. Even if speculators exit their projects, these units should eventually reach the market under the ownership of more established companies, although these newbuilds too may struggle to land contracts.
Share your news with Offshore at firstname.lastname@example.org