NEW YORK – Evercore ISI’s Oilfield Services, Equipment & Drilling group has updated its monthly outlook on the global offshore industry, with this report updating on the floater supply outlook.
The industry is poised to retire at least 20 floaters this year and outpace newbuild deliveries of just four units versus the 20 originally ordered for 2016 delivery, the analyst firm said.
Evercore tracks floater attrition and provided an update on this activity. Croatia-based Crosco scrapped the second-generation semisubmersible Zagreb 1 on Sept. 12, increasing the industry’s total scrapped floater count to 17 for the year, or 62 over the last two years. Three other floaters (Sedco 704, Transocean Winner, Borgny Dolphin) are expected to be decommissioned shortly, raising the floater attrition count to at least 20 by the end of the year.
The global floater orderbook declined by one to 63 over the past month, with the Deepwater Conqueror delivered and undergoing acceptance testing ahead of a five-year contract in the Gulf of Mexico.
“While a total of 12 floaters are technically scheduled to be delivered later this year, we believe only the contracted Frigstad Shekou is likely, with the industry taking delivery of only four floaters this year … vs. ~20 originally ordered for 2016 delivery,” the report noted.
Meanwhile, P&A work is driving near-term demand for jackups and floaters in the UK and Norway, as well as short-term projects throughout much of Asia.
Ensco recently secured two additional jackup contracts for P&A work in the Netherlands and Malaysia, as the company continues to successfully work for its large jackup fleet. However, Evercore said it believed “the market may be underestimating P&A as a driver for floater demand, particularly in the UK for semisubs.”
The analyst group also found that Nigeria is showing “signs of life.” The country’s floater rig count is down sharply from the mid-2009 peak of 11 units, but recently improved to four from three with the return of PACD’s Pacific Scirocco. In addition, Total is reportedly in the final stage of evaluating jackups for the Ofon Phase 2 development, while Erin Energy and Eni are expected to tender for floaters shortly.
The report continued by highlighting some global offshore rig trends over the past month. Utilization fell for floaters to 55.6% and 59.0% for jackups, the lowest level since February 1987 and August 1986, respectively.
Ultra-deepwater floater utilization fell below 60% this month, midwater floater utilization is at risk of falling below 50% shortly despite incremental rig retirements. Jackup fixture count is keeping pace with recent trends, but day rates continue to decrease.
Finally, it found that floater utilization is at risk of falling below 60% in Gulf of Mexico and 40% in Southeast Asia, but appears to be stabilizing at 50% in West Africa and the low 80s in South America, where the working floater count has continued to increase from the March low.