Report: August shaping up as big month for floating rig contracts

(OM) Halfway through the month of August, contracts for floating rigs are significantly outpacing contacts for jackups, according to Evercore ISI’s latest Offshore Rig Market Snapshot.

Of the 17 rig contracts announced so far this month, floater contracts outnumber jackup almost 2-to-1 with the average term more than six times longer at 1.2 years versus four months. Four ultra-deepwater drillships secured new contracts averaging almost three years each, with the biggest winner being Transocean’s Petrobras 10000 extended for 5.8 years into 2029.

More term contracts from Petrobras are anticipated shortly, with the state oil company scheduled to open bids for three rig tenders on August 19. Tender 1 is for up to two high-spec drillships capable of working in 10,000 ft water depth while tender 2 is for up to five drillships in up to 7,900 ft; and tender 3 is for a low spec rig also in 7,900 ft.

Petrobras has two other tenders and could award 11 floaters up to 34 rig years of work in the near term.

Petronas and Shell also have tenders outstanding for work offshore Brazil, although the potential contract terms are much shorter for one and two exploration wells respectively. Nine floaters are scheduled to go off contract in Brazil over the next 12 months, but Evercore says that it expects the rig count to increase from about 24 currently, with Petrobras and Brazil key drivers of industry demand and dayrate improvement.

As part of this renewed drilling activity offshore Brazil, Valaris is reactivating the cold stacked DS-17 (Reliance) for a new 540-day contract with Equinor for work offshore Brazil. The $327-million contract includes an $86-million upfront payment for mobilization, reactivation, and upgrades, implying a daily operating rate of $446,000/day including managed pressure drilling services, ROV, casing running, slop treatment and cuttings handling.

Evercore also notes that Brazilian operator PetroRio recently acquired Aquadrill’s Diamond-managed Capricorn for $40 million, a sign of how tight the offshore rig market is getting. The company will self-operate the 11-year-old, sixth-generation semisubmersible for its own field revitalization efforts.

Evercore says that contracting activity is expected to get busier in the coming months, with 22 floaters and 77 jackups scheduled to roll off contract into year-end. Dayrates have clearly moved higher over the past six months and are stabilizing in the +$400,000/day range for floaters and $130,000 to $150,000/day for modern jackups.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Powered by

Up ↑

%d bloggers like this: