Transocean, Noble, Valaris, Seadrill, ADES, and Shelf Drilling get hold of $31 billion backlog: Is rig demand tapering off?

Six offshore drilling players – Transocean, Noble Corporation, Valaris, Seadrill, Shelf Drilling, and ADES –  have reported a combined total backlog of $31.17 billion in the first quarter of 2025. This comes at a time when Westwood, an energy market intelligence research firm, paints a picture of a freeze in the rig demand and forecasts a ramp-up in the rig retirement trend, with marketed utilization said to be at the lowest levels since the start of the recovery period in 2021.

According to Teresa Wilkie, Westwood’s Director of RigLogix, the offshore rig market recovery has seemingly taken a break, with a slump in demand and marketed utilization reaching the lowest levels recorded since recovery began in 2021 due to a variety of factors, including Aramco’s suspension of over 30 jack-up contracts by up to one year, the entry of newbuild rigs into the market without work to go to, and the deferment of several long-term deepwater drilling and plug and abandonment (P&A) projects.

This reportedly unexpected combination of a dip in firm demand, which saw an 18% drop versus March 2024, and a boost in supply of 7% compared to March 2021, is said to have resulted in marketed utilization fall to 88% as of March 2025, representing a 6% decrease in less than two years. The company claims that attrition this year is the highest since 2022, predicting utilization of the combined jack-up, semi-submersible, and drillship segments to fall further to around 85%.

With this in mind, Wilkie underlines that more rigs are likely to be permanently removed from the active drilling fleet as the year progresses, since attrition began to pick up again as market softness started creeping in, especially in the UK sector of the North Sea semi-sub market, where four of the seven assets were retired. This year, nine rigs have been confirmed for removal from the active fleet, consisting of four jack-ups – owned by Shelf Drilling, White Fleet Drilling, and Well Services Petroleum – and three 8500-series semi-subs, owned by Valaris, all of which were under 15 years old.

Aside from this, Noble announced the disposal of two modern S12000-design, ultra-deepwater drillships it inherited during its acquisition of Pacific Drilling, one of which never drilled a single well and was just ten years old. Westwood claims that the average age of assets retired from the fleet has continued to be downsized for floating rigs, with the age for drillships reducing by eight years over the last five years, and semi-subs by three years.

Furthermore, Wilkie explains that jack-ups have not adhered to the same pattern, with a slight boost recorded during the same period of a one-year increase in average age of attrition. However, this figure is significantly higher for the four assets confirmed for removal year to date, at 43 years old. However, Westwood’s Director of RigLogix points out that falling utilization and age are not the only factors to sway the likelihood of a rig finally hitting the scrap heap, as RigLogix records 87 units over 40 years old that are still on drilling duty.

“Generally, rigs that have limited future prospects, have been without work or cold-stacked for some time (meaning a costly reactivation programme), and are due the often very expensive five-yearly special periodic survey (SPS), are also considerations. Other factors can be one-off designs in a contractor’s fleet, where they may not be able to spread spare parts costs etc, out-of-favour designs (as seen with the small variable deck load on the 8500-series semisub), and of course mergers between owners, which often enables easier culling decisions as owners look to streamline fleets,” elaborated Wilkie.

Regarding jack-ups, Westwood notes that 39 of these units are cold stacked and 19 are warm stacked – seven of them for over a year – but eight of these assets do not have a valid special periodic survey (SPS) in place, and three more will expire this year or next if not renewed. Most of the units included in the firm’s analysis are situated in the Middle East, India, or U.S. waters, with Shelf Drilling and Enterprise Offshore owning the lion’s share of these rigs.

Only five drillships are cold-stacked, all between 14 and 16 years old, while seven are warm or hot stacked units, none of which have been idle for more than a year, and four of these do not have a valid SPS, or it will expire in 2025 or 2026. The majority of the drillship candidates are perceived to be in Southeast Asia or the Mediterranean, with Transocean, Seadrill, Stena, Vantage, and Saipem owning the assets.

Last but not least, the pool of semi-sub candidates is said to be small, primarily because of the high level of attrition already undertaken in the segment over the past decade, which has resulted in the total supply of the fleet reducing by 59% to 119 rigs since March 2015, with only two cold-stacked and three warm-stacked assets, out of which only one of the warm units has been idle for over a year and, all but one rig, either do not have a valid SPS, or it will expire in 2025 or 2026.

Moreover, Wilkie underlines that two of these assets are in the landlocked Caspian, where bringing in new rigs is a challenge, making them less likely to be scrapped. The rest of these assets are currently in Las Palmas in the Canary Islands, the North Sea, or Canada and are owned by Dolphin Drilling, Well-Safe, and Transocean. Westwood emphasizes that this combination of the reduced pool of retirement candidates and the ongoing softness in demand signifies “an increased chance of a younger, hotter unit being retired.”

Wilkie concluded: “To sum up, due to the reduction in jackup, drillship and semisub demand and utilisation this year, we will likely see more assets moved to cold stack due to not having follow-on commitments in place. Meanwhile, further M&A activity could also be in the works. These factors we believe will spur further older, idle and surplus assets to be removed from the fleet, which in the long run may help set the stage for a stronger recovery in utilisation from the second half of 2026 onwards, when Westwood expects to see a rebound in demand.”

The rig owner’s backlog was reported to be $7.9 billion in the fleet status report from April 2025. Transocean disclosed a net loss attributable to controlling interest of $79 million for the three months ended March 31, 2025, down from a net income of $7 million in Q4 2024 and down from a loss of $86 million in Q1 2024. The first quarter of 2025 adjusted net income was a loss of $65 million, compared to a net income of $27 million in the last quarter of 2024 and a loss of $92 million in Q1 2024.

Jeremy Thigpen, Transocean’s Chief Executive Officer, commented: “The Transocean team delivered a solid quarter, with an adjusted EBITDA of $244 million on revenues of $906 million. We also improved our balance sheet with the repayment of $210 million in outstanding debt.

“While uncertain macroeconomic conditions have resulted in near-term market volatility, including commodity prices, Transocean is very well-positioned to navigate this evolving landscape. In addition to continuing to deliver strong operating performance across our highly contracted fleet, we remain engaged in constructive conversations with our customers on opportunities several years in the future.”

Noble’s backlog reached $7.5 billion as of April 28, 2025, compared to $5.8 billion in February 2025 and $4.4 billion in May 2024. After the last quarter’s earnings disclosure, the firm has won new contracts with a total value of between $2.2 to $2.7 billion, including additional services and mobilization payments, but excluding unexercised extension options.

The rig owner’s marketed fleet of 25 floaters was 80% contracted during the first quarter, compared with 74% in the prior quarter. Recent backlog additions since last quarter have added 15 rig years of total floater backlog. The firm’s recent day rate fixtures for Tier-1 drillships have been in the low-to-high $400,000s, with sixth-generation floater fixtures between the low $300,000s to mid $400,000s.

On the other hand, the utilization of Noble’s 13 marketed jack-ups was 74% in the first quarter, versus 82% utilization during the prior quarter. The company underlines that leading-edge day rates for harsh environment jack-ups in the North Sea have remained stable, albeit with limited fixtures recently.

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, emphasized: “The booking of over 15 rig years of new contract awards over the past several weeks underscores the durability of our customers’ long-term commitments offshore, as well as Noble’s place as a trusted service provider for these highly strategic drilling campaigns.

“Our recent commercial success and 30% sequential increase in backlog have greatly enhanced our visibility through 2030. We remain highly focused on delivering safe and efficient operations for our customers, building strategic backlog, optimizing costs, and producing differentiated free cash flow and return of capital for our shareholders.”

Valaris has reported a backlog of $4.2 billion after securing approximately $1 billion of new contracts since its previous fleet status report, increasing its total backlog by nearly 20% from $3.6 billion as of February 18, 2025. This is also higher than the $4 billion backlog in April 2024.

The firm sold three semi-submersibles: Valaris DPS-3, DPS-5, and DPS-6 for recycling in April. The company’s 53-strong rig fleet, which consists of 18 high-specification floaters and 35 jack-ups, has seen over 96% revenue efficiency.

Anton Dibowitz, Valaris’ President and Chief Executive Officer, noted: “We are also successfully executing our commercial strategy by securing attractive, long-term contracts for our high-specification fleet. The recent award for drillship Valaris DS-10 offshore West Africa enhances our presence in a key deepwater region. Additionally, since the beginning of the year, we’ve had meaningful contracting success across our shallow-water fleet, including contracts for jack-ups in the Middle East, the North Sea, Australia and Trinidad.

“We remain actively engaged with customers for additional contracting opportunities in 2026 and beyond. While macroeconomic uncertainty has increased recently, we expect offshore production will continue to play a vital role in meeting the world’s energy needs and will be an important part of our customers’ portfolios going forward. Given our high-quality fleet and operational performance, we believe Valaris is well positioned to secure additional contracts which, paired with our prudent fleet management, will further support our earnings and cash flow.”

The company’s backlog as of May 12, 2025, was $2.8 billion, which is lower than the $3 billion recorded in February 2025, but does not differ from $2.8 billion in May 2024. Seadrill’s first quarter 2025 total operating revenues went up by $46 million to $335 million, compared to $289 million in the prior quarter.

The firm’s contract revenues, which increased by $44 million, reaching $248 million, are said to have driven almost all the sequential improvement. An uptick in operating days is perceived to be attributable to the West Auriga and West Polaris units, which began their respective contracts in December 2024 and February 2025, partially offset by lower economic utilization, primarily due to rigs operating in Brazil.

Simon Johnson, Seadrill’s President and CEO, emphasized: “Our strategy to operate a floater-focused fleet at the heart of the deepwater market positions Seadrill well to navigate near-term volatility.

“We remain focused on adding to our durable backlog, which extends meaningfully through 2028, and we are actively engaged with customers for opportunities starting in the next 12 months. This proactive approach and our robust financial position provide a platform for long-term value creation.”

The rig owner’s backlog as of March 31, 2025, was $1.6 billion, which is lower than $2.14 billion at the end of December 2024 and $2.18 billion at the end of March 2024. The firm’s effective utilization marginally decreased to 79% in Q1 2025 from 80% in Q4 2024, mainly due to the suspension of operations for two rigs in Saudi Arabia in late Q4 2024, of which one was redeployed to Nigeria for expected contract commencement in Q2 2025.

This was also affected by two rigs in India that completed contracts in late Q4 2024 and Q1 2025, respectively, partially offset by three rigs that began new assignments in Nigeria, Norway, and Egypt between late Q4 2024 and February 2025.

Greg O’Brien, Shelf Drilling’s Chief Executive Officer, noted: “With total fleet uptime of 99.4% for the quarter, we continued our strong level of operational efficiency from 2024 demonstrating the execution capabilities of our offshore and onshore teams. […] The recent macroeconomic developments have contributed to reduced commodity price levels and created some market uncertainty.

“The contract suspensions in the Middle East during 2024 continue to impact the global jack-up market with further dayrate pressure seen in recent months. We have a solid pipeline of near-term contract opportunities for our rigs with availability in 2025 and 2026 and are also focused on identifying ways to further optimize our cost structure.

“We remain committed to delivering safe and reliable services and providing best-in-class operations to our customers, leveraging our unique operating platform. We believe we are very well positioned to navigate the current market challenges and capitalize on the positive long term outlook in our sector.”

The rig owner has revealed a backlog of SAR 26.9 billion (around $7.17 billion) as of March 31, 2025, slightly higher than the SAR 26.75 billion (about $7.13 billion) as of March 31, 2024. This is lower than SAR 28.27 billion (nearly $7.54 billion) as at FY 2024 versus SAR 27.54 billion (circa $7.34 billion) in FY 2023.

Dr. Mohamed Farouk, CEO of ADES Holding, stated: “Looking ahead, while we remain mindful of ongoing global economic uncertainties, our strategic focus on long-term fundamentals, operational agility, and financial discipline positions us well to capitalize on emerging opportunities.

“Management’s view is that the underlying long-term supply-demand dynamics will continue to favor our high- performing and highly demanded fleet of optimized assets, with strong tendering activity in key markets across Southeast Asia, the Middle East, and West Africa supporting sustainable growth and profitability over the long term.

“Our 2025 guidance remains optimistic, with full-year performance expected to strengthen as the deployment plan ramps up. Backed by a solid financial and liquidity position, we have the firepower to execute on accretive growth opportunities as they emerge, deliver solid shareholder returns, and further our global expansion strategy. I am confident in our ability to sustain strong performance through 2025 and beyond.”

Given the rise in climate change concerns and the growing energy transition momentum, all offshore drillers are looking into low-carbon technology options to up their sustainability ante and decarbonize their rig operations.

This content is available after accepting the cookies.

Change cookie-settings View on Offshore-energy.

While liquified natural gas (LNG) is at the top of rig fuels to curb emissions in the years ahead, offshore drilling players are also exploring alternative fuels, such as hydrogen, methanol, and biofuels, alongside carbon capture technology, to minimize their carbon footprint.

ADVERTISE ON OFFSHORE ENERGY

𝐃𝐨 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐠𝐫𝐚𝐛 𝐭𝐡𝐞 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐢𝐧 𝐨𝐧𝐞 𝐦𝐨𝐯𝐞? 𝐋𝐨𝐨𝐤 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝐎𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐄𝐧𝐞𝐫𝐠𝐲! 𝐎𝐮𝐫 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐫𝐞𝐚𝐝 𝐛𝐲 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐞𝐧𝐠𝐚𝐠𝐞𝐝 𝐢𝐧 𝐨𝐢𝐥 & 𝐠𝐚𝐬, 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞, 𝐨𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐰𝐢𝐧𝐝, 𝐠𝐫𝐞𝐞𝐧 𝐦𝐚𝐫𝐢𝐧𝐞, 𝐡𝐲𝐝𝐫𝐨𝐠𝐞𝐧, 𝐬𝐮𝐛𝐬𝐞𝐚, 𝐦𝐚𝐫𝐢𝐧𝐞 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐟𝐮𝐞𝐥𝐬, 𝐬𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐨𝐧 𝐚 𝐝𝐚𝐢𝐥𝐲 𝐛𝐚𝐬𝐢𝐬.

ADVERTISING OPTIONS

Follow Offshore Energy’s Fossil Energy market on social media channels: