Offshore drilling highlights: Top paid rigs in 2H 2023

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After pouring over the available day rate information within fleet status reports from three offshore drilling giants – Transocean, Noble Corporation, and Valaris – three rigs stand out as the highest-paid ones during the second half of 2023. Unsurprisingly, all three spots were taken by drillships.

With offshore rig scrapping at its lowest level in years, as the offshore drilling market’s recovery intensified, cold-stacked rigs were being increasingly reactivated for new assignments amid growing demand and elevated day rates while the available supply of active, non-cold stacked rigs, especially jack-ups and drillships, was shrinking fast, according to Westwood Global Energy, an energy market research and consultancy firm.

The company revealed that the marketed sixth-generation harsh environment semi-submersible market was all sold out in 2023 after committed utilization jumped 14% in just six months. As a result of the boost in the semi-sub market, day rates for contract fixtures also rose, with some well above $400,000 – a feat not witnessed since 2015.

While Transocean and Odfjell Drilling managed to drive day rates higher for these assets, securing new deals with rates reported as high as $484,000 (Australia), $457,000 (Australia), and $420,000 (Norway), respectively, these three fixtures do not begin until the first quarter of 2025, the first quarter of 2024, and the second quarter of 2024. In the meantime, Transocean has managed to secure deals for Transocean Equinor in Australia with day rates that go as far as $540,000 in 2027 and 2028.

Westwood’s research shows that new rig deal durations peaked in 2013 for jack-ups and in 2014 for floating rigs, but the length of such deals dwindled during the prolonged downturn and eventually reached the trough in 2018 for floaters and 2019 for jack-ups. This has picked up steam again since the global rig market recovery got underway in 2021.

On average, awarded jack-up contract durations have increased 36% compared with 2021, while drillships have increased 41% and semi-subs a whopping 117%. This signifies that the search for more oil and gas is on the rise, as further illustrated by ADNOC Offshore’s six 15-year contract awards for jack-ups in the Middle East.

The same operator has since awarded a plethora of further long-term jack-up deals, five of which were fixed in June 2023 for ten years apiece. Westwood believes that further lengthening in average rig deals will be seen, as there are already ten-year tenders out in the market for a pair of drillships required for campaigns beginning in early 2025.

Bearing in mind the ongoing upcycle in the offshore drilling market, Offshore Energy was interested in finding out which rigs were the best-paid ones during the second half of 2023. To shed light on this, fleet status reports were reviewed from Transocean, Noble Corporation, and Valaris to compare the available day rates and find out which rigs were the biggest earners in 2023.

Transocean’s fleet status report from October 2023 indicates that the 2016-built Deepwater Proteus drillship has been moved to a day rate of $490,000. With a maximum drilling depth of 40,000 ft and a water depth of 12,000 ft, this rig has been working for Shell in the U.S. Gulf of Mexico since August 2016. The drillship was on a day rate of $481,000 before this, based on the fleet status report from July 2023.

The second highest-paid rig based on the rig owner’s latest fleet status report is the 2018-built Deepwater Poseidon drillship, also working for Shell in the Gulf of Mexico. The rig, which has the same drilling and water depth specs as the first rig on this list, moved from a day rate of $478,000, which was listed in July 2023, to $487,000 in October 2023.

The third on this list is the 2017-built Deepwater Pontus drillship, which has been working for Shell in the U.S. Gulf of Mexico since October 2017, albeit at different rates for different periods. The rig comes with the same specs as the other two. This drillship moved to a day rate of $484,000 in the latest fleet status report from a day rate of $483,000 in July 2023.

Looking at the two eight-generation drillships, which dazzled the world with their bells and whistles upon delivery, the Deepwater Titan drillship, which is working for Chevron in the U.S. Gulf of Mexico, was on a higher rate than the Deepwater Atlas drillship during 2H 2023. The Deepwater Titan has been receiving a day rate of $455,000 since May 2023. The rig’s deal with Chevron is currently expected to end in March 2028. The rig was delivered to the offshore drilling giant at the end of December 2022.

Following the delivery, the Deepwater Titan drillship was scheduled for deployment on a five-year contract in the U.S. Gulf of Mexico. Equipped with two 20,000-psi BOPs, a three-million-pound hook load, and five 10,000-psi mud pumps, this rig can drill up to 40,000 feet and operate in water depths of up to 12,000 feet.

Noble Corporation’s latest fleet status report from October 2023 shows that the Noble Valiant drillship, which is working in the U.S. Gulf of Mexico, has been on a day rate of $450,000 from July 2023. This is expected to remain in place up to January 2024, when the day rate is slated to jump to $470,000 once the rig kicks off its assignment with LLOG. The Noble Valiant is a high-specification drillship of Samsung 96K design, accommodating 230 people.

With a maximum drilling depth of 40,000 ft, it can operate in water depths of 12,000 ft. The 2013-built rig worked for Kosmos Energy in the U.S. Gulf of Mexico under a day rate of $450,000 from July 2023, prior to moving to complete a one-well contract also in the Gulf of Mexico with an undisclosed operator under the same day rate before kicking off its assignment with LLOG.

On the other hand, Valaris’ fleet status report from November 2023 points out that the Valaris DS-17 drillship has been working on a day rate of $447,000 since September 2023. This 540-day contract with Equinor in Brazil is scheduled to end in March 2025. With a maximum drilling depth of 40,000 ft, the 2014-built Valaris DS-17 drillship, which is of GustoMSC P10,000 design, can operate in water depths of 12,000 ft and accommodate 210 people.

While many other rigs have demonstrated that they are worth their weight in gold based on the day rates they have secured for their recent drilling assignments, Offshore Energy decided to pick out one of the rigs from each offshore drilling player as an example of rigs that have earned their keep in 2H 2023.

Therefore, Transocean earned the top spot as the highest-paid offshore drilling contractor while its Deepwater Proteus drillship was the highest-paid rig in 2H 2023 not just in Transocen’s fleet but also compared to the available day rates rigs from Noble and Valaris have tucked under their belts.

When looking at the best-paid rigs from other offshore drilling giants, the Deepwater Proteus drillship was followed by Noble Valiant with Valaris DS-17 bringing up the rear.

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