Seadrill: Offshore drilling market recovering, but at ‘lower pace’

Offshore drilling company Seadrill has painted a cautiously optimistic picture for the offshore drilling market outlook, with the company seeing an opportunity for high-end floaters as well as for jack-up reactivations in 2020.

Illustration: A Seadrill drillship / Image source: Seadrill

At the end of the third quarter, Seadrill had 35 offshore rigs in Total, of which, 19 floaters and 16 jack-ups. Of the total 35, as at September 30, 2019, there were seven floating rigs and 10 jack-ups in operation, with 17 rigs and one „future contracted“ rig.

Seadrill said that near term activity in the floater market was being driven predominantly by short term, well-based programs. However, Seadrill said that looking forward, there has been an increase in tenders for longer-term programs, especially in Africa and Brazil.

The drilling contractor said that it expected those longer-term programs to improve forward floater utilization and continue to deliver improved pricing.

“There is continued bifurcation for high specification assets with utilization for 7th generation drillships approaching 90% and utilization for 6th generation drillships in the mid 80% range. We believe our fleet is well positioned for these trends and remain confident in our strategy of prioritizing pricing overutilization,” Seadrill said.

In the jack-up market, contract terms are increasing along with fixture volume driven primarily by activity in the Middle East and Southeast Asia, the drilling company said.

“There continues to be a bifurcation between premium and standard jack-ups with marketed utilization for premium jack-ups approaching 90%.  We expect to see an improvement in rates going forward which may open the opportunity to reactivate premium jack-ups later in 2020 on a limited time scale,” Seadrill said.

Seadrill, which posted a net loss of $521 million during the third quarter, said that it had added $250 million in offshore rig contract awards post-quarter-end.

Seadrill’s backlog at the end of the quarter decreased to $1.8 billion, of which approximately $220 million is expected to be consumed in the remainder of 2019. The company explained the decrease in backlog with the replacement of legacy contracts (struck during the time when the dayrates were high) by contracts at more recent dayrates.

Anton Dibowitz, Seadrill CEO said: “…we continued to show commercial success in awards during and subsequent to the quarter which reinforces our confidence in a recovering market across all sectors, albeit at a lower pace. We expect that as we move into 2020 the gradually improving market conditions will result in a limited number of reactivations but also continued scrapping of rigs across the global fleet.”

Offshore Energy Today Staff

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