Seadrill sees rig dayrates improving in 2019-20

After a couple of years of negative sentiment in the offshore drilling industry caused by the low oil prices and the rig oversupply, things have started looking up for the sector.

Following recent positive forecasts shared by jack-up rig players, we now have floater operators showing optimism too. Offshore driller Seadrill Limited, which operates both floaters and jack-ups, on Monday said it sees dayrates improving in the next two years.

The company, which in July emerged from Chapter 11 Bankruptcy after successfully completing restructuring, had seven floaters working for the full quarter at an average dayrate of $241k per day and two floaters completing contracts during the quarter.

Seven jack-ups were working for the full quarter at an average dayrate of $99k per day and two jack-ups started contracts during the quarter.

When it comes to the dayrates, the drillers have in this downturn learned that the margins have to come from somewhere, and as they wouldn’t come from dayrates, they had to come from lower operational expenses.

Seadrill on Tuesday said:”Through the downturn and as part of our restructuring we have made significant progress in reducing operating expenses and overhead costs. Our average daily running cost is approximately $120k per day for benign floaters and $40k per day for benign jack-ups. For our cold stacked units, the average daily cost in steady state is approximately $10k per day for floaters and $4k per day for jack-ups.”

“We had an operationally strong quarter with economic utilization of 98% for floaters and 97% for jack-ups,” Seadrill said.

No long-term deals at low dayrates

Anton Dibowitz, the CEO, said: “The fundamentals for our industry remain strong and there are improving signs through increased contracting activity, additional supply leaving the market and industry consolidation which should lead to better pricing in the future. We are already starting to see rate improvements for contracts starting in 2019/20.”

Seadrill has also shared how it managed to cut operational costs for the rigs during the downturn.

“We remain disciplined in our approach to contracting and will not be drawn into long-term contracts at low day-rates given our financial flexibility.”

“Having restructured our business, we are now well positioned to capitalize on the recovery. The combination of a strong cash position, no near-term amortization payments or debt maturities and light financial covenants alongside a large modern fleet and continued focus on cost reduction will ensure we remain competitive.

“We remain disciplined in our approach to contracting and will not be drawn into long-term contracts at low day-rates given our financial flexibility.”

The company posted a net loss of $245 million for the third quarter of 2018.

The article has been amended as it previously incorrectly stated that the loss for the quarter was $249 million. It was actually $245 million.

Offshore Energy Today Staff