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    1. Drilling & Completion

    Evercore’s latest offshore rig report sees long-term contracts on the rise

    Feb. 25, 2020
    Fifty-two contracts awarded in January accounted for 98 rig years.
    Evercore Isi Capture 5e557b2b8c731

    Offshore staff

    NEW YORK CITY – A total of 52 contracts were confirmed in January, down slightly from 57 a year ago, according to Evercore ISI’s February “Offshore Rig Market Snapshot.”

    However, these 52 contracts accounted for an "impressive" 98 rig years vs. only 56 in January 2019 as several Middle East jackups were extended for two-to-four years each.

    A total of 24 jackup contracts were awarded for the Middle East, with 70 rig years secured for 20 rigs off the UAE and three rigs signed for nine years with Saudi Aramco. Term jackup contracts were also signed for Qatar, Thailand, Mexico and Russia, while three floaters were locked for term work offshore Brazil, UK, and Trinidad.

    Overall, jackups made up 71% of all contracts but 92% of all rig days signed in January. A total of 15 term contracts have been announced for February thus far, trailing 28 as of this point a year ago.

    Floaters currently account for 60% of all February contracts and 64% of all rig days, as two units have each secured three-year contracts offshore Guyana and Brazil. Under a unique new commercial agreement, the dayrate on the Noble Tom Madden’s new 3-yr contract with ExxonMobil will reset “at least twice per year to the prevailing market rate, subject to a scale-based discount and performance bonus.”

    Meanwhile, two jackups have been signed for term with Saudi Aramco renewing another unit for three year. Evercore said it counted 56 jackups contracted in Saudi currently, with three incremental units starting over the next six months versus 11 rolling over before yearend.

    In addition, there are eight incremental units starting new contracts in the UAE, Qatar and Egypt over the next several months; but based on existing contracts, the Middle East jackup count is poised to exit the year down 18%. However, Evercore says that it does “not expect this scenario to play out.” Instead, it expects Middle East operators to award additional rig contracts throughout the course of the year. There are eight jackup tenders for the Middle East currently, including five 5-year tenders for Qatar.

    02/25/2020