These Valaris DS-8 recently won a three-year contract from Petrobras for work offshore Brazil.
Offshore staff
NEW YORK CITY – Three long-term offshore drilling contracts have been signed thus far this month, according to Evercore ISI’s latest Offshore Rig Market Snapshot. These include a three-year contract for the cold-stacked Valaris DS-8 for Petrobras offshore Brazil; a two-year extension for the Stena IceMax with bp in the US GoM; and a one-year extension for Shelf Drilling’s jackup Rig 141 with GEMPETCO off Egypt.
This follows a busy January where five floaters and 14 jackups secured long-term contracts of one year or more. Longer contract terms traditionally signal the emergence of a tight offshore rig market and should support further dayrate improvements as backlogs fill up.
Evercore notes that rig contractors appear to have “largely worked through lower priced single-well type options,” which “was a drag” on average contract terms for floaters in 2022 (averaged eight months in 2022 vs. 11.5 months year-to-date).
On the jackup side, contract terms averaged 21 months in 2022 with 134 term contracts secured (nearly 50% of the total). More than half were for the Middle East, followed by Mexico and India in a distant 2nd and 3rd place.
In contrast, Mexico and India are leading term contracts year to date, but only 15 term jackup contracts have been announced (versus seven for floaters year to date), tracking below pace of 2022 levels.
