Floating rig rate rise slowing, but raw material prices set to increase

Although rig rates for floaters remain high, there are signs that growth is slowing down, according to Wood Mackenzie.

According to a Dec. 4 opinion piece by Devin Thomas, vice president of Supply Chain Data & Analytics, operators have been exerting greater capital discipline with appetites for risky projects easing.

So, after two years of 20% growth in rigs, Wood Mackenzie now expects a much smaller increase this year of 4% compared with 2023, followed by a 25% rise in 2025.

Offshore operators should also benefit from lower inflation in drilling and completion services, Thomas said. Costs now look set to finish the year 4% higher compared with last year’s 10% increase, and 2.3% higher over each 2025 and 2026. 

Drilling Fluids & Mud and OCTG account for 9% and 8%, respectively, of total drilling and completion costs. Over the past 18 months, there have been lower raw material prices for steel, organic and inorganic chemicals, and barite.

However, Wood Mackenzie expects raw material prices to rise again, putting upward pressure on overall drilling and completion costs.