Report: New year sees rousing start to offshore drilling market

Offshore staff

NEW YORK CITY – Offshore drilling contractors have had a great start to 2023, as they have kicked off the new year with 26 rig contracts (17 jackups, 9 floaters) for 38 rig years of work (30 jackups, 8 floaters).

According to Evercore ISI’s latest Offshore Rig Market Snapshot, this has included an “impressive” 16 contracts (>60%) with terms of one year or more (13 jackups, 3 floaters).

“We believe lengthening contract terms will be a sign of a strengthening floater market in 2023 as operators exhaust the availability of priced options fixed at below spot rates,” the firm commented.

On the jackup front, contract terms are on track to trend higher for the fifth straight year from the 2018 trough, the firm said, with potentially India and Mexico playing catchup to Middle East operators in driving term demand.

The Middle East accounted for one-third of all jackup contracts announced in 2022, with 80% of these for term; and these contracts accounted for nearly 60% of all contracts that were issued last year for one year or more.

Evercore estimates that 23 tenders for floaters will commence by the end of 2023, of which at least 10 and up to 13 will be for terms of a year or more. Nearly all of these term tenders will be for development projects, including four tenders from Petrobras for up to four-to-six rigs. Petronas is also looking for floaters for Brazil and Suriname while ONGC has tenders for two floaters off India’s East Coast.

On the jackup side, at least 22 and up to 26 of 42 tenders are expected to be for term, comprised of up to 15 for the Middle East, 3 each for NW Europe and West Africa, and two for Mexico.

01.15.2023