North Sea rig utilisation needs to rise above 80% to impact dayrates
North Sea rig utilisation stood at 58% for jack-ups and 57% for semi-submersibles at the end of September and is unlikely to be much different by end-October. Marketing conditions remain very challenging for drilling contractors, although Fred Olsen Energy and Transocean both recently expressed a similar view that the North Sea sector will be one of the main growth areas over the two to three years. Meanwhile, rig utilisation is struggling to get above the 60% level and has been all year and needs to get well above the 80% benchmark before drilling contractors can start securing higher dayrates, a scenario which currently looks to be a long way off.
The size of the North Sea fleet still needs to be reduced further in order push up rig utilisation. The fleet currently contains 53 jack-ups and 42 semi-submersibles, plus one drillship. The semi-submersible fleet has been reduced this year, due to a few rigs being scrapped, but there has been no action yet among the jack-up fleet. There are 24 jack-ups which were all built pre-2000, several of which remain idle or stacked, with future work prospects looking questionable.
It is possible the semi-submersible fleet could be reduced further over the next six months or so if market conditions do not improve significantly. Transocean has become more ruthless recently with its fleet reduction decisions outside the North Sea. However, the contractor is in the process of acquiring Norway-based Songa Offshore, a purchase which is driven by Transocean's desire to take control of four modern Cat-D semisubs which are all on long-term contracts with Statoil. The deal will also see Transocean pick up three other semisubs, built in the 1970s and 1980s; two have been stacked for over one year, while the other has been stacked for two years. Considering Transocean's recent action with scrapping older units and its concentration on deepwater activity, the contractor is likely to place these units under review soon after it completes the purchase of Songa Offshore. North North Sea Rig Contracts - October 2017
North Sea Reporter
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