Rig utilisation remains sluggish with over-capacity still an issue

At end-March, North Sea jack-up rig utilisation stood at 51% for a second consecutive month, with 25 rigs actively working from a fleet total of 49. Despite some optimism in the industry about future activity, the number of jack-ups based in the North Sea remains an issue, with a high level of spare capacity that seems continually to exceed future work requirements. The last time jack-up utilisation breached 60% was in July 2016 and the figure needs to rise above 85% before tighter utilisation triggers any significant improvement in dayrates.

Jack-up utilisation is due to improve marginally in April as both the Noble Hans Deul and the Paragon C20051 are scheduled to begin respective contracts with Spirit Energy and Perenco.

Semi-submersible utilisation slipped back to 42% at end-March after moving up to 47% in February; utilisation has been at the 42% level for three of the last four months. The fleet size increased in March as a result of the addition of the COSLProspector, which is being marketed for work in Norway and the UK and should be ready to drill later this month. COSL Europe decided to bring the rig over from China without a firm North Sea contract in place.

Five new contracts were issued in March, plus one extension via a declared option. The latest news is that Total has hired the semi-submersible Stena Don to drill an exploration well in UK block 206/4a; the well is scheduled to spud in early-May. Statoil has a three-well programme lined up in the UK sector and one well in Norway and in early-March confirmed the semi-submersible West Phoenix had been fixed for the drilling. Statoil also exercised a third option with the semisub Deepsea Bergen.

Three fixtures involve jack-ups. Paragon confirmed the six-month letter of intent Perenco issued for the Paragon C20051 was signed in March; the rig has been hired for well abandonment work in the southern UK North Sea. Meanwhile, firm detail of the Rowan Gorilla VII's contract with Chrysaor has yet to be revealed, but is estimated to last around six months. The third fixture is Shell's 100-day contract with the Rowan Viking.

North North Sea Rig Contracts - October 2017


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