• DCube(Demand Database): Historical and forecasted opex and capex for global oil and gas fields, split on supplier segment and geography
In the latest DCube version (March 2015) we see short term purchases relatively unchanged compared to January and February. Allthough the oil price have rallied the latest days, we still assume our 2016 spending numbers to be representable as we believe in an average oil price of 47 USD/bbl for 2016.
• SCube(Supplier Database): Reported revenue from oil service companies split on the same supplier segments and geographies as DCube
The Q4 2015 version of SCube shows that the revenue decline has started to slow down. The third quarter is down by 5% compared to the second quarter of 2015 with -8%.
• RigCube (Rig Demand & Supply Database): Global, offshore rig demand (rig count) and supply based on bottom-up, field-by-field activity analysis
Offshore drillers still face a challenging future. The Q4 2015 RigCube version shows that the demand for floaters in 2016 will decrease by 16% compared to 2015. For jack-ups the demand will fall by 6%.
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The global oilfield service market is up for a challenge in the current environment with excess capacity, low oil prices and major cuts in E&P purchases. This is very evident in the world of mobile offshore drilling units (MODUs), which is one of the service segments that has been hurt the most, with a record decline in 2015. We have taken a closer look at the floater market in Brazil, which represents one of the key drivers for the current decline in rig markets.
Brazil has been one of the world’s largest players on the deepwater drilling stage over the recent years, and in 2015 it made up 24% of the global contracted floater supply. This amounted to 53 rig years supplied by 25 rig owners. In Figure 1 we can see how the largest contractors achieved almost full utilization levels of their respective fleets in Brazil. In 2015 we also saw that the average age of the floater fleet in Brazil came down as rig owners like ENSCO, Transocean and Diamond Offshore retired some of their older units.
In an oversupplied floater market, we expect short-term challenges in Brazil, and we will see a diminishing market with fewer rigs on contract in 2016 than was the case last year due to a lack of sufficient drillings schedules to balance the market. These days, Petrobras as the key operator in this deepwater theatre, finds itself in the midst of a severe corruption scandal. Simultaneously, they have announced major cutbacks in investments, which largely affects exploration activities but also the willingness to follow through on sanctioning and new field developments.
Figure 2 shows the current contract status of floaters in Brazil towards 2021. This supply scenario accounts for the current capacity as well as new influx scheduled to enter the market. If we assume that there will be no further retirements, we expect the floaters in Brazil to number more than 65 units in 2021. This growth will further add to the oversupply as there is insufficient demand to meet this supply and there will be further downward pressure on utilization rates.
One topic of interest is the contracted Sete Brasil supply that is scheduled to enter the market in Brazil from 2017 to 2021. We now assume that 14 of the floater units coming from this project is part of the contract scenario outlook for Brazil. This is a reduction of 15 units from the initial plan for this rig owner. It will be interesting to follow this project more closely, as a potential outcome could be a further reduction in the number of Sete Brasil units entering the market, which in turn will ease the oversupply and improve the utilization rates we expect in the short term.