August 2017

The evolving player landscape in the offshore drilling market

Rystad Energy Information Session at Offshore Europe

Join Rystad Energy at Offshore Europe 2017 in Aberdeen, booth #2B34. We will also be hosting an evening Information Session on Wednesday 6th

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Speaker: Jo Friedmann, 
Analyst

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Article: Transocean’s Acquisition of Songa Offshore strengthens position in floater market

Article: Offshore activity in South America outside of Brazil


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• DCube (Demand Database): Field-by-field coverage for the global oilfield service companies and their spending

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During the first half of 2017, the industry witnessed the first moves towards consolidation in the offshore drilling sector. In early August, Transocean announced plans to acquire Songa Offshore making them the second driller to step up and make an acquisition this year. This is also the second major move on a strategic level for Transocean after the announcement of the divestiture of their jackup fleet to Borr Drilling, which took place during Q2 2017.

Transocean’s acquisition of the entire share capital of Songa Offshore is expected to close during Q4 2017. The combined fleet will have 51 rigs – 30 ultra-deepwater floaters, 11 harsh environment floaters, 3 deepwater floaters and 7 midwater floaters giving Transocean the largest floating rig fleet as compared to other offshore drilling contractors.



Note: Average age excludes newbuilds not yet delivered. Seadrill includes all consolidated companies. Fleet comparison only looking at competitive floating rig fleets of selected drilling contractors (jackups excluded from chart).

Upon completion of this transaction, Transocean will have one of the most technically capable harsh environment fleets in the industry. Transocean has indicated they would be comfortable with a fleet of approximately 60 floating rigs. Currently, the company has four newbuilds yet to be delivered and plans to continue evaluating older units in their existing fleet as candidates for retirement. It would not be a surprise to see Transocean continue their fleet rationalization plans with other acquisitions of either whole or partial fleets.

Excluding newbuilds, the average age of the Transocean/Songa combined contracted floater fleet is around 13 years. According to Rystad Energy’s RigCube database, combined the two companies will have approximately 90 years of contracted rig backlog, followed by Seadrill and Diamond Offshore with approximately 25 years each.

Another merger this year is the acquisition of Atwood Oceanics by Ensco in an all-stock transaction. It is the first merger among drilling contractors since the start of the downturn. Shareholders are scheduled to vote on the merger October 5, 2017.

Ensco will be well-positioned for a market recovery with a combined fleet of 63 rigs – 26 floaters and 37 jackups and thus the largest blended fleet when compared to other offshore drilling contractors with fleets including both floaters and jackups.

Excluding newbuilds, the average age of the Ensco/Atwood combined floater fleet is less than 10 years while the average age of the combined jackup fleet about 20 years. According to Rystad Energy’s RigCube database, the two companies' combined will have around 50 years of contracted rig backlog.

Table 1: Overview of rig sales by number of unit for floaters and jackups YTD 2017

Table 1 gives an overview of all 59 transactions that have taken place so far into 2017. The divesture of jackups from Transocean to Borr Drilling is still the largest transaction measured in units to date. The second largest transaction is Ensco’s acquisition of Atwood’s 11 units. While the Hercules/Enterprise transaction also accounts for 11 units, it was a result of a bankruptcy auction. It is evident that the rig owners are positioning themselves for a market turnaround and we expect more activity when it comes to mergers and acquisitions, rig sales and rig attrition.

RYSTAD ENERGY ANNUAL OIL & GAS SUMMITS 2017

Rystad Energy has the great pleasure of inviting you to our Annual Oil & Gas Summits 2017. This year our key events will take place in Houston and London. Join us to hear about our up-to-date market analyses and overview, industry perspectives and data analysis discussions.

September 19-20, 2017
Houston, United States
October 4-5, 2017
London, United Kingdom

The Annual Oil & Gas Summit is free to attend for client companies. To request more information, please vist our dedicated website here. For queries about non-client pricing, please contact Rystad Energy.