January 2017

Floater market outlook for H1, 2017

Oilfield Service Solutions

Product webinar

Speaker: Audun Martinsen, 
VP of Analysis

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North Sea Suppliers - Dead or Alive?

Content webinar

Speaker: Audun Martinsen, 
VP of Analysis

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Article: Light at the end of the tunnel


Article: Oilfield service companies exposed to shale are the winners of OPEC cuts; Offshore suppliers will struggle


RYSTAD ENERGY PRODUCT HIGHLIGHTS

Oilfield Service Databases

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

In the January 2017 release of DCube we see the increased optimism in the market by E&P companies and service companies. Oil prices has strengthen since last release and our oil price estimate of 62 USD/bbl for 2017 looks reasonable.

• SCube (Supplier Database): Detailed insights into revenues of the largest oilfield service companies

Q4 2016 version of SCube shows that 2016 has been worst for service companies exposed to the shale business. However, not all service companies or segments have been impacted to the same extent.

• RigCube (Rig Supply & Demand Database): Insights into historical and forecasted global rig supply and demand

In the December version of RigCube our Asset FactSheet was launched. This is an automatically report that can be produced on fields with corresponding field drilling demand and other field specific properties.

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The floater market is in the middle of what is arguably the most dramatic downturn in the history of offshore drilling. Last year saw a record decline of 29% in the floater market, from 225 units on contract in 2015, to 159 units in 2016. This was more than double the decline seen in 2015, when the market dropped 14% from 261 units on contract from the year before. Rystad Energy believes 2017 will be the trough and contracting activity will start to pick up speed, as there is still a need to contract a larger capacity to cover existing drilling demand. We have taken a closer look at the contracts that are expected to roll off for the first half of the 2017 and what rig demand will look like going into 2018.

Utilization for the competitive floating rig fleet stands at 45% for the beginning of 2017. Rystad Energy believes utilization for the floating rig fleet will drop to 39%, should no options be exercised nor newly signed contracts commence prior to the end of the first half of the year. Based on data from RigCube, utilization at the end of the first half of 2017 is a result of a net of 18 rigs rolling off contract without any follow-on work. Over half of these rigs are located in the Northern and Latin America markets while the majority of the remaining rigs are in West Africa.

  

Of the twenty-seven contracts that will commence during the first half of 2017, only seven were signed prior to 2016 and of those, only one is an exercised option. The average dayrate for contracts commencing during the first half of the year is $170,000. All but eight of those contracts will also end during 2017.

Looking ahead to 2018, Rystad Energy forecasts rig demand to increase in South America and West Africa, driven by projects like the Libra Pilot in Brazil and Egina in Nigeria. Although we estimate the floater market to decline by 6% to 147 units in 2017, we expect to see a recovery into 2018 with a rig demand of 166 units, corresponding to a 13% increase over 2017’s forecasted exit.

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