Drill rig day rates to peak at $500k in 2023 – Westwood Energy

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Drill rigs are expected to have a busy year in 2023.

So much so that Westwood Global Energy Group sees day rates shooting up to US$500,000.

Last year, Westwood said day rates for new drillship fixtures jumped to US$359,852 from US$232,555 in 2021. In the final four months, it hiked to US$388,842. There was also a deal fixed at US$462,000 for a contract offshore Brazil – the highest that year.

Westwood said other trendsetters regionally included the US Gulf of Mexico and South America.

“During the year, there were, of course, outliers on both ends, with some Southeast Asia fixtures well below the rest of the market,” Westwood said.

But in 2023, Westwood forecasts that those same regions will remain trendsetters. It also said outstanding rig requirements will result in continued rig demand for exploration drilling, with long-term field development programmes also adding multi-year contracts.

“The current trajectory of day rates will continue their upward path, but whether that will be maintained at a similar pace as in 2022 remains to be seen. Most questions surrounding floating rig day rates are centered around when they will reach $500,000, particularly for drill ships,” Westwood’s Head of RigLogix, Terry Childs wrote.

Westwood names Guyana, Namibia among high-impact exploration successes | OilNOW

Westwood said currently, 83 of the 162 active floating rigs have no availability in 2023. Of the remaining 64 contracted units with a 2023 available date, 28 run until November or December. Twelve of the 64 have options that, if exercised, will extend availability into 2024 or later.

“We could go on, but the numbers are evidence of a rig fleet with decreasing availability in 2023. To that end, most recent floating rig tenders have specified a 2024 start date, but there are some limited windows of opportunity for operators in some regions that have just one or two wells to drill,” Westwood pointed out.

For the remainder of 2023, Westwood expects marketed drillship supply and demand to remain tight, with utilisation continuing in the 95% plus region.

“Rig demand in the golden triangle will keep the fleets currently working there and some incremental demand will be created in areas like the Mediterranean where recent large discoveries have been made could push some more drilling plans forward,” it said.

This year, almost 30 high-impact wells (HIWs) are set to be drilled across Latin America, Africa, and the Asia Pacific regions in 2023. It said there will be fewer wells planned in Europe, frontier North America, and the Middle East.

In Latin America, S&P Global said it envisages HIWs to be spud in Mexico (Yatzil, Itzcali and Jokol), Brazil (Tucano and Morpho), Argentina (Argerich), Suriname (Walker) and Guyana (Amatuk and Wei).

In Africa, S&P said there are two wells planned in Gabon (Seal and Tigre), two wells in Mozambique (Angoche and Raia) and two wells in South Africa. It also expects to see HIWs in Republic of the Congo (Niamou), Guinea-Bissau/Senegal JEZ (Gainde) and further drilling in Namibia with the Aurora well.

For Asia Pacific, it said there are wells planned in Australia (Beehive and Lion) and Papua New Guinea (Antelope South and Mailu) along with wells in Indonesia (Geng North), Malaysia (Layang-Layang), Philippines (Cinco) and Vietnam.

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