In a climate of escalating offshore rig dayrates, energy companies are increasingly considering ownership as a strategy to control costs and ensure availability, according to insights from Westwood Global Energy Group.
As of December 31, 2023, the cost to rent offshore rigs surged to a nine-year peak, with jack-ups, semi-submersibles, and drillships commanding average dayrates of US$118,000, US$368,000, and US$419,000 respectively, a substantial 54% increase from 2021. Westwood said this surge, fueled by rising global rig demand and tightening availability, has prompted operators to reassess their rig provisions and select vessels for long-term projects.
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One notable solution emerging in response was exercised by TotalEnergies in a recent agreement with Vantage Drilling, where Total acquired a 75% stake in the ultra-deepwater seventh generation drillship Tungsten Explorer. Total’s Chairman and Chief Executive Officer, Patrick Pouyanne, cited the deal as a cost-controlling measure amidst rising dayrates, highlighting that the effective dayrate for the rig under the joint venture will be significantly lower than the prevailing average.
Westwood outlined that this move reflects a broader trend, with Total hinting at further similar agreements in the pipeline.
“Speculation is ripe that the company may strike a similar deal to meet its offshore drilling requirements in Angola and other regions,” Westwood said.
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Westwood’s insights underscored that while such agreements are unique, they are not unprecedented. Beyond TotalEnergies, other energy players have also pursued ownership strategies. Notably, Brazilian NOC Petrobras and Indian NOC ONGC maintain rigs within their fleets, alongside collaborative efforts such as Equinor’s ownership of the Cat-J jack-ups Askepott and Askeladden.
Moreover, US-based Arena Energy has established affiliates like White Fleet Drilling (WFD) to manage its jack-up fleet, addressing the challenge of dwindling local rig supply and fewer contractors.
