In an impressive surge in just six months, the utilisation of marketed sixth-generation harsh environment semisubmersibles has experienced a 14% increase, resulting in full utilisation at a staggering 100%, Westwood Energy said in a recent report.
This level of utilisation has not been witnessed in this fleet since February 2014. The committed utilisation includes both rigs currently on hire and those with upcoming contracts.
The surge in utilisation also has a significant impact on day rates for recent contract fixtures. Day rates have risen substantially, with some surpassing the US$400,000 mark. This upward trend in day rates has not been observed since 2015.
The current fleet consists of 27 active rigs, all of which are either already on hire or have contracts scheduled to commence in the future. While Northwest Europe remains the dominant contributor to demand – accounting for 68% of contracted days awarded this year – several rigs within this fleet are consistently being confirmed for new work or extensions in other regions.
Day rates for floating rigs went up 40% in past year – WoodMac | OilNOW
One of these ‘hot’ regions is now Australia, where Transocean will relocate two of its CAT D assets for three new long-term assignments, Westwood highlighted. Mexico, China, and Namibia have also contributed considerable demand thus far in 2023, and all are expected to remain critical for this fleet going forward.
Sixth-generation harsh environment semi-average day rates (excluding priced contract options) for contracts fixed year-to-date are now US$394,000 – a 32% increase compared to the full-year average for 2022 and is the highest average reached since 2014. Transocean and Odfjell Drilling have been especially successful at driving day rates higher for these assets this year, securing new deals with rates reported as high as US$484,000 (Australia), US$457,000 (Australia), and US$420,000 (Norway), respectively. Note that these rates may include other services. These three fixtures do not begin until the first quarter of 2025, the first quarter of 2024, and second quarter of 2024, respectively.
US, UK, Norway to ramp up oil exploration and production | OilNOW
For those operators looking to secure a unit, Westwood said the earliest availability appears to be late 1Q 2024 when the Transocean Barents comes off hire.
Westwood’s Global Offshore Drilling Rig Dayrate Forecast 2023-2027 suggests day rates in this segment are set to continue their escalation over the coming years as demand for harsh environment rigs rises, coupled with a lack of newbuild assets or reactivation candidates, which have been a saving grace for the booming drillship and jack-up markets.
Westwood also anticipates that day rates in this sector will continue increasing worldwide over the five-year forecast period, and we will likely see rates secured at or above US$500,000 for contracts beginning in late 2024 and early 2025.
“The steep economics behind a reactivation campaign or commissioning a new build will also add further pressure to commercial terms on a new rig deal. Of course, day rates for these units will continue to vary depending on specific rig capabilities, when the job starts, where work will take place and the duration of the contract, but we expect to see significant increases across the fleet,” the report outlined.
