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Jack-up Drilling Rigs.

Healthy oil and Gas drilling news. For 2023 there will likely be additional contract awards in the Middle East, though probably not at the same rate as in 2022. Outstanding rig requirements in Southeast Asia and West Africa will help result in a continued tight supply and demand balance in those regions.

Activity in the North Sea has been affected by the UK Government’s 2022 windfall tax which has prompted several operators to reconsider previously planned drilling programs, and some have already indicated they will cancel specific campaigns. As a result, some rig owners have begun marketing jack-ups into other regions, making it probable that additional rigs will leave the area this year.

Despite the potential North Sea issues, global marketed utilisation is believed to increase from the 90% average in 2022 to around 95% for 2023. Given that level of utilisation, rig owners will undoubtedly continue to push dayrates upward.

The Middle East garnered all the jack-up attention last year and for good reason. Major rig fleet growth for ADES and Arabian Drilling, coupled with over 60 new contract awards from Saudi Aramco and ADNOC Offshore, resulted in a substantial number of long idled and stranded newbuild jack-ups finding work in the form of minimum three to five-year contracts, most of which will commence this year. In addition, several currently working units were signed to similar multi-year extensions.

Further drilling news reveals that in addition to the Middle East, state-run operators ONGC in India, Pemex in Mexico, and CNOOC in China extended contracts for those jack-ups already working in those regions. In fact, the number of jack-ups working offshore accounts for the second most in the world behind the Middle East. Meanwhile, jack-up utilization in the North Sea increased by 18% between January and October of last year, hitting 97% before the typical winter decline late in the year. Lastly, Southeast Asia saw a 2022 rebound as well. Despite a late year drop, marketed utilization was up by 14% for the year, ending at 88% in December.

Drillships and Semi-subs.

Dayrates for new drillship fixtures in 2022 were substantially improved from the prior year. After an average fixture rate of $232,555 in 2021, the number jumped to $359,852 in 2022, and for the final four months of the year the average increased to $388,842. As has been reported, several deals in 2022 were fixed at over $400,000, with the highest reaching $462,000 for a contract offshore Brazil. Regionally, the US Gulf of Mexico and South America were the trendsetters in the rate increases.

For the semi-sub market in 2023, there are some outstanding rig requirements which will result in continued rig demand for exploration drilling, with long-term field development programs also adding multi-year contracts. There are currently 73 rig requirements globally that are in some form of rig inquiry. The golden triangle area accounts for 23 of these, while the North Sea totals 16. Another 21 requirements are on the books in Southeast Asia, the Far East and Australia, and operators are looking for rigs for 10 programs in the Mediterranean/Black Sea area.

Currently, 83 of the 162 (51%) 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.

The current trajectory of dayrates 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 dayrates are centred around when they will reach $500,000, particularly for drillships. Anecdotal evidence suggests that bids at that rate have already been submitted, but so far, no awards have been made. The number could be reached in the form of a multi-year deal where $500,000 comes after the first year.

Any way one looks at it, 2023 should be a busy year for rigs.

Oil and Gas News from Quipsearch, oil field equipment supplier.