Offshore Drilling Market Update February 2017 Erik Tønne Head of Offshore Research +47 23 11 28 51 / +47 95 75 01 77 [email protected]Note: This is a shortened version of the presentation given at the IADC seminar in Februar-17. For further details, please contact Clarksons Platou Offshore
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Offshore Drilling Market Update - sapc-iadc. · PDF fileOffshore Drilling Market Update ... Introduction The global rig market . Source: Reuters article 19-Jan 2017; Clarksons Platou
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Note: This is a shortened version of the presentation given at the IADC seminar in Februar-17. For further details, please contact Clarksons Platou Offshore
Oil companies are increasingly on the acquisition track
“Since late November (2016), major oil companies have announced 11 deals worth more than USD 500m each with a combined value of USD 31bn, the clearest sign yet that oil executives are more confident a recovery
is underway”
“According to Martijn Rats, equity analyst at Morgan Stanley, most of the
deals announced in recent months have been based on a long-term oil price of
Seismic late sales have increased last three quarters, potentially indicating oil companies are about to increase exploration focus again…
Seismic Industry Late Sales Implied Seismic Contract Rates
Source: Statoil; Clarksons Platou Offshore
Statoil +30% exploration activity in 2017 is an important indicator. Others to follow suit?
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…and at least some oil companies are vocal on increasing exploration focus
Agenda
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Introduction
The global rig market
Global rig demand remains at record-low levels (I)
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JU-fixing at clear all-time low in our time series Floaters: 2016 proves to be another miserable year
Note: Other fixtures relate to Petrobras’ domestic newbuilds / SETE program (2011 & 2012) and NADL/Rosneft (2014) Source: Clarksons Platou Offshore
Global rig demand remains at record-low levels (II)
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JU-fixing at clear all-time low in our time series Floaters: 2016 proves to be another miserable year
Note: Other fixtures relate to Petrobras’ domestic newbuilds / SETE program (2011 & 2012) and NADL/Rosneft (2014) Source: Clarksons Platou Offshore
Stripping out “other fixtures” for the floaters visualizes clearly that 2005-2008 were exceptional years
Number of working rigs coming down hard across the world
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Floaters – Currently down to 135 contracted units, further decline is likely
• Latest actual demand in terms of floaters on contract (Dec-16) was 135 units
• Nr. of floater years fixed annually on average
― Last 5Y: 189
― Last 10Y: 226
― Since ‘98: 202
Source: Clarksons Platou Offshore
Jackups – Number of active working rigs keeps coming down faster than we had estimated
• Latest actual demand (Dec-16), measured by units on contract, was 290 units. This has flattened lately. Summer-16 saw 300 JU’s on contract on average
• Number of JU years fixed annually on average
― Last 5Y: 380
― Last 10Y: 363
― Since ‘98: 344
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Floater demand: Actual and forecasted
Demand - actual and base case Forecasted fixing activity model
Rig spend model (volume effects) Backlog (no new fixtures)
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Jackup demand: Actual and forecasted
Demand - actual and base case Rig spend model
Top down model (strip oil price) Bottom up model
Backlog (no new fixtures)
Currently 100-110 likely actually working
290 on contract as of Dec-16
Source: IHS Petrodata; Clarksons Platou Offshore
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Jackup rigcount (rigs on contract) has started flattening
Jackups – Number of active working rigs (on contract), monthly since 2012 – flattening out last 3-5 months
Jackup demand/supply and fleet utilization (Base) - 1996 to 2020E
Total jackup demand Total jackup supply Adjusted supply Adjusted utilizationSource: Clarksons Platou Securities AS, IHS
Summary
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• The oil market is rebalancing and we don’t foresee N.Am unconventionals alone to be sufficient to mitigate coming supply shortfall
• The E&Ps need to gradually increase investments again ―Happening onshore N.Am already ―International markets likely to follow later in 2017 and into 2018
• JU demand will recover before floater demand and we believe number of JU’s on contract is
flattening out now and that we will end 2017 at a higher level than currently
• Supply side overhang nevertheless needs to be addressed in the JU-market. If not, ample supply will suppress utilization and rates for many years
• Floater demand likely also bottoms this year, and we will start to see an increasing rigcount again (rigs on contract) from late-17/early-18 ―As for the JU-segment, supply side overhang will need to be addressed, but «natural forces»
seem to have somewhat faster impact on the floater market (AND; some drillers are already scrapping ~15Y old floaters)
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