Gulf of Mexico, North Sea, Brazilian Waters, and West Africa are attracting offshore investors. Higher crude price, lower breakeven price, declining production from mature fields, and several large new discoveries are the factors driving the global offshore contract drilling market.
September, 2018: The number of offshore rigs contracted had declined by around 56%, between Q1 2014 and Q4 2017. The impact of the rise in prices of commodity had not been universal in the recent past, indicating a surge in onshore drilling activity, and lesser activity in the offshore segment. The number of offshore rigs contracted was constant, and at a historical low, in Q4 2017 and Q1 2018. Offshore rig utilization has declined from 80% in 2014, to around 60% in 2017.
However, the current crude oil price is more than USD 70 per barrels, well above breakeven price of several major offshore regions, such as Gulf of Mexico, North Sea, Brazilian Waters, and West Africa. It has increased the confidence of investors significantly, and the demand for offshore rigs is expected to improve gradually as witnessed in the North Sea in Q1 2018.
The major development in the market is expected to be witnessed after two to three years from now, due to the recent increase in production from the onshore segment, especially from Permian basin, accounting for a major share in the new crude oil produced recently. The shale production is expected to plateau in the next two to three years, and a shift in more focus toward offshore, is likely to become essential in maintaining the demand-supply balance.
The offshore contract drilling market has a high potential for economies of scale, and is capital intensive. In the recent past, contractors focused on economies of scale, rather than on the consolidation of the market, which was the trend before. In the past two years, only three merger and acquisitions activities have been witnessed: Ensco acquired Atwood Oceanics, Transocean acquired Songa Offshore, and Borr Drilling acquired Paragon. Lack of consolidation has been an obstacle for mitigating oversupply and increase in day rates.
The report “Offshore Contract Drilling Market Segmentation by Depth, by Type, and by Geography” is now available, and can be purchased directly at:
Offshore Contract Drilling market segmentation, based on depth, type, and regional coverage:
Offshore Contract Drilling Market, by Depth:
Offshore Contract Drilling Market, by Type:
Offshore Contract Drilling Market, by Region
Middle East & Africa
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