The Interview first acknowledged the drop in rig numbers over the last year, with the expert breaking these figures down to consider floating and jack-up rig demand. Asia was the hardest-hit region across both types, they said. COVID-19 and a shift towards renewables were cited as factors behind the slump.
While the expert believes there will be “opportunistic increases” in the 2021 rig count, overall the industry is taking a cautious stance on CAPEX. Meanwhile, day rates are “still nowhere near where they should be”. The environment remains highly competitive and “we need a significant amount of rigs to be scrapped”.
With utilisation numbers “way too low”, between 35 and 40 rigs are likely to be scrapped or reconverted this year, according to the Interview. “If 90% of all the remaining rigs are all working, that’s when day rates actually start increasing, so that’s really where you need to be.”
It was also noted that some supply-side players are going bankrupt. The specialist explained a shift in mindset around bankruptcy, with restructuring being “the game” at the moment. Much of this restructuring will have taken place by the middle of this year, they said.
To access all the human insights in Third Bridge Forum’s Global offshore drilling – Q4 2020 update & 2021 outlook Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
For any enquiries, please contact email@example.com