Odfjell Drilling: Fierce competition ahead for new rig contracts

February 25, 2015

Odfjell Drilling has said that it expects the drilling industry market to stay weak for the next couple of years.

As a reason for this, the company has cited continued delivery of new drilling rigs and oil companies’ cuts in spending, leading to a growing number of stacked drilling rigs and continued downward pressure on day rates.

The company owns three 6th generation, ultra-deepwater semi-submersibles. It also owns a 40% share in two UDW drillships, and it owns one 3rd generation semi-submersible drilling rig.

Odfjell has warned that several of these rigs are exposed to re-contracting risk in the current or near term drilling market.

The company’s Deepsea Metro I drillship is currently idle, anchored in South Africa, waiting for an assignment. Also, both Deepsea Metro II drillship and Deepsea Atlantic semi are exposed to re-contracting risk in the next 6 months.

Deepsea Stavanger rig is exposed to re-contracting risk in 2016 and while Deepsea Bergen will need to find a new assignment in 2017.
“There are contract opportunities for all of our units in the current and near term market, but competition is fierce and reduced day rates alone do not clear the market. We believe the bifurcation between modern drilling units and older units will continue and this is in favour of our fleet,” Odfjell Drilling has said.

“Scrapping and cold-stacking of older units will pick up speed but despite this, we expect the deep- and ultra deepwater market to be oversupplied for a period going forward. We believe the harsh environment market to be relatively more in balance for modern assets, but also here we expect a drop in utilization. “