Maersk Drilling Chief Says Rigs Dip Could Extend To 2018

Article title
The global offshore drilling market's dip could be longer than previously expected and charter rates could take until 2017 or 2018 to recover to last year's levels, Claus Hemmingsen says.


OSLO, May 22 (Reuters) - The global offshore drilling market's dip could be longer than previously expected and charter rates could take until 2017 or 2018 to recover to last year's levels, the head of Maersk Drilling said on Thursday.

Oil groups continue to delay projects to save cash and rig rates will fall further just as a slew of new vessels ordered during the boom years start to hit the water, said Claus Hemmingsen, the CEO of Maersk Drilling, part of Danish shipping conglomerate A.P. Moller-Maersk.

"With every quarter that goes by with next to no new projects sanctioned and next to no new deepwater rigs contracted, the recovery is pushed out a little bit," Hemmingsen told Reuters.

Analysts at Barclays say that 13 newly built floating rigs due to enter the market this year are still without contracts.

Hemmingsen now expects the market dip to last a further 18-24 months, having predicted in the previous quarter that it would last 12-18 months, and sees charter rates hitting the bottom over the next several months.

His comments match forecasts by rig firm Fred Olsen , which has said it expects tough times for the sector for at least another two years.

Hemmingsen added that charter rates, which peaked at about $650,000 a day for top of the line ultradeep water units last year, would fall to $500,000 a day or even lower in some cases.


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Jon McCarty | May. 23, 2014
Not good news in the short term but this cycle will never stop. Greedy oil companies can only stave off their thirst for more oil for so long, then panic sets in and they will pay anything for a rig. The cycle flows downstream and all that are not prepared to weather the storm will go under or pull through by the skin of their teeth. Subsea construction business, prepare for less new construction in 2016 and 2017, then a pick up again in 2018. Try and explain that to a bean counter!

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