Worldwide offshore rig utilization moved up significantly this week, rising more than 1/2 of a percentage point from 82.9% to 83.5%. This rise was driven by a total of eight idle rigs starting new contracts this week. That rise was offset slightly by three rigs coming off contract for a net total of five rigs going on contract.
Drillships constitute a fairly small, but important, portion of the overall offshore drilling fleet. There are currently 38 active drillships in the worldwide rig fleet, which constitutes less than 6% of the 656 rigs in the fleet. For comparison, the drillship fleet is less than 1/10 the size of the worldwide jackup fleet of 395 rigs.
Commanding Top Dollar
During that same four year period, jackup and semisub day rates varied more widely. Jackups had twice as many months (12) in which the overall average day rate earned varied more than 10% from the 4-year average. Meanwhile, semis had 50% more months (9) in which the monthly day rate average varied more than 10% from the 4-year average.
Since June 2004, when drillship day rates averaged about $135,000, drillship day rates have risen along with the market and are now nearly $50,000 higher. That amounts to an increase of 37%. This continues the trend of drillships having more stable day rates than other rig types. Over the same 2-year period, semisub day rates increased 81% and jackup day rates increased 100%.
Longer Contracts Make for a Smoother Ride
In contrast, for current jackup contracts, the average length is 1.9 years with 0.9 years remaining. And current semisub contracts average 1.7 years in length with about 0.9 years remaining. So, on average, jackups and semis are currently contracted for about 6 to 7 months less per contract than drillships. This leaves them more open to variations in the market as day rates move up and down over time.
After Petrobras, ONGC has the second largest number of drillships currently under contract with 4 lower specification rigs in its fleet. Shell, Total, and BP each have 3 drillships under contract. Of those companies, Shell and BP are paying average day rates about $220k for contracts between one and two years in length, while Total is paying about $170k per day for its three to four year contracts.
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