Weekly Offshore Rig Review: Top Ops

Worldwide offshore rig utilization continued its upward trend this week, rising to 84.6% utilization as a net total of 7 idle rigs started new contracts. This represents the largest week-to-week increase in utilization in the last 12 months, and it puts utilization at its highest level since June of 2001. Of course, today's utilization rate actually represents significantly more rigs under contract, as the current offshore rig fleet is 28 rigs larger than 5 years ago. In terms of the number of rigs under contract, there are nearly 4% more rigs contracted today than at the 2001 peak in utilization.

This high level of rig utilization is driven by operator demand for offshore drilling equipment, and demand from operators has been very strong over the last several years particularly for semisubmersible rigs, which we will be examining today.

Top Semisub Operators
The table below provides the semisubmersible day rate expenditures for the top 10 operators worldwide over the course of 2001 to 2005. Day rates for the current year are not included because the year is ongoing and data is not complete. As can be clearly seen below, Petrobras has been the leading operator of semisubmersible rigs by a significant margin.

Operator Total Semisub Contracts ('01-'05)
Petrobras $2,353.65
BP $1,777.19
Shell $1,757.80
Statoil $1,237.48
ExxonMobil $1,143.79
Norsk Hydro $1,089.29
ChevronTexaco $710.97
Kerr McGee $624.29
Pemex $505.66
Total $495.95
Total for Top 10 $11,696.06
Total for Others $6,889.58
Total for All $18,858.64
Dollar values in millions of USD

These top ten operators accounted for more than 65% of the total expenditures on semisubs during the 2001 to 2005 period. During that 5-year period, spending was significantly higher in 2004 than in any other year, as can be seen in the graph below that illustrates expenditures for the top 4 semisub operators. These 4 operators alone accounted for nearly 40% of the semisub day rate expenditures over the 2001 to 2005 period.

Total Semisub Day Rates Paid by Operator
2001 to 2005

Expenditures Up
During the five years from 2001 to 2005, worldwide all operators combined to spend an average of about $3.5 billion on semisub day rates per year. From 2001 to 2003, that amount averaged about $3 billion per year, but expenditures increased dramatically in 2004, rising 65% above the previous 3-year average. That amount declined in 2005, but still held about 30% higher than the 2001 to 2003 average.

The chart below illustrates the total number of days that semisubs were contracted to the top 10 operators. The trends in the number of days under contract closely mirrors the trend of total expenditures, with the number of days being fairly steady from 2001 to 2003 then rising significantly in 2004. The day rate and rig days trends split somewhat in 2005 because the number of rig days declined back to the 2003 level, but total day rate expenditures remained about 30% higher than in 2003. This departure was due to the fact that day rates were higher in 2005 than in previous years.

Semisub Rig Days for Top 10 Operators
2001 to 2005

Smaller Operators Play Growing Role
The contracting of semisubmersible rigs has primarily been an activity of the larger operators. Over the course of the last 5 years, nearly 70% of all semisub day rates were paid by the top 10 operators. But it the last couple of years the percentage of day rates paid by smaller operators has increased. So much so, that in 2005, nearly 45% of semisub day rates were paid by smaller operators. The general trend is illustrated in the graph below.

Breakdown of Semisub Expenditures by Company Size
2001 to 2005

As 2006 progresses, it's likely that smaller operators will continue to make up a larger portion of the total semisub utilization picture.

For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit www.riglogix.com.