Maersk Drilling Chief Says Rigs Dip Could Extend To 2018
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.
"But if you look at the long term requirements for deepwater drilling, the rigs available and the order backlog, then by 2017 or 2018 I would expect rates close to being on par with what you saw in 2013," Hemmingsen said. "The projects are there and the economy is gradually picking up."
Maersk Drilling, like many of its global peers, has struggled to pick up new contracts this year and its order backlog shrank to $7.4 billion at the end of the first quarter from $7.9 billion at the end of last year.
However, Maersk needs more vessels to meet its long term growth targets and despite the industry's dip, Hemmingsen would not rule our further orders.
"We will still have an interest to grow Maersk Drilling to a bigger size than where we are today ... and I would still have the appetite to order a couple of rigs within the next 12 months," he said.
Maersk operates more than 30 drilling rigs and barges.
(Editing by David Goodman)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Brand Finance Ranks Most Valuable, Strongest Oil and Gas Brands
- Canacol Makes New Gas Discovery in Colombia's Magdalena Basin
- Egypt Plans to Meet Summer Fuel Needs with LNG Imports
- FortisBC Denies Gas Greenwashing as Suit Awaits
- Credit Agricole Helps NGP Secure Funds for Fishery-Solar Projects in Taiwan
- Oil and Gas Executives Predict WTI Oil Price
- Industry Protests Proposed Methane Fee Guidelines for O&G Facilities in US
- Exxon, Cnooc Merge Guyana Arbitration Claims Against Chevron
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- USA Oil and Gas Job Figures Jump
- Blockchain Demands Attention in Oil and Gas
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension