Weekly Offshore Rig Review: Measuring Contracts

This week, worldwide offshore rig utilization dipped slightly, falling below 83% to 82.7%.

Over the course of the last 18 months, worldwide offshore rig contracts for jackups, semisubs and drillships have increased in length by an average of 40 days per contract. That amounts to a six percent increase in contract lengths since the end of May 2005.

While an overall six percent increase is fairly small, on a regional basis the changes are more significant. The table below provides the regional breakdown of average contract lengths for the world regions with at least 10 jackups, semisubs, and drillships.

The region with the longest average contracts is South Asia, primarily India, where the average current contract is nearly 5 years in length. Over the last 18 months, contract lengths in this region have declined 8%. Conversely, rigs in the US Gulf of Mexico have the shortest average contract lengths. However GOM rigs have experienced the greatest increase in average contract length of any region in the world, increasing an average 132 days in length, a 71% increase. At the same time, in the same area of the world, rigs in the Mexican Gulf of Mexico experienced the largest drop in average contract length over the last 18 months, with average contracts nearly nine months shorter now than they were in May 2005.

Average Contract Length by Region

  Current 18 Months Ago
Rig Type Total Rigs Cont. Rigs Avg. Cont. Len. Avg. Cont. Len. Change Change
Asia - South 36 rigs 36 rigs 1716 days 1870 days -154 days -8%
S. America - Brazil 35 rigs 34 rigs 1066 days 845 days 221 days 26%
MidEast - Persian Gulf 78 rigs 67 rigs 1049 days 963 days 86 days 9%
MidEast - Red Sea 11 rigs 11 rigs 988 days 1074 days -86 days -8%
N. America - Mexico 35 rigs 35 rigs 888 days 1150 days -262 days -23%
Asia - Caspian 15 rigs 7 rigs 748 days 527 days 221 days 42%
Mediterranean 16 rigs 13 rigs 666 days 564 days 102 days 18%
Africa - West 51 rigs 51 rigs 546 days 542 days 4 days 1%
Europe - North Sea 74 rigs 70 rigs 503 days 477 days 26 days 5%
Asia - SouthEast 54 rigs 41 rigs 410 days 371 days 39 days 11%
Australia 11 rigs 11 rigs 317 days 195 days 122 days 63%
Asia - Far East 19 rigs 17 rigs 272 days 410 days -138 days -34%
N. America - US GOM 134 rigs 93 rigs 245 days 185 days 132 days 71%
World 598 rigs 508 rigs 679 days 639 days 40 days 6%

Contracts Lengths by Rig Type
Besides region, it is helpful to look at the average length of contracts based on the type of offshore rig. For this analysis, we are examining the three major offshore drilling rig types: jackups, semisubmersibles, and drillships. The table below outlines the current average contract length from the start of the contract to the projected end of the contract, not including options, broken down by these major rig types.

Not surprisingly, drillships have the longest average contract length, coming in at 2.5 years. What was somewhat surprising is the fact that jackups have longer average contract lengths than semisubs. In fact, the difference is quite significant in favor of jackups, with current jackup contracts averaging 152 days longer than semisub contracts. That is 27% longer.

Average Contract Length by Rig Type

  Current 18 Months Ago
Rig Type Total Rigs Cont. Rigs Avg. Cont. Len. Avg. Cont. Len. Change Change
Drillship 38 rigs 28 rigs 910 days 840 days 70 days 8%
Jackup 394 rigs 337 rigs 713 days 678 days 35 days 5%
Semisub 166 rigs 143 rigs 561 days 502 days 59 days 12%

The Intersection of Regions and Rig Types
Looking at the rig contracts for specific rig types within each region of the world yields an interesting set of results for comparing regions. As can be seen in the two tables below, drillships working offshore India (Asia - South) have the longest average contract lengths of any rigs in the world. At the opposite end of the spectrum, jackups in the US Gulf of Mexico have the shortest average contract lengths.

One of the more noteworthy elements of this data is the fact that jackups in the Middle East (the 2nd largest jackup market) are among the rigs with the longest contracts while jackups in the US GOM (the largest jackup market) have the shortest. The difference between these two top regions for jackup utilization is very significant because it is a very clear indicator of why such a large number of jackups Independent Leg Cantilvere jackups have left the Gulf of Mexico for the Persian Gulf.

Average Contract Length for Region and Type
Longest (Regions w/ At Least 5 Rigs)

Rig Type Region Total Rigs Cont. Rigs Avg. Cont. Len.
Drillship Asia - South 6 rigs 6 rigs 1850 days
Jackup Asia - South 29 rigs 29 rigs 1711 days
Semisub N. America - Mexico 6 rigs 6 rigs 1380 days
Semisub S. America - Brazil 21 rigs 21 rigs 1198 days
Jackup MidEast - Persian Gulf 76 rigs 67 rigs 1049 days

The table below present the rig types within specific regions that have the shortest average contract lengths. These are the areas and rig types that are contracted for the least amount of time for each contract.

Average Contract Length for Region and Type
Shortest (Regions w/ At Least 5 Rigs)

Rig Type Region Total Rigs Cont. Rigs Avg. Cont. Len.
Drillship Asia - SouthEast 8 rigs 2 rigs 395 days
Semisub N. America - US GOM 33 rigs 25 rigs 370 days
Semisub Australia 8 rigs 8 rigs 301 days
Semisub Asia - SouthEast 13 rigs 9 rigs 265 days
Jackup N. America - US GOM 95 rigs 62 rigs 173 days

For More Information on the Offshore Rig Fleet:
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