Top 10 offshore drilling contractor
survey sees more changes
Last year was yet another tough 12 months for offshore drilling contractors. While some offshore sectors began to experience recovery, it was not mean- ingful enough to save some companies.
And it was not just drilling contractors that felt
the pinch – hard times also hit operators, E&P
firms, and oilfield service providers. In some
cases, companies were able to reorganize and
emerge from bankruptcy. Others were forced
to close down and liquidate their assets.
New number one
Last year marks the first time since 1999 that
Transocean was not the largest offshore drilling
contractor in the world. In 2016, Transocean
held the top spot with 67 units. But during 2017,
the company decided to sell off its jackup portfolio, which at the time consisted of 10 existing
units and five newbuilds under construction.
The jackups were purchased by Borr Drilling,
which as of the end of 2016 only owned two rigs.
This, combined with some floater attrition during the year, left Transocean with a total of 44
units, dropping it to the fourth spot on the list.
The three drilling contractors that are now
larger than Transocean are Ensco with 62 units,
followed by Seadrill with 54, then state-owned
China Oilfield Services (COSL) with 46. In 2016,
Ensco finished the year with 53 units. The net
increase in its 2017 fleet is primarily attributed
to its acquisition of fellow rig contractor Atwood
Oceanics. The merger was announced in May
and finalized in October. Ensco noted that the
combination of its fleet with Atwood’s 11 units
would give it the flexibility to retire some of
its older legacy units while preserving market
share. During the year, Ensco also took delivery
of one drillship and scrapped two jackups.
Two long-time players that dropped out of
the Top 10 are Rowan Companies and Diamond
Offshore. Rowan ended 2016 with a fleet of 30,
and finished off 2017 with 19. While this sounds
like a significant decrease, the majority of these
units were either sold to newcomer ARO Drill-
ing, which is a joint venture between Rowan
and Saudi Aramco, or transferred under ARO’s
management. Conversely, Diamond retired a
total of nine jackups and semis over the course
of the year, bringing its rig portfolio down from
28 to 19 and contributing to a decrease in the
global rig supply. In terms of attrition count,
Diamond and Transocean tied for the most
active last year with nine units retired by each.
While the overall count for the global offshore
rig fleet dropped from 1,075 in 2016 to 1,033 last
year, oversupply remains a huge issue that will
persist in 2018 as global demand continues to
fall far short of available supply, and the number
of units idle for a year or more grows. For the
purposes of this analysis, the global offshore
rig fleet included Arctic rigs, drill barges (but
not inland barges), drillships, jackups, semisub-
mersibles, submersibles, and tender-assist rigs.
IHS Markit anticipates that more consolidation
will take place among the rig contractors, as well
as more scrapping or recycling of units that are
unable to compete in the leaner market of today.
One of the most prominent changes anticipated is the exit of Maersk Drilling from the rig
contracting realm. In November 2017, its parent
company, A.P. Moeller-Maersk, classified the
division as discontinued operations and noted
that it aimed to have a structural solution in place
within the next 12 months. At the end of 2017,
Maersk held the final spot on the Top 10 list with
23 rigs – 15 jackups, 4 semis, and 4 drillships.
Of the company’s 15 jackups, 13 are harsh-environment, high-specification units, making
them highly sought-after rigs capable of working
in Northwest Europe. This has been the first
sector to show indications of a tight rig market
in 2018, particularly over the summer months.
Since conditions in the region necessitate the
use of harsh-environment rigs, this limits the
competitiveness from most of the global drilling rig fleet.
However, as evidenced by the shrinking
dominance of the Top 10 drilling contractors,
absorbing all of Maersk’s fleet might be a dif-
drillship ENSCO DS- 8 is
currently working offshore
Angola. (Courtesy Ensco)