20 Offshore February 2018 •
TOP 10 DRILLERS
ficult task for any company that wants to buy it.
Market chatter has been indicating a stronger
likelihood of Maersk’s rigs going to more than
one buyer, possibly broken up along the lines of
jackups to one buyer and floaters to another. A
number of capital funds have been set up over
the past couple of years with asset acquisitions
in mind. With many very experienced former
drilling contractor executives out of work due
to the downturn, it will not be difficult for these
funds to find experienced people willing to run
the day-to-day business of a drilling company.
The bigger problem is knowing when is the
right moment to jump on an acquisition – that
is, when will the price be low enough, and
future work prospects look more attractive.
One such newcomer that has been steadily
building its rig portfolio is Borr Drilling. This
year marks Borr’s entry to the Top 10 Drilling
Contractor list at the number nine spot with 24
rigs as of the end of 2017. At the close of 2016,
Borr had only two units to its name, both of
which had been acquired from Hercules Offshore. Initially, the company was managed by
ex-Seadrill executives Rune Magnus Lundetrae
(CEO) and Svend Anton Maier (COO). However, in August 2017, Simon Johnson, formerly
an executive at Noble Corp., took over as CEO
and Lundetrae became deputy CEO and CFO.
As part of Borr’s acquisition of Transocean’s
jackups, which was finalized in May 2017, the
rig contractor took on five units still under
construction, one of which was delivered in
November 2017. In October 2017, Borr had
signed an agreement to purchase nine jackups
from PPL Shipyard. These nine units include
six rigs for which PPL had previously terminated construction contracts with the original
owners, and three units under various stages of
construction that the yard was building on spec.
An eagle-eyed reader may note that Borr’s
acquisitions as listed above add up to 26, but
the total number of rigs listed for Borr is 24.
This is because the table shows the number of
units managed by a drilling contractor, and in
this case, Borr purchased all of Transocean’s
jackups, but Transocean will continue to manage two of them – Mist and Odin – until their
current contracts expire in October 2018 and
May 2018, respectively.
There has been a switch-up in the regions
with the largest presence of Top 10 contractors. The US Gulf of Mexico market dropped
from having 61.0% of its total fleet coming from
Top 10 companies to just 50.5%, placing it in
the second spot. Taking over the top spot is
Northwest Europe, which went from second
place with 52.3% of its total fleet made up of rigs
managed by Top 10 companies, up to 54.0%.
West Africa remained in third place while falling
from 48.0% to 43.8%.
While Northwest Europe was the only region
noted on the accompanying table that had its
percentage of rigs from the Top 10 increase
over the past year, the final column – which
represents the rest of the world – had a huge
jump from 15.3% in 2016 to 24.2% in 2017. This
growth shows the growing importance of re-
gions like the Mediterranean/Black Sea and
Notably, when looking at the entire fleet
count for the various regions, in a down year,
one region maintained its net fleet: the Middle
East remained at a total of 176 offshore rigs.
The only increase was in the generic catch-all
grouping of “Rest of World.” This group’s fleet
grew from 59 units at the end of 2016 to 62 units
at the end of 2017.
With fewer jobs available in traditional regions, rig contractors are sometimes willing
to take chances on less traditional programs.
These are often with smaller operators that
might not be able to get a sufficiently long campaign together at the higher rates generally paid
during up cycles in the market. As an example,
Grenada had its first offshore well drilled in 2017
when Global Petroleum Group (GPG) hired the
Transocean semi Development Driller III for the
campaign. Prior to that, the 2009-built rig had
worked exclusively in the US Gulf of Mexico
until it ran out of work in late 2016. After finishing
its assignment with GPG, Development Driller
III mobilized to Aruba where it is now stacked.
This year, IHS Markit expects more changes
in the offshore drilling rig market. As mentioned
earlier, Maersk has made known its plans to exit
the drilling business, which could mean its absence on next year’s table. Meanwhile, Seadrill
is in the midst of reorganizing under Chapter 11
Bankruptcy, so it remains to be seen whether it
intends to refocus the company and sell of f some
assets. Other companies continue to find themselves on the brink of filing for bankruptcy and
may not be able to hang on long enough for the
meaningful recovery to kick in, despite a slight
increase in demand over the course of 2017.
Not only do we anticipate more consolida-
tion among the remaining players, but also
some new drilling contractors will emerge as
capital funds move on choice acquisitions. In
addition, more rig retirements are expected
as supply continues to far outstrip demand,
even with a recent rise in both the Brent and
WTI oil prices that is helping to boost E&P
companies’ optimism when planning their 2018
drilling programs. •
Top 10 offshore drilling contractors by number of rigs managed (total rigs includes rigs under construction).
Company Total rigs Working
construction US GOM Latin America NW Europe W. Africa Middle East Asia/Pacific Rest of world
Ensco 62 28 3 10 2 10 7 10 18 5
Seadrill 54 17 15 6 5 1 11 5 25 1
COSL 46 28 1 0 3 4 0 4 35 0
Transocean 44 19 2 11 10 8 0 0 12 3
ShelfDrilling 38 21 0 0 0 0 6 17 13 2
PDVSA 29 5 0 0 29 0 0 0 0 0
ParagonOffshore 29 2 0 11 0 10 0 7 1 0
Noble 28 15 0 9 1 3 0 8 5 2
BorrDrilling 24 0 13 0 0 5 3 1 15 0
MaerskDrilling 23 15 0 1 3 13 1 0 3 2
TopTenTotal 377 150 34 48 53 54 28 52 127 15
EntireFleet 1033 387 143 95 163 100 64 176 373 62
TopTen%ofTotal 36.5% 38.8% 23.8% 50.5% 32.5% 54.0% 43.8% 29.5% 34.0% 24.2%
Notes: Rig Types: Arctic, drill barges (but not inland barges), drillships, jackups, semisubmersibles, submersibles, and tender-assists.
Rigs en route between regions are shown in the destination region.
Latin America includes all South America, Central America, Caribbean and Mexico.
Seadrill numbers do not include rigs owned and managed by North Atlantic Drilling.
Data courtesy of IHS Markit. All data as of December 27, 2017.