‘Sleeping Beauty’ Owners Positioning for Expected Boon from Oil Industry
April 19, 2018 | Singapore | OSEA2018 Industry Insights
The past year has seen rig-owning stalwarts position themselves for an expected improvement in the oil industry’s fortunes, with Ensco replacing Transocean at the top of the tree, writes Eoin O’Cinneide.
Ensco, which swooped on Atwood Oceanics in a $1.58 billion deal, not only has the highest number of units, but is also ahead on current fleet value, while Norway leads the way in terms of owning countries by value.
“Looking at the size of the fleet and its breakdown, the number of rigs is the most interesting figure,” says VesselsValue’s lead analyst offshore Charlie Hockless, whose data show there are currently 945 offshore drilling rigs worldwide.
Of those, 136 are drillships, 180 semi-submersibles and 639 jack-ups, with 118, 158 and 562, respectively, being live units and the rest on order.
“Of course we know that a large proportion of floaters are laid up, and it is unknown how the assets themselves will be reactivated,” Hockless says.
The overall value of the offshore fleet is $79.11 billion, with jack-ups worth $44.44 billion, drillships $21.52 billion and semisubs $13.16 billion.
Following the Atwood deal, Ensco has 65 rigs worth $5.97 billion, compared to the 45 worth $5.03 billion at Transocean, which last year sold its entire fleet of jack-ups to Norway’s Borr Drilling.
A year earlier, Transocean topped the charts with a fleet of 68 units worth $6.82 billion, with Ensco in fourth on 60 worth $3.45 billion, VesselsValue data shows.
Companies connected with John Fredriksen — comprising the likes of Seadrill, North Atlantic Drilling and Northern Drilling — are in second place this year with 38 units worth $5.64 billion, while a year ago a fleet of 47 units worth $6.13 billion was also good enough for second spot for the group. China’s CNOOC Group has climbed up the ranks by virtue of a rise from $1.97 billion to $2.73 billion in its fleet value, while US players Noble Drilling and Rowan Companies stayed in the top 10, as did Danish sale candidate Maersk Drilling.
Norway is the top offshore rig-owning country by value at $14.22 billion with 105 units, while the US has 174 rigs, but worth just $10.82 billion, the data shows.
The UK, with the likes of Ensco and KCA Deutag, is in third on $9.62 billion, China fourth on $6.71 billion and Switzerland, by virtue of Transocean, fifth on $5.03 billion. Mexico, Singapore, Denmark, Brazil and Greece — the last with Ocean Rig in its ranks — fill out the top 10.
Borr unsurprisingly tops the list of the biggest spenders since the start of 2017, the outfit led by Fredriksen’s former right-hand man Tor Olav Troim splashing out $2.65 billion on 24 rigs, adding nine resales at Singaporean yards and Paragon Offshore’s units to its fleet.
“Troim has seemingly pulled a company out of nowhere, raising huge amounts of capital in a matter of months and now is part of one of the largest drilling companies worldwide,” Hockless says.
The figures point to the high level of consolidation that has taken place in the rig market in the past year, which has gone some way to addressing the supply-demand balance. However, so many of the units in companies’ fleets remaining at shipyards — and likely to continue to do so for some time yet — is a concern for the industry.
UK-based Clarksons Research says in a March offshore drilling report that, although the number of active units was up 5% year-on-year in March, 115 rigs remained on order as of last month.
“Although resale activity has picked up recently, activity has not been evenly distributed,” Clarksons Research says, pointing out that owners are picking up resales at yards in Singapore and South Korea but not China, where so many remain idle or unfinished.
Companies such as Borr that are taking resales are often agreeing with the yards to keep them there for another 12 to 24 months, the research arm of the rig and shipbroker says.
“These rigs are ‘sleeping beauties’, intended only to be woken when market conditions are right. The eventual effect on the supply-side may, therefore, be gradual at first, with units only being delivered some time after resale occurs.
“As the market heats up, however, owners may well choose to accept units more quickly. The combined effect of this may be to delay the impact of the significant orderbook on the rig supply-demand balance for some time.”