Listen closely in the offshore arena and you may hear contractors whistling the tune to that old Bruce Springsteen song, “Glory Days.”
While offshore activity is still not back to peak levels from 2007-09, the sector gets closer every month. Worldwide offshore rig utilization climbed to 82.4% in July, according to IHS-Petrodata, the highest level since March 2009.
Utilization above 80% typically indicates a tightening market with positive momentum for rig rates and service providers. Offshore utilization among all rig classes worldwide has now exceeded 80% in eight out of the last nine months with February the only exception when utilization briefly dipped to 79.6%.
It is noteworthy that utilization also rose to 82% in July for the global jackup fleet, which is the third straight month where utilization of the lowest spec portion of the offshore fleet has exceeded 80%. For comparison, the offshore jackup fleet reported 75.7% utilization during the same month one year ago. The new figure comes in spite of the poorly utilized Gulf of Mexico, which has seen utilization flatten in the mid-50 percentile range in 2012 after a stellar 2011 run when the region’s jackup utilization rose from 36% in January to 53% by year end.
With the exception of jackup markets in the GoM and West Africa, utilization tops 80% in all other major jack up markets globally. In West Africa, jack up utilization moved up during the summer to 77.5% in July versus 70.6% in May.
The North Sea jackup market remains the tightest region globally with near full utilization of equipment. But that tightness is evident across all North Sea rig classes as noted in the August fleet update for Transocean Ltd ., which reported a one-year contract extension from Total in the North Sea for the Sedco 714 beginning in December 2012 at $395,000 per day, up nearly $70,000 per day. Similarly, the Transocean John Shaw also inked a one-year extension with Taqa in the North Sea beginning in November 2013 at $360,000 per day.
Demand For High-Spec Rigs Fuels Deepwater Newbuilds
A continuing string of significant global deepwater discoveries, extensions, or appraisals make the sector the most promising in oil and gas, and that is leading contractors to build state-of-the-art equipment in a multi-year upcycle.
The latest example includes Cobalt International Energy Inc. ’s successful completion of the Cameia #2 appraisal well on July 31 in the