The boss of Ocean Rig UDW Inc. has reaffirmed his faith in the underlying demand for drilling in deepwater areas, which he says will result in a continued strong market for premium drilling assets.

George Economou, chairman and CEO of the company, commented during the company’s second quarter results presentation: “We continue to see some softness in the market as several units are coming off contract and certain uncontracted newbuilds are being delivered. As a result, we have seen the first signs of attrition of older units which are coming off contract and in some cases swapped out of existing contracts and replaced by newer units.

“As the forward contract coverage for older units is in steep decline, we believe that stacking of obsolete drilling assets will increase considerably in the coming months. We remain confident that the underlying demand for drilling in the deepwater areas will result in a strong market for premium drilling assets.”

For Q2 2014 Ocean Rig reported a net income of US $69.6 million. Recent highlights included the Ocean Rig Athena beginning drilling operations under a 3-year contract for ConocoPhillips offshore Angola, and the formal signing of a 6-year contract for drilling operations offshore Angola for its ultra-deepwater drillship Ocean Rig Skyros with Total in Block 32. The latter contract is expected to start in the third quarter of 2015 and has an estimated backlog of $1.3 billion.

It also signed during the quarter a contract with Premier Oil for its semisubmersible rig Eirik Raude for a minimum six-well program, with an estimated duration of 260 days, offshore the Falkland Islands, with an estimated backlog of approximately $164 million. The rig is scheduled to start drilling during Q1 2015. The rig is currently offshore South Africa under contract with Lukoil, and expected to finish there in December.

Offshore