Navigating 2024: A Global Q1 Review and Year Ahead Forecast.
Summary
TLDRThe Estan Rig Webinar Series for March 2024 reviews Q1 activity and forecasts the rest of the year. Matthew Donovan and Sophia Forester discuss trends in jackup and floating rig markets, highlighting increased demand in the Middle East and other regions. They note potential market shifts due to Saudi Aramco's adjustments in jackup demand and the impact on global rig markets. The webinar also covers the floating rig market, with a focus on South America and the North Sea, and provides insights into future rig requirements and day rate expectations.
Takeaways
- ๐ The global jackup fleet stands at 499 units, with 75% actively drilling, indicating a higher demand than current supply when considering units with future contracts.
- ๐ Jackup activity is primarily clustered in the Middle East, with strong demand also from the Far East, Indian Ocean, Southeast Asia, Mexico, and the North Sea.
- ๐ There are around 62 cold stacked units, many of which are not available for future work, impacting the potential supply of jackups.
- ๐ Jackup demand and utilization have increased over the past two years, especially in the Middle East, absorbing much of the spare capacity globally.
- ๐ Despite high utilization rates, competitive contractor utilization has remained at 90% or above since early 2023, reflecting a tight market.
- ๐ Saudi Aramco's potential release of jackups may lead to changes in market dynamics and contracting strategies, with 23 contracts set to expire by 2025.
- ๐ The North Sea market has tightened, with increased contract activity and limited remaining availability, impacting day rates and supply.
- ๐ข The floating rig market, including drillships and semisubmersibles, has a total supply of 208 units, with South America, US Gulf of Mexico, and West Africa being key regions.
- ๐ Floater demand has improved since the COVID-19 pandemic, with utilization around 70%, up from 33% since the pandemic.
- ๐ฐ High day rates for premium rigs have been observed, and long-term contracts are expected to tighten floating rig availability in the coming years, leading to potential increases in day rates.
Q & A
What was the total number of jackup units in the global fleet at the beginning of 2024?
-The total number of jackup units in the global fleet at the beginning of 2024 was 499.
What percentage of the global jackup fleet was actively drilling at the start of 2024?
-At the start of 2024, 75% of the global jackup fleet was actively drilling.
Which regions showed strong demand for jackups in Q1 2024?
-The regions that showed strong demand for jackups in Q1 2024 were primarily the Middle East, Far East, Indian Ocean, Southeast Asia, Mexico, and the North Sea.
How has jackup demand and utilization changed over the past two years and into Q1 2024?
-Over the past two years and into Q1 2024, there was increased demand in the Middle East, which drew a large number of jackups to the region and boosted global utilization. Total utilization trended up towards 75%, while competitive contractor utilization, which includes rigs with future contracts, remained at 90% or above since early 2023.
What is the current status of cold stacked jackup units, and are they expected to return to the market?
-There are still around 62 cold stacked jackup units. While some of these have been reactivated over the past several years, many of the remaining units are not available for future work and some may not return to the markets going forward.
What is the current situation with Saudi Aramco's jackup demand and how might it change in the future?
-Saudi Aramco has received a directive to maintain its maximum sustained capacity for crude oil production at 12 million barrels per day, leading to speculation that the company will modify the number of jackups under contract. There are around 23 contracts set to expire between now and the end of 2025, which could highlight a potential shift in market dynamics and contracting strategies for this state oil company.
What is the current utilization rate for floating rigs, and how has it changed since the COVID-19 pandemic?
-The current utilization rate for floating rigs is around 70%, which has been the trend for the last three quarters. This is up from 33% since the COVID-19 pandemic.
Which regions are driving the demand for floating rigs?
-The top four regions driving the demand for floating rigs are South America, US Gulf of Mexico, West Africa, and the North Sea.
What is the expected trend for day rates of jackups and floating rigs in the near future?
-In the near future, jackup day rates are expected to remain flat due to some availability in the floating rig market and uncertainty in the jackup market. However, as uncertainty decreases and rigs are signed to long-term contracts, some upward movement in day rates is expected.
How has the average duration of contracts for floating rigs changed recently?
-The average duration of contracts for floating rigs has increased, with a spike in mid-2022, surpassing the 2020 levels. This is due to operators wanting to secure rigs for their future projects and to hedge against potential upticks in day rates.
What is the expected demand for rigs in South America for the year 2025?
-South America is expected to have a very high number of rig requirements in 2025, with the region being responsible for around 26% of the global demand in rig years and 32% of the global number in terms of backlog added in the first quarter.
What is the current supply and demand situation for semisubmersibles in the North Sea?
-The supply of semisubmersibles in the North Sea has shrunk over the last couple of years due to high demand elsewhere driving the harsh environment semis out of the region. However, there has been a recent arrival of a rig from China for a two-year contract in Norway, indicating a potential for increased activity in the coming years.
Outlines
๐ Introduction and Overview of the Webinar
The webinar begins with an introduction to the Estan Rig Webinar Series, highlighting the presenters, Matthew Donovan and Sophia Forester, and their respective roles. The session includes housekeeping notes, such as the presentation's duration and the process for asking questions. It also mentions that the presentation will be recorded and made available on the SN website. The main focus of the webinar is to review Q1's activity and provide an Estan forecast for the rest of 2024, starting with an analysis of jackup trends in the first quarter.
๐ Global Jackup Trends and Demand
The global jackup fleet is detailed, with 499 units and 75% actively drilling. The demand is higher when considering units not currently working but with contracts lined up. Regional activity is primarily in the Middle East, Far East, Indian Ocean, Southeast Asia, Mexico, and the North Sea. There are 62 cold stacked units, many of which are not available for future work. The past two years have seen increased demand in the Middle East, particularly in Saudi Arabia and the UAE, with high utilization rates. The first quarter of 2024 has been quiet in terms of new contracts, with operators focusing on deploying existing rigs. Saudi Aramco's potential release of jackups due to production capacity changes is discussed, as well as the impact on the market dynamics and contracting strategies.
๐ ๏ธ Saudi Aramco's Impact on the Jackup Market
Saudi Aramco's directive to maintain a production capacity of 12 million barrels per day has led to speculation about modifications to the number of jackups under contract. The company operates 85 jackups, with seven more starting work soon. A shift towards natural gas projects is expected, with a reduction in offshore oil rigs and an increase in gas rigs. Around 23 contracts are set to expire by the end of 2025, which could lead to a change in market dynamics. Aramco has requested the suspension of several jackups, and it is anticipated that 10 to 30 units may be released. However, this does not rule out future contracting for rigs used in gas projects.
๐ Regional Analysis of Jackup Market
The North Sea has a limited supply of jackups, most of which are currently working. Contract activity accelerated in Q4 2023 and early 2024, resulting in a tighter market with little remaining availability. The UK's energy profits levy has postponed some work in the region, and the extension of EUPL into 2029 may negatively impact demand. However, increased activity is expected in 2024 and 2025. The jackup demand forecast remains largely flat in the near term, with increased availability expected as Saudi Aramco adjusts its demand. Other regions like the Middle East, Indian Ocean, Southeast Asia, and West Africa are expected to absorb excess supply from any released units.
๐ข Floating Rig Market Analysis
The floating rig market is discussed, with a current supply of 208 rigs, including drillships and semisubmersibles. South America, the US Gulf of Mexico, West Africa, and the North Sea are the top regions driving demand. Brazil leads in terms of supply and drilling activity, followed by Guyana, Norway, and Namibia. Despite fewer fixtures this quarter, there has been an increase in utilization from 33% post-pandemic to 70% in the last three quarters. Contracts are lengthening globally as operators seek to secure rigs for future projects and hedge against potential day rate increases. The backlog for the quarter is around 28 years, with a preference for drillships over semisubmersibles.
๐ Contract Duration and Day Rates in the Floating Rig Market
The average day rate for the quarter was around $373,000, driven by high day rates in the US Gulf of Mexico and South America. The average day rate increased by 7% compared to the last two quarters. There is a preference for long-term contracts, and the backlog added shows a shift towards drillships. South America is expected to be busy in the coming years, with a high number of rig requirements. Brazil continues to drive global floater demand, with a preference for rigs with MPD and dual activity capabilities. The North Sea has seen a decrease in demand, leading to a reduction in supply. However, high day rates have been recorded, with a contract in 2023 securing a day rate of $490,000. Australia's supply has increased to six semis, with expectations of a busy period ahead, potentially causing strain in supply.
๐ฎ Future Outlook for Rig Demand and Day Rates
The demand for jackups and floating rigs is expected to remain strong into 2025 and 2026, with day rates likely to be flat in the near term due to market availability and uncertainty. Long-term contracts are expected to tighten floating rig availability in 2025 and 2026, leading to upward movement in day rates. The Middle East will continue to be the primary market for jackups, with increased demand expected in West Africa, India, and Southeast Asia. New build orders for drillships are not expected due to high costs and long project timelines, and the market conditions do not currently support new orders.
๐ Conclusion and Q&A Session
The webinar concludes with a summary of key takeaways, emphasizing the strong demand for rigs and the potential for increased day rates in the future. The Q&A session addresses questions about new builds, market conditions for ordering new drillships, the situation in Saudi Arabia, and the impact on global supply. The session ends with thanks to the presenters and attendees, and an announcement that the recording will be made available on the Estan website.
Mindmap
Keywords
๐กJackup Rigs
๐กUtilization Rate
๐กSaudi Aramco
๐กNorth Sea
๐กFloating Rigs
๐กDay Rates
๐กContract Duration
๐กMarket Forecast
๐กNew Builds
๐กRegional Breakdown
Highlights
Global jackup fleet stands at 499 units with 75% actively drilling.
Many jackup units with contracts lined up, indicating higher demand than current 75%.
Jackup activity primarily clustered in the Middle East, Far East, Indian Ocean, Southeast Asia, Mexico, and the North Sea.
Approximately 62 cold stacked units, many not available for future work.
Jackup demand and utilization have increased over the past two years, especially in the Middle East.
Competitive contractor utilization has remained at 90% or above since early 2023.
Saudi Aramco's directive to maintain crude oil production at 12 million barrels per day may affect jackup demand.
Saudi Aramco operating around 85 jackups under contract, with seven more slated to commence work.
North Sea jackup market shows increased contract activity in Q1 2024 compared to 2023.
Energy Profits Levy in the UK may negatively impact demand, but overall activity in the North Sea expected to increase.
Jackup demand forecast remains largely flat in the near term, but high utilization expected to continue.
Floating rig supply at 208 units, with South America, US Gulf of Mexico, and West Africa being top regions.
Utilization of floating rigs around 70%, up from 33% since the pandemic.
Contracts for floating rigs are lengthening as operators seek to secure rigs for future projects.
Average day rate for floating rigs in Q1 2024 around $373,000, driven by high rates in US Gulf of Mexico and South America.
Brazil drives global floater demand with a high number of rig requirements and exploration activity.
North Sea demand has softened, but harsh environment semis have left the region, reducing supply.
Australia's supply increased to six semis, with contracts indicating a busy period until 2028.
Global utilization forecast for semis and drill ships indicates an increase in demand around late 2026.
Day rates for rigs are likely to remain flat in the near term but may increase as demand grows and supply tightens.
Transcripts
good morning afternoon and evening
everyone welcome to March's edition of
the estan rig webinar Series in today's
presentation we'll be reviewing q1's
activity and sharing estan forecast for
the remainder of
2024 today's presenters uh Matthew
Donovan head of our rig market research
based here in Houston and Sophia
Forester senior rig analyst based in our
Oslo office before we start the
presentation just a couple of
housekeeping
notes the presentation will last
approximately 30 minutes and will
include some time for
Q&A to ask a question please use the
question and answer icon at the top
panel of the team's
window today's presentation is being
recorded and will be posted onto the SN
website later this week I would like
like to thank to invite Matthew and
Sophia to start the presentation Matthew
over to you thank you very much Paul I
appreciate it and thank you everyone for
joining us here today for our March
presentation navigating 2024 a global q1
review and year ahead forecast joining
me today is our senior rig analyst
Sophia
forestieri next slide
please just a disclaimer at the
beginning as per usual and we're going
to start today by looking at uh jackup
Trends in the first quarter of the year
so turning out uh the global jackup
Fleet stands at 499 units 75% those are
75% of those are actively drilling at
the moment uh with others that are warm
stacked or undergoing repair or SPS many
of those already have contracts lined up
so while our Uh current um demand is
around 75% it's actually higher when you
bring in the uh units that are not
currently working if you to the supply
or Regional breakdown you can see
activity for jackups remains clustered
primarily in the Middle East with strong
uh demand also from the Far East the
Indian Indian Ocean and Southeast Asia
Mexico and the North Sea uh there are
still a number of cold stacked units
around 62 at this time uh while some of
these have been reactivated over the
past several years uh many of the units
remaining are not available many of
these cold stack units are not available
for future work and some may not return
to the markets going
forward uh next slide
please Tak now to jackup demand and
utilization so over the past two years
and continuing into the first quarter of
this year we saw increased demand in the
Middle East which drew a l large number
of jackups to the region and boosted
utilization globally absorbing much of
the spare capacity from around the globe
that total utilization as we saw on the
previous side has trended up towards
75% while competitive contractor
utilization which includes rigs that
have future contracts has remained at
90% or above since early 2023 so we've
remaining uh quite High utilization
going into the first quarter of uh 2024
Middle East as I said accounts from the
majority of jack up demand particular
activity in Saudi Arabia and the United
Arab Emirates with State oil and gas
companies southeast Asia and the Far
East are also major markets for Jack up
activity particularly in China uh though
most of this activity is limited to
chinese-owned Rigs and state-owned
Chinese
companies however one change we have
seen in the first quarter of 2024 while
demand is not lessened yet recent announ
announcements by Saudi aramco Point
towards some possible changes in jackup
demand going
forward
the first quarter it's been quiet for
the jackup market when you compare to
recent quarters in terms of uh new
fixtures and backlock added and that's
partially a result of the large number
of fixtures that we saw over
2023 what we see in the first quarter of
2024 rather than a large number of new
contracts is the uh operators that
signed up Rigs Over the uh past several
quarters moving into a mode where where
they are dealing with uh putting these
rigs to work and um assigning them jobs
throughout their Fleet uh we are still
still have a number of tenders open in
regions around the world uh so we should
see some new multi-year fixtures before
the end of this
year turning now to the news with Saudi
aramco we are expecting sa aramco to
possibly release some jackups over the
coming year in January Sai aramco
received a directive from the ministry
of energy to maintain its maximum
sustained capacity for crude oil
production at 12 million barrels per day
reversing the previous increase to 13
that was announced in March
2020 uh this has led to widespread
speculation and assumptions that Saudi
ramco will be modifying the number of
jackups it has under construction under
um under contract uh aramco is currently
operating around 85 jackups under
contract with additional SE seven slated
to commence work offshore Saudi Arabia
within the coming months six of those
currently undergoing maintenance before
they begin their contracts while one is
expected for delivery uh before the end
of the uh year then the Saudi arango CEO
has announced plans to reduce the
offshore rigs used for oil projects
while increasing the number of rigs for
gas projects aramco said it is aiming to
maintain around 300 rigs that includes
both onshore and offshore units with a
shift towards natural gas projects
it's currently unclear how many jackups
aramco will suspend cut from its Fleet
or not renew due to the reversal of
these production goals so what we're
seeing in Saudi Arabia right now is
there are around 23 contracts that are
set to expire between now and the end of
2025 which could highlight a potential
shift in market dynamics and Contracting
strategies for this uh State oil company
and we understood that aramco has
already sent letters requesting the
suspension of several jackups uh
reflecting potential adjustments in
response to this and we understand they
are aiming to finalize these
negotiations over the next month for the
jackups now Mark participants have
speculated that anywhere between 10 to
30 units could be released does not mean
that uh Sano may not uh contract new
rigs in the future as the co has said
there will be a shift towards rigs that
are being used for gas projects rather
than uh oil projects so there may shift
in the uh makeup of the jackups under
contract with Saudi aramco but we are
expecting some of the units currently
with the company uh to be released in
the coming
year turning now to the North Sea this
quarter there is a limited supply of
jackups in the North Sea most of which
are currently working following a period
of slow activity in terms of new rig
Awards North SE jackups in the first
half of 2023 saw contract activity
accelerating in the uh fourth quarter
and early 2024 around six years of
backlog added for jackups in the first
quarter of the year compared to 14 years
added in 2023 as a whole and what we've
also seen uh over early 2024 and late
2023 several jackups in response to the
slow Market in the North Sea secured
contracts in other regions in
conjunction with the recent increas in
contract Act AC ity this has resulted in
a much tighter Market in the North Sea
with little remaining availability and
the costs of reactivation and repair
will limit opportunities for some of the
cold and warm stack jackups in the
region we're already seeing contractors
looking at opportunities with 2025 start
dates and Beyond now the energy profits
Levy in the UK uh resulted in some work
in the region being postponed and that
eupl has recently been expend extended
into
2029 We Believe demand could again
potentially be negatively impacted by
these changes to Levy and the results of
the upcoming elections but we should
still see some increases in activity in
the North Sea as a whole as we move into
24 and into
2025 uh some projects including uh PNA
work will continue despite uh the
eepl now looking ahead further to the
jackup market in 2024 our jackup demand
forecast remains largely flat in the
near term there is likely to be
increased availability in the coming
years as s aramco adjusts its jack up
demand and but we do expect overall
demand and utilization from the market
to remain high trilling contractors are
expecting demand in other regions of the
Middle East the Indian Ocean southeast
Asia and West Africa to absorb much of
the excess Supply from any additional
units that are uh released from Saudi
ramco what we've seen as I mentioned in
recent quarters is very tight Market in
non-middle eastern areas as the excess
capacity largely moved to the Middle
East so with any of these units released
they're likely to filter back into other
regions increasing the availability
there temporarily but being absorbed
eventually by the expected increase in
demand and right now there are long-term
tenders and Pretenders open for work in
countries including Qatar Malaysia
Nigeria and Angola and we've already
seen in anticipation of Saudi ramco
cutting units some driven contractors
have already begun offering these units
on Charters outside the region even
though they may remain under contract to
Saudi arango at this time so
anticipating that they may not have
their contracts renewed so I think what
we're seeing going forward is a flatter
for the market but because that excess
demand um from other regions will absorb
the exess Supply that leaves the Middle
East looking at day rates the
uncertainty in the market is expected to
keep jackup day rates flat in the near
term uh jackup rates in the first
quarter of 2024 largely been Comm
measure it with what we'd seen in the
previous quarter of
2023 although there have been some
upticks on the higher end of uh the
markets for premium rigs uh we are
expecting um some some uh checkup uh
rates to increase over the next couple
of years as that uh uncertainty
decreases and rigs are signed to
long-term contracts decreasing the
amount of available units
globally and now we're going to move on
to the uh floating rig market and I'll
be uh passing it on to uh
Sophia thank you Matthew uh so yes now
we're going to talk a little bit about
what we saw this quarter in terms of
floaters uh and also what we're
expecting for this year and in the short
term as well so a quick overview so what
we have today Supply both drw ships and
semi submersibles is at 208 uh Rigs and
when we break down the supply into
regions we have top four regions that
are driving uh this this number
and those regions are South America us
Gulf of Mexico and West Africa forming
what we know as the Golden Triangle and
we also have uh the North Sea when it
comes to South America Brazil is the
leader both in terms of Supply but also
uh rigs that are occurr into Drilling
and it's followed by Guyana where we're
seeing a lot of exploration um activity
Norway drives the numbers behind uh the
North Sea and in West Africa we see and
go and Namibia driving the uh Supply and
the drilling activity um in the region
now when we look here at the um select
fixtures uh the number of fixtures as
we're going to see uh in the next slide
has not being the highest this quarter
but there have been a few fixtures that
are worth highlighting uh both in terms
of duration but also um High day rates
so we see here uh drill sh all of them
are for shs and with uh day rates above
$435,000 we
90,000 and they're all in South America
or us Gulf of Mexico and in South
America again we see Brazil as the one
with the highest number of pictures but
we also see surm uh with
Petronas now in terms of uh demand and
utilization we have seen floater uh
demand improved a lot since uh the
covid-19 pandemic so today we have
utilization around 70% and that has been
the trend the last three quarters so the
last half of uh last year and this
quarter and this is up from 33% since uh
the pandemic South America uh is one of
the regions experiencing a boost in
terms of Dr ship demand and that's
mostly due to the Petras contract but we
also see that in gyana and Surinam um
because of the exploration activity and
we also see that uh happening in
Colombia with Frontier um offshore
exploration uh us Gulf of Mexico has
seen uh a rise in 2023 but we do expect
demand to stay relatively flat uh in the
short term West Africa has uh a similar
Trend to South America and that is
propelled by exploration uh
in Namibia as well as long-term
contracts in Nigeria and
Angola uh one very interesting Trend
that we also see for floaters is that
the contracts they are lengthening
across the globe and that is due to
operators wanting to secure rigs for
their future projects as well as um hge
against a potential uprise um in day
rates now when it comes to fixures as I
mentioned we've seen fewer fixures uh
this quarter but again with the long uh
with with this trend for long-term
contracts we have had a backlog of
around 28 years which is very similar to
the backlog of the past um two
quarter um some of the uh fixures that
are worth mentioning um this quarter are
the just award uh awarded
semi um rig tender uh for Pb to cost
Souls uh n high8 uh rig as well as we
have uh Valar zs4 uh again with Petrus
also in Brazil now when it comes to day
rates um again even though we have had
fewer fixtures the average day rate for
the quarter was around
373,000
um dollars mainly driven by the fixure
the fixures of high day rates in the US
golf of Mexico and um South America and
even though we had last pictures the
average uh day rate was 7% higher when
compared to the last two quarters and
here on the right when we look at the
backlog added we start to see a
preference for drill ships uh compared
to semi
submersibles now when we focus on South
America uh first of all globally we do
back back 2025 to to be a very busy year
and that is reflected in um South
America where we have a number of a very
high number of uh rig requirements now
when it comes to demand South America is
responsible for around 26% of the global
um demand in um rig years and uh in
South
America when it comes to backlog added
uh in this first quarter South America
is responsible for 32% of the global
number and just Brazil responsible for
28% of that um of that number so we do
see Brazil as continue to drive uh the
global floater demand and we also see
contributions from Surinam and Guyana
where the discoveries are moving into um
development projects and one very
interesting thing about Brazil is that
even though the clean day rates they
tend to be a little lower than the
global average uh we do see long
contracts especially from Petras but we
also have seen uh a preference or yeah a
preference from operators uh for rigs
with MPD and dual activity capability so
before in 2014 we had very uh very very
small number of rigs with both MPG and
dual activity and now in 2024 the
Brazilian Fleet 54% uh has MPG and 64%
has dual activity uh capability now when
it comes to the North Sea uh demand uh
so there's had there has been a soft
demand in the North Sea and the high
demand that we see elsewhere has driven
uh the harsh environment semis out of
the region which means the supply has
shrunk over the last uh couple of years
and today we have around rggs um in the
region um we do have one exception to
that which was the recent arrival of the
Costo prospector from China for a
two-year contract um in Norway starting
later um this
year now when we look at semis um the
trend for semi pictures we see that
there has been a increase a recovery
since um the 2020 downturn with the
pandemic mic and we do see that the
average duration of contracts has
increased and it spiked in August 20122
and then it goes over the 2020 levels
towards uh mid
2023 um one interesting fact is that in
2023 Nori topped the day rate records in
the North Sea and uh Beyond and that was
with a contract with odfel drillings uh
dpy nor cap which secured a day rate R
of
$490,000 uh dollar for 2026 and that
even surpass as we saw in the previous
slides uh rates in Africa and even uh in
South America demand is flat but we do
expect some uh some increase this year
and through uh
2025 now when we come to Australia
Australia uh has seen uh its Supply
increased to six uh semis in the recent
months and that is due to two units that
were moved from the North Sea to
Australia so we have transitional
Equinox on Route uh to Australia from uh
Singapore for multiple contracts and we
expect the rig to be busy until 2028 if
all the options are exercised and we do
have transtion endurance which arrived
in late January uh for a contract with
Woodside and it's it has worked it has
its contract until
2026 um when it comes to fixtures we do
not see uh in the past couple of years
Australia being busy in terms of uh
awarded contracts but we do see
something that is very interesting is
the duration of the contracts so once a
rig arrives in Australia it has the
tendency of stay there for a very long
time and that is also supported by day
rates that tend to be around the global
average for both semis and um for semis
um in the region uh one other thing when
we look at rig requirements we do expect
the region to be busy in the next few
years uh and that could cause um a
strain in Supply uh given what we have
given the activity that we have today
and that all the six uh rigs are
currently booked for some time uh we
have some recent interesting news as
well in Australia um Santos has been
able to restart work on Drilling and uh
pipeline work at the uh Barosa gas
project of short the um Northern
Territory uh following legal challenges
that were uh happening and we also have
the recent news that New South Wales um
has pass a legislation to ban offshore
drilling so that cast uh some questions
on the pp1 uh project that was in the
pipeline now looking into the future um
when we look at uh Global utilization
forecast for semis and Dr ships we
expect an increase in demand around late
the second half of 2026 of around
30% again Brazil is to be mentioned as
one of the drivers of the South American
uh increase in demand in the future as
well as activity in uh West
Africa um we do expect as we can see
from the chart drill ships to remain as
the prefer rig type productivity in
benign uh de water environments but as
the drillship market remains tight some
work will move into semis and that's
where we see this increase um in semis
uh towards late 25 early
26 um drill ship Supply uh over the next
few years is also um uh will be limited
to existing units delivery of the
current uh new builds and reactivation
of code unit uh code stack units so we
do not expect uh new orders of drill
ships and that is mostly associated to
cost and the longly times of new build
uh
projects and um in terms of Outlook when
it comes to the day rates for both semis
and drill chips uh we do expect growth
uh we do expect the growth in demand and
The Limited Supply uh which drives of
course the high utilization to also uh
support elevated day rates but we do not
expect a high uptick uh in the short
term for neither uh semis or Dr ship so
we do see an annual growth level between
two and 4% and this uptick that we see
here on the right for the Dr ships uh
it's mostly due to those recent fixures
that we uh went over around 450 for um
490 um thousand doll so they're driving
this uptick but we do expect uh the
range for uh drill ships to be in
between six gen to be in between uh
around
400,000 and for S gen uh drill ships
between 400 and getting close or
approaching the low $500,000 and when it
comes to semis in general we do expect
it between 300,000 and
$400,000 um dollar day
rates and now I move to the key
takeaways Matt do you want to take the
part yes thank you sopia so key
takeaways from this despite some
availability in 2024 the jack up and
floating rig demand is expected to
remain strong over this year and into
2025 and
2026 as sopia mentioned day rates for
rigs are likely to be flat in the near
term due to some availability in the
floating rig market and uncertainty in
the jackup market Market at this time
but long-term contracts are expected to
tighten floing rig availability in 2025
and 2026 which should prompt some upward
movement in day rates Middle East will
remain the primary market for jackups
but contractors are expecting demand in
West Africa India and Southeast Asia to
draw further
units thank you for joining us today
everybody we now move into the Q&A
session of our uh presentation
thanks Matthew so here some uh some
interesting numbers and uh conversation
there I really appreciate it um we do
have a just a couple of questions that
have have come in um one around sort of
new builds uh what what kind of market
conditions do we uh say would be to be
needed for a drilling contractor to
order a new drill ship that's a that's
an interesting question and I mean we
we've really not seen any uh significant
new floating rigor ERS in recent years
and what we've heard from several of
major drilling contractors is that the
the market as it is currently wouldn't
support um new uh new orders at this
time so based on uh their expectations
new drill ship would take minimum of
five years from order date to delivery
and that could really be anything closer
to five to eight years and um costs on
those several of the major drilling
contractors have said that a new unit
would cost close to a billion dollars so
they would need initial contracts for
the unit to run for over 15 years at a
day rate in the high 600,000 or above so
not currently supported uh by current
market conditions I think even though
the drill ship Market is uh very
tight okay um switching over to jackobs
we had a couple of comments and
questions he'd mentioned about the
situation in Saudi Arabia so with
jackobs being released in Saudi Arabia
how how do we see the effects in Supply
in other
regions uh well Paul um as I said it's
the the it's it's still unclear how many
rigs will actually be released that's
sort of still in process um you know
Market participants have uh mentioned
anything from 10 to 30 units possibly
over a certain time frame and I think it
would be important that many of those
wouldn't be cut all at once probably
more gradual thing um so there hasn't
been a change in global in the global
Supply um movement yet but I think what
we would see is rigs cut from Saudi
Arabia first they're going to be bidding
on contracts in other parts of the
Middle East so Qatar UAE uh and then we
would probably see some move to uh I
think India southeast Asia and possibly
West Africa as well so definitely a
potential for increased Supply in those
regions but it'll basically be in
response to uh increased demand in those
regions you know rigs that places where
they haven't been able to secure a rig
beforehand for up coming work may be
able to uh get something when uh Supply
available Supply
increases okay um another one on sort of
supply of drill ships total 75% stake in
the Vantage drill ship um do you see
others uh taking similar
Investments with investing in
rigs very interesting uh movement there
from from Total yeah 75% stake in the
tungsten Explorer um
I think I think probably it's not likely
that we'll see many of those it's kind
of
uh unusual situation I think you know a
situation where Vantage was the
advantage was the uh company that the
totel did totel energies did to deal
with um obviously it was something that
worked out well for them in terms of U
needing the cash influx uh I think
probably wouldn't see too many of those
you'd have to have both a drilling
contractor motivated to sell off its
unit and an operator that has a large
number of projects lined up for an
extended period of time so you know with
totel energies they've got work in
Namibia and other parts of West Africa
that rig could be suited for so uh
probably wouldn't see too many of those
have to meet certain you know meet
certain criteria to make sense for other
companies um we do have a couple of
other questions but I'm conscious we
we're coming out of time now so um
what I'd like to say is that the
questions that we haven't been able to
answer in this time we will reach out
directly to those individuals um after
this call and then and and answer those
questions directly so we're not we're
not ignoring you but um I'd like to
thank Matthew and and Sophie for taking
the time presenting um hopefully
everybody's found a lot of some great
information there and more importantly
I'd like to thank everybody who has uh
taken the time to attend this conference
and this webinar um hopefully you've got
some information through as mentioned at
the begin this the recording uh will be
loaded onto the estan website and I will
forward a link to that uh recording uh
before the end of this week so again i'
just like to thank everybody else for
taking the time and uh look forward to
speaking to you all in the second uh
webinar Series in the middle of 2024
thanks everybody that concludes today's
presentation everyone
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