Navigating 2024: A Global Q1 Review and Year Ahead Forecast.

Summary

The 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

• 📈 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.
• 🌍 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.
• 📉 There are around 62 cold stacked units, many of which are not available for future work, impacting the potential supply of jackups.
• 🔄 Jackup demand and utilization have increased over the past two years, especially in the Middle East, absorbing much of the spare capacity globally.
• 📊 Despite high utilization rates, competitive contractor utilization has remained at 90% or above since early 2023, reflecting a tight market.
• 🔄 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.
• 🌐 The North Sea market has tightened, with increased contract activity and limited remaining availability, impacting day rates and supply.
• 🚢 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.
• 📈 Floater demand has improved since the COVID-19 pandemic, with utilization around 70%, up from 33% since the pandemic.
• 💰 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

00:00

📊 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.

05:01

🌐 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.

10:02

🛠️ 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.

15:05

🌍 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.

20:07

🚢 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.

25:08

📈 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.

30:10

🔮 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.

🙌 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.

Keywords

💡Jackup Rigs

Jackup Rigs are a type of mobile offshore drilling unit used in the oil and gas industry. They are vessels with legs that can be jacked down to the sea bed, providing a stable platform for drilling operations in shallow waters. In the video, it is mentioned that the global jackup fleet stands at 499 units, with 75% actively drilling, indicating a high demand for these rigs.

💡Utilization Rate

Utilization Rate refers to the percentage of time that a resource, such as a drilling rig, is in active service compared to the total available time. A high utilization rate indicates efficient use of the asset and strong market demand. In the context of the video, the utilization rate of jackup rigs has trended up towards 75%, with competitive contractor utilization remaining at 90% or above since early 2023.

💡Saudi Aramco

Saudi Aramco is the state-owned oil company of Saudi Arabia and one of the largest companies in the world. It plays a significant role in the global energy market and has considerable influence on the demand for drilling services and equipment. In the video, Saudi Aramco's potential release of jackup rigs and shift in focus towards natural gas projects are discussed as key factors affecting market dynamics.

💡North Sea

The North Sea is a marginal sea located between Great Britain, Norway, Denmark, and the Netherlands, and is known for its rich oil and gas reserves. The region is a significant area for oil and gas exploration and production, and thus, a key market for drilling activities. The video discusses the limited supply of jackups in the North Sea and the impact of the energy profits levy on drilling activities in the region.

💡Floating Rigs

Floating Rigs are offshore drilling platforms that are not attached to the sea floor and can be moved from location to location. They include drillships and semisubmersibles, which are used in deeper waters where jackup rigs are not suitable. The video provides an overview of the supply and demand dynamics for floating rigs, particularly highlighting the Golden Triangle of South America, US Gulf of Mexico, and West Africa.

💡Day Rates

Day Rates refer to the daily cost that drilling contractors charge for the hire of their rigs. These rates are a critical factor in the financial performance of drilling contractors and can fluctuate based on market conditions, rig type, and location. The video discusses how uncertainty in the market is expected to keep jackup day rates flat in the near term but anticipates an increase in rates over the next couple of years.

💡Contract Duration

Contract Duration refers to the length of time that a drilling rig is contracted for a specific project or by a particular client. Longer contracts provide more stability and predictability for both the drilling contractor and the client. The video notes a trend towards longer-term contracts for floating rigs, reflecting operators' desire to secure rigs for future projects and hedge against potential increases in day rates.

💡Market Forecast

Market Forecast involves predicting future trends and conditions in a particular industry or market. It is an essential tool for businesses to make strategic decisions, such as when to invest in new equipment or how to plan for changes in demand. The video provides a forecast for the jackup and floating rig markets, including expectations for demand, utilization, and day rates.

💡New Builds

New Builds refer to the construction of new drilling rigs or other equipment in the oil and gas industry. Decisions to order new builds are influenced by market conditions, the expected lifespan of existing rigs, and the demand for drilling services. The video discusses the current market conditions not supporting new orders for drill ships due to high costs and long delivery times.

💡Regional Breakdown

Regional Breakdown refers to the analysis or categorization of data, activities, or trends by geographical regions. In the context of the video, it involves examining the distribution of drilling activities and the demand for jackup and floating rigs across different regions of the world. This helps in understanding market dynamics and making informed decisions.

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