Aramco's Rig Suspensions: Shaping the future of the global jackup market?

Summary

In May's edition of the Estrian Rig webinar series, Matthew Donovan, Head of the Estrian Rig Market Research Team, discusses the impact of Saudi Aramco's rig suspensions on the global jackup market. With 22 jackups suspended for up to 12 months, the presentation explores supply and demand trends, regional market impacts, and day rate forecasts. Donovan highlights potential shifts in rig utilization and the possibility of rigs securing work in other regions like Southeast Asia and West Africa. The webinar anticipates a short-term blip in market utilization and day rates, with a return to normalcy by 2025.

Takeaways

• 📈 Global Jackup Supply Overview: There are 499 jackup units worldwide, with 72% currently drilling or contracted. The Middle East has the largest fleet, followed by the Far East and Southeast Asia.
• 📉 Recent Trends: Utilization rates have been increasing, but there has been a slight dip in active rigs and competitive utilization in Saudi Arabia and the UAE due to contract suspensions.
• 🛢️ Impact of Aramco's Decision: Aramco received a directive to maintain its crude oil production at 12 million barrels per day, reversing a previous plan to increase to 13 million barrels per day.
• 🔄 Aramco's Rig Strategy: Aramco plans to reduce offshore oil rigs and increase gas project rigs, aiming to maintain over 300 rigs in total, shifting some towards natural gas projects.
• 🚫 Contract Suspensions: Aramco has issued contract suspensions for up to 12 months on 22 jackup rigs, affecting several drilling contractors.
• 🔄 Rig Reallocation: Rig owners are marketing the suspended jackups globally, with some already securing long-term contracts in other regions.
• 🌐 Regional Challenges: Jackups moving to new regions may face challenges such as regulations, technical requirements, and age of the unit, which might require modifications for compliance.
• 📊 Market Forecast: Global jackup demand is expected to pick up by 2025, with West Africa, India, and Southeast Asia expected to absorb much of the excess supply.
• 💰 Day Rate Forecast: Near-term day rates are expected to flatten due to increased availability and market uncertainty, but should begin to rise again by 2025 due to strong utilization and limited supply.
• 🌍 Regional Demand: Southeast Asia and India are highlighted as regions with potential for increased jackup demand, with several long-term requirements and attractive markets.
• 🛠️ Maintenance and Repair: Some drilling contractors intend to use the suspension time for maintenance and repair of their rigs.

Q & A

What is the current global jackup supply status?

As of the presentation, there are 499 jackup units globally, with 72% of them actively drilling or contracted.

Which region has the largest number of jackup units?

The Middle East has the largest number of jackup units, with nearly 200 units, followed by the Far East and Southeast Asia.

How has the jackup market utilization been trending in recent years?

Utilization has been trending generally upwards, with increased demand in the Middle East boosting global utilization as excess capacity from other markets moved there.

What impact did Saudi Aramco's directive have on rig contracts in Saudi Arabia?

Saudi Aramco received a directive to maintain its maximum sustainable crude oil production at 12 million barrels per day, leading to adjustments in its rig fleet and contract suspensions.

How many jackup rigs are currently under contract with Saudi Aramco, and what changes are expected?

Saudi Aramco currently has around 75 jackups under contract, with plans to reduce the number of offshore rigs for oil projects while increasing rigs for gas projects.

What was the total number of jackups known to be affected by contract suspensions?

A total of 22 jackups are known to be affected by contract suspensions.

How are the suspended rigs being handled in terms of contract terms?

The suspended rigs have their contract backlog preserved by adding the suspension time back to the contract as an extension once they restart work.

What challenges might drilling contractors face when trying to market their rigs outside of Saudi Arabia?

Challenges include country regulations, technical requirements, and the age of the drilling unit. Some rigs may require modifications or upgrades to comply with local regulations and operating conditions.

How many of the suspended rigs are likely to be competitive in the international market?

Around 15 of the 22 suspended rigs are likely to be competitive in the international market.

What is the current forecast for global jackup demand and utilization by 2025?

Global demand and utilization for jackups are expected to remain high by 2025, with demand in West Africa, India, and Southeast Asia expected to absorb much of the additional excess supply.

What is the expected impact of the suspensions on global jackup day rates in the near term?

Near-term flattening of day rates is expected due to the unexpected boost in availability and market uncertainty as contractors work to secure additional contracts.

How might the suspensions affect the North Sea market?

The North Sea market is unlikely to be significantly affected as it requires harsh environment jackups, which are different from the rigs released by Saudi Aramco.

What is the potential impact of the suspensions on drilling contractors' willingness to work with Saudi Aramco in the future?

While it's too early to tell, it's unlikely that contractors will avoid working with Saudi Aramco entirely due to its significant market share. Instead, there may be an impetus for companies to diversify their business and expand globally.

Outlines

00:00

🌏 Global Jackup Market Overview and Recent Trends

The first paragraph introduces the webinar on the global jackup market, highlighting insights on how Ram Corp's rig suspension announcements may influence the market outlook. Matthew Donovan, head of the estrian rig market research team, presents an overview showing 72% of 499 global jackup units are currently drilling or contracted. The Middle East has the largest number of jackups, followed by the Far East and Southeast Asia. Utilization rates have generally increased, especially with the Middle East's demand growth. However, recent contract suspensions by Saudi Aramco, the largest operator in the jackup market, have begun to impact active rig numbers and utilization rates slightly.

05:00

📉 Impact of Saudi Aramco's Contract Suspensions

This section delves into the specifics of Saudi Aramco's decision to suspend contracts for up to 12 months on 22 jackup rigs, which has led to a preservation of backlog by extending contracts. The impact on various drilling contractors is detailed, with some electing to terminate contracts rather than return after suspension. The response of rig owners includes marketing the jackups globally, with some securing long-term contracts elsewhere and others facing challenges due to regulations, technical requirements, and rig age. The market has seen a decrease in rates due to the additional availability and uncertainty.

10:01

🛳️ Rig Redeployment and Market Challenges

The third paragraph discusses the challenges and strategies for drilling contractors looking to redeploy jackups outside of Saudi Arabia. It covers the need for rigs to meet new region specifications, including water depth and weather patterns, and the potential for upgrades to ensure compliance. The paragraph also touches on the competitive nature of securing contracts in new regions, with around 15 of the 22 suspended rigs likely to be competitive in the international market. Examples of rigs that have already secured work elsewhere are provided, indicating a shift in the market dynamics.

15:03

📈 Global Utilization Forecast and Market Opportunities

The fourth paragraph presents a forecast for global jackup demand and utilization, expecting a pickup in 2025 after a near-term weakening due to rigs coming off contract with Saudi Aramco. It discusses the expectation that demand in other Middle Eastern countries, the Indian Ocean, Southeast Asia, and West Africa will absorb much of the excess supply. The paragraph also mentions long-term tenders and pre-tenders open in various countries and concludes that the 22 suspended units represent a small fraction of the global fleet, suggesting a positive outlook for the market.

20:05

🌐 Regional Market Analysis and Potential for Growth

This section provides an in-depth analysis of potential growth in various regions for jackup rigs. Southeast Asia and India are highlighted as areas with potential demand for the suspended rigs, with specific mentions of contracts secured in Thailand, Qatar, and Egypt. West Africa is also identified as a region with rising demand, offering long-term opportunities. The North Sea is noted as unlikely to be significantly affected due to its requirement for harsh environment jackups, which are not typical of those suspended by Saudi Aramco.

25:09

💡 Key Takeaways and Future Market Insights

The final paragraph summarizes the key points from the presentation, emphasizing the suspension of contracts for 22 jackups by Saudi Aramco and the marketing of these rigs in other regions. It predicts that half of the units will likely remain in the Middle East, despite suspensions. The paragraph also anticipates that global demand and utilization for jackups will remain high, with day rates expected to flatten in the near term before increasing by 2025. The potential for further suspensions or terminations by Aramco is mentioned, along with the possibility of rigs being redeployed for gas production or to maintain production capacity levels.

❓ Addressing Audience Queries and Closing Remarks

The closing segment addresses audience questions about the suspensions, potential for increased demand in the Americas, and the future of day rates. It confirms that not all suspensions have begun, and some are still under discussion. The potential for more than 22 rigs to be suspended is acknowledged, but no specifics are provided. The paragraph concludes with an expectation of market recovery by 2025, with utilization and day rates returning to solid levels. The presentation is recorded for future reference, and a document with answers to audience questions will be circulated.

Keywords

💡Jackup Market

The jackup market refers to the industry sector involving jackup rigs, which are mobile offshore drilling units used in shallow water environments. In the video's context, the global jackup market is being analyzed, particularly in light of recent rig suspension announcements by Saudi Aramco, a significant player in this market. The script discusses the impact of these suspensions on the outlook and forecast for the industry.

💡Rig Suspension

Rig suspension refers to the temporary halting of operations for a drilling rig. In the script, it is mentioned that Saudi Aramco has suspended contracts for 22 jackup rigs. This action has implications for the global market, as these rigs are now being marketed and securing work in other regions, affecting the supply and demand dynamics within the jackup market.

💡Utilization

Utilization, in this context, refers to the rate at which jackup rigs are being used or contracted for work. The script indicates that global jackup fleet utilization has been trending upwards and remains competitive, despite the recent suspensions. Utilization rates are a key metric for understanding the health and demand within the jackup market.

💡Saudi Aramco

Saudi Aramco is the state-owned oil company of Saudi Arabia and is the largest single operator in the jackup market. The script discusses how decisions made by Saudi Aramco, such as the directive to maintain maximum sustainable crude oil production at 12 million barrels per day and the subsequent rig suspensions, have significant impacts on the global jackup market.

💡Drilling Contractors

Drilling contractors are companies that provide drilling services, often using their own rigs, to oil and gas companies. The script mentions several drilling contractors such as Shelf Drilling, Culp, Arabian Drilling, Egyptian Drilling, and ARA Drilling, which are affected by the rig suspensions announced by Saudi Aramco.

💡Contract Suspensions

Contract suspensions are a specific type of contract modification where the work under the contract is temporarily stopped. The script details that Saudi Aramco began issuing contract suspensions of up to 12 months to units that were under contract, leading to a shift in the market as these rigs seek new contracts elsewhere.

💡Market Forecast

A market forecast is a prediction or projection of future market conditions based on current trends and data. The script provides insights on the global jackup market forecast, suggesting that despite near-term challenges due to rig suspensions, the market is expected to pick up by 2025, influenced by factors such as demand in other regions and the potential for further rig suspensions or contract terminations.

💡Day Rates

Day rates are the fees charged by drilling contractors for the use of their rigs on a daily basis. The script discusses the impact of rig suspensions on day rates, suggesting that there may be some near-term flattening due to increased availability and market uncertainty, but with expectations of rates beginning to rise again by 2025 as the market absorbs the excess supply.

💡Global Supply

Global supply refers to the total number of jackup rigs available worldwide. The script provides an overview of global jackup supply by status and region, highlighting that the Middle East has the largest number of jackup units, which is significant in understanding the market dynamics and the impact of rig suspensions.

💡Demand and Supply

Demand and supply are fundamental economic concepts that refer to the quantity of a product that consumers are willing to buy (demand) and the quantity that producers are willing to sell (supply). In the script, the balance between demand and supply in the jackup market is discussed, particularly in relation to the suspension of rigs by Saudi Aramco and the potential for increased demand in regions like West Africa, India, and Southeast Asia.

Highlights

Matthew Donovan, head of the estrian rig market research team, presents insights on the global jackup market.

Recent rig suspension announcements by Ram cor may alter the market outlook and forecast.

Global jackup supply currently stands at 499 units, with 72% drilling or contracted worldwide.

The Middle East is the largest region for jackup supply, followed by the Far East and Southeast Asia.

Jackup market utilization has been trending upwards, with increased demand in the Middle East.

Saudi Aramco's directive to maintain crude oil production at 12 million barrels per day has led to adjustments in their jackup fleet.

Aramco plans to reduce offshore oil rigs while increasing rigs for gas projects, aiming to maintain over 300 rigs in total.

22 jackups are known to be affected by contract suspensions, with durations of up to 12 months.

Rig owners are marketing the suspended jackups globally, with some securing long-term contracts.

Challenges for drilling contractors include country regulations, technical requirements, and the age of the drilling unit.

Approximately 15 of the 22 suspended rigs are likely to be competitive in the international market.

Three out of the 22 suspended units have already secured work elsewhere, indicating a shift in the market.

Jackup day rates are expected to flatten in the near term due to increased availability and market uncertainty.

Global jackup demand is expected to pick up by 2025, with a focus on regions like West Africa, India, and Southeast Asia.

The North Sea market is unlikely to be significantly affected by the Middle East situation due to its requirement for harsh environment jackups.

Drilling contractors may use the suspension time for maintenance and repair of their rigs.

The presentation suggests that the market will return to high utilization and day rates will rise by early 2025.

Transcripts

good morning afternoon and evening

everyone uh welcome to May's edition of

the estrian rig webinar Series in

today's presentation we will be

discussing our insights on the global

jackup market and how Ram cor's recent

rig suspension announcements may change

the Outlook and forecast from esen

today's presentation will last

approximately 30 minutes and will

include some time for Q&A at the end to

ask a question please use the Q&A box at

the top panel of today's event

window to this presenters Matthew

Donovan head of the estan rig market

research team uh who is based in our

Houston

office today's presentation is being

recorded and will be uploaded onto the

estan website uh later this

week I would like night to to invite

Matthew to start today's presentation

over to you Matthew thank you Paul

appreciate it and thank you all for

joining us today for AR Co rig

suspensions shaping the future of the

global jackup

market disclaimer

first so starting off we're going to

look at the uh Global jackup Supply

overview uh the chart on the left hand

side of the screen shows Global jackup

Supply by status with 499 units

currently 72% of those are drilling or

otherwise contracted worldwide a

significant number number of the uh 133%

of rigs that are currently warm stacked

do have uh contracts

upcoming to the right hand side of the

screen you'll see jackup Supply by

region where you can see that the Middle

East uh is by far the largest area in

terms of jackups uh with the Far East

and Southeast Asia coming in second and

third but uh well below the nearly 200

units found in the Middle East at this

time going to look now at some recent

Trends in jackup demand and utilization

so in the jackup markets utilization had

been trending generally upwards what

we've seen over the past two years is

that increased demand in the Middle East

drew a large number of jackups to the

region so we had Rising demand there it

also boosted utilization globally as a

lot of the excess capacity in other

markets moved to the Middle East at the

same time as demand also picked up

slightly in some of those

regions and what we've seen is

competitive contractor utilization for

the global jackup Fleet remain around

90% since early

2023 and total utilization was as high

as

74% as of March of this year as I

mentioned earlier the Middle East

accounts for the majority of jackup

demand particularly activity in Saudi

Arabia and the United Arab Emirates what

we've seen in recent months in April and

May is the number of active Rigs and

competitive utilization have dipped

slightly in these months as contract

suspensions began in Saudi

Arabia so Saudi AR Saudi aramco the

state operator uh for Saudi Arabia is

the largest single operator in the

jackup

market in January of this year aramco

received a directive from the ministry

of energy to maintain its maximum

sustainable capacity for crude oil

production at 12 million barrels per day

reversing a previous planned increase to

13 million barrels a day that was

announced in March of

2020 so what we've seen is that uh

aramco is now adjusting its uh Fleet to

deal with this uh reversal in uh the

increase in uh maximum sustainable

capacity and that was what had fueled a

lot of the uh new rig contracts that are

around cosigned over the last several

years in March of this year arango's CEO

I mean n announced plans to reduce the

number of offshore rigs working on oil

projects while increasing the rigs for

gas projects he stated that aramco aimed

to maintain over 300 rigs including

onshore and offshore rigs together and

shifting some of those towards natural

gas

projects aramco currently has around 75

jackups under contract with another

three slated to commence work soon two

of those rigs are undergoing maintenance

while one is awaiting delivery at a yard

in the Middle

East in April Saudi aramco began issuing

contract suspensions of up to 12 months

to units that were under contract and a

total of 22 jackups are known to be

infected with suspensions spread among

drilling contractors including Addis

shelf drilling cul cipm Arabian drilling

Egyptian drilling ARA Drilling and boore

drilling we have seen multiple

suspensions already begin While others

are still under discussion and expected

to begin later in

20204 so I mentioned these are 12

subscrip suspensions of up to 12 months

for these contracts and the backlog on

these is being preserved by adding the

suspension time back to the contract as

an extension at the end once they

restart work however we have seen at

least one rig owner elected to terminate

the contract rather than return to a

ramco after the suspension the remaining

terms on some of these suspended

contracts can vary from a few months to

multiple years now in response we've

seen rig owners have already begun

marketing these jackups globally with

three already securing long-term

contracts however the additional

availability and uncertainty in the

global jackup market has resulted in

some lower rates fixed

recently and as part of these

suspensions I should note that jackups

that secure new work in other areas are

given the opp the option to complete any

of these new contracts and Associated

options before returning to work with a

ramco and you turn to the charts on the

right of the screen you can see the uh

companies impacted by the current

suspensions and the number of rigs that

were suspended and also the percentage

of rigs suspended by rig manager that

were under contract to aramco so cell

had 44% of its rigs under contract to

Aram Co suspended as did shelf Drilling

and CM close at 43% while Addis which

had five units suspended represents

around 15% of their units under contract

to a

ramco moving ahead with a look at some

of the units being

suspended um while we're expecting some

of these units to uh become active in

the global market not every jackup may

be suitable for work in every other

region there'll be some challenges for

drilling contractors wish to Market

their rigs outside of Saudi Arabia these

can include country regulations

technical requirements and the age of

the drilling unit and indeed some

contractors may have to work to expand

beyond the market they are currently

focused on if you're talking about rigs

moving to another region the jackup

specifications must align with the

requirements of that new region

including water depth and Wet Pat

weather patterns modifications or

upgrades may be necessary for some units

to ensure compliance with local

regulations and operating conditions and

securing a contract in a new region of

course depends on market demand

competition and economic factors each

region has its own set of regulatory

requirements governing drilling

operations and we estimate that of the

22 suspended rigs around 15 of those are

likely to be competitive into the

international market and some of the uh

remaining of those units May uh instead

await their suspensions in uh Saudi

Arabia or perhaps bid for similar work

in other parts of the Middle East we've

uh broken down these suspended units to

the right of the screen by their design

and by the age so you can see the

majority of the units that were

suspended were Gusto MSC CJ 46 or Kel's

b class and a number of the units uh

well number of the units relatively new

rigs delivered in the past decade we had

several quite old units uh that were

suspended now the working life of a

jackup can easily reach over 40 years so

uh some of these rigs do have uh work uh

working life ahead of them but they may

be less competitive on the global market

due to operator preference for newer

rigs this is a look at rig designs per

region of units currently

drilling we can see preference for

certain uh designs within

regions and what we've seen is that

suspended rigs are already beginning to

move outside Saudi Arabia Aris was

awarded an 18-month trilling contract in

the Gulf of Thailand from ptcp marking

its entry into its ninth country of

operations and subsequently artist has

also secured a new contract for oneye

firm term in Qatar with optional

extensions of up to 18

months uh they have also been awarded a

20 mon month drilling contract in Egypt

so with three out of the suspended unit

total 22 suspended units have already

secured work

elsewhere multiple units are already

being marketed internationally and

several of the affected drilling

contractors already have a significant

International presence it is understood

that one cm jackup will relocate likely

to Mexico where it will take over a

contract currently fulfilled by a jackup

that cpim has Bebo

charted now given the high costs of

mobilization demobilization and the

potential for new contracts to be for

terms longer than 12 months some jackups

may not return to Saudi Arabia at the

end of this so they could uh elect to

terminate their remaining uh

contract and there are units that are

more suited to the Middle Eastern

markets they remain stead bid on work in

other parts of the region or remain uh

suspended until resuming work with ar

ramco and we do know that some drilling

contractors intend to use the suspension

time uh to let their rigs undergo

maintenance and

repair looking at Global utilization

forecast we are still expecting jack up

demand globally to pick up in

20125 after some near-term weakening as

rigs come off contract with Saudi aramco

and bid on new jobs drilling contractors

largely expect demand in other countries

of the Middle East in addition to the

Indian Ocean southeast Asia and West

Africa to absorb much of the excess

supply of rigs suspended by

aranco uh we currently have long-term

tenders and pre- tenders open for work

in countries including Qatar Malaysia

India Nigeria and

Angola and we expect Global competitive

utilization to remain strong due to the

pent up demand in these other areas and

the small number of suspended units in

terms of global Fleet size the 22 units

represent around

4.4% of the total Global Fleet so we are

expecting uh a significant number of

those to secure work in other areas

going forward now on a long ter frame

the possibility remains that ramco could

suspend further rigs or terminate

contracts towards the end of the

suspension periods rather than resume

work however this is medicated by the

state oil company's plans to increase

gas production which will allow some

rigs to be redeployed uh to that work

and also the work needed to maintain the

12 million barrels per day uh maximum

sustainable capacity levels so we are

expecting uh Demand by 2025 to have

picked up

again looking at our Global jackup day

rate forecast we are projecting some

near-term flatness in as we go forward

and as as drilling contractors work to

secure additional contracts in a short

time frame we've seen some jackup

contracts fixed at the lower end of

recent day rate ranges however other

recent fixtures have remained close to

the Leading Edge of day rates that were

achieved in early

2024 so the increased availability and

Market uncertainty in the near term

expected to cause some flattening in

jackup day rates as that excess capacity

is absorbed we expect jackup rate to

begin Rising again due to the overall

strong utilization and general limited

Supply globally so by 20125 we should

expect to see some increases in uh

jackup day

rates and we'll turn now to some other

regions um we're expecting demand in

Southeast Asia and India to draw some

more jackups in that's been southeast

Asia has been identified by several

drilling contractors as a potential

market for the suspended rigs to secure

work and the weather conditions and

water depths mean that many jackups in

the Middle Eastern Market could be SED

suited for work in parts of Southeast

Asia as I mentioned earlier arst has

already secured an 18-month contract for

one of their units that was suspended

with pttp offshore Thailand and they

have cited an existing vacuum in very

attractive Southeastern Asian Southeast

Asian markets as a potential place for

their rigs to move we're seeing

long-term jackup require ments in

Thailand Malaysia and Indonesia with

start dates in late 24 and into

2025 and outside southeast Asia India is

also an important jackup Market that

could potentially bring in rigs OMC has

had an open tender for four jackups

though many of these are likely to go to

incumbent Rigs and the company recently

canell a three-year tender for an hpht

uh unit there's currently also an oil

India tender in progress and Market

sources indicate that can oil and gas

can oil and gas India will issue a

letter of award for two jackups in the

near

future moving now to West Africa we are

expecting jackup demand to rise in West

Africa there are currently long-term

opportunities for jackups in Nigeria

Angola and equ Equatorial Guinea and

also shorter term jobs possible in areas

including Ghana Cameroon and the Congo

this potential work includes exploration

a development drilling as well as

boosting production from mature

assets and we've seen that drilling

contractors with suspended rigs

including shelf Drilling and B drilling

already have extensive operations in

West

Africa recently valaris fixed a jack up

to a 13 well contract in Angola and this

unit will be mobilizing from the US Gulf

of Mexico for this job which indicates a

general willingness to move rigs into

West Africa for

work also worth mentioning that many

smaller operators in West Africa are

very sensitive to price escalations in

terms of day rates so a near-term

increase in availability could provide

some opportunities for these companies

to uh work on projects that would not

otherwise go ahead if they were bidding

at higher day

rates look at the North Sea the North

Sea Market is unlikely to be

significantly affected by the situation

in the Middle East

this is because the North Sea Market

requires harsh environment jackup so the

rigs released by Saudi aramco are very

unlikely to move to the North Sea for

work what we have seen in recent years

jackups left the North Sea for other

regions including West Africa southeast

Asia oania and Latin America and

suspended rigs from uh from the Middle

East finding work in other regions could

reduce future movement of jackups from

the North Sea with the recent departure

of two jackups the fleet in the North

nor sea in the Russian Arctic is down to

34 jackups and this reduced Supply and

increased Contracting uh in recent

quarters has resulted in a tight Market

with limited availability in the near

term momentum in the North Sea jackup

Market picked up in late 2023 and early

2024 with around eight years of backlog

added in 2024 to date and we've seen

competitive contracted utilization in

the North Sea jacket Market has been

around 90% over the last 4 months

we're expecting demand in Norway to

remain stable with all eight units in

the region currently firmed through 2025

and the remaining active UK Fleet is

sold out through 2024 with several rigs

transitioning to higher rates during the

year and around half of the UK Fleet

contracted into mid

2025 looking now some key takeaways from

uh this presentation today mention Saudi

aramco is suspending contracts for 22

jackups these current

suspensions last up to 12 months

suspended jackups already being marketed

and securing work in other

regions uh although we do expect around

half of the units to likely remain in

the Middle East Middle East even with

these suspensions Remains the primary

market for jackups but we are expecting

uh contract contractors are expecting

demand in West Africa India and

Southeast Asia to absorb much of the

additional excess Supply in the jackup

market by

2025 we're expecting Global demand and

utilization for jackups to remain high

over the coming

years but we do expect day rates to be

flat in the near term due to that

availability in the global

market right it's been a presentation

today so I believe now we have some time

for uh questions from the

audience thanks Matthew um again if

anybody's got any questions please use a

Q&A box at the the top of the uh the top

of the screen um we did get a couple of

questions coming actually um just very

early on before the presentation started

on on the suspensions have all of the

suspensions actually begun at this time

uh no not at this time Paul so several

have already begun and we've seen rigs

move into Anchorage in uh parts of uh

Saudi Arabia and outside uh the area in

the Middle East uh so those some have

already begun but there are some that

are still under uh discussion for the

exact terms of the suspension and timing

and so what we're seeing is uh probably

most of those suspensions to uh Begin by

uh the end of the second or into the

third quarter of 2024 so so we're

expecting most of these suspensions to

begin by the end of this year but not

all have done so at this

time okay um you obviously showed quite

a few detailed slides on sort of the

regional demand broken down but uh one

question came in is is is there

potential for increased jackup demand in

the

Americas well if we look at Americas as

a whole I mean there is a uh we are

expecting at least one of the units that

was suspended uh to move to Mexico where

it'll be replacing rather than uh

additional demand to it but in general

the Americas is quite a small market for

uh jackups uh there's only a handful of

jackups active in the US Gulf of Mexico

uh at this time and as I mentioned one

of those is already secured work in West

Africa and uh will be leaving uh for

work uh in in West Africa in the near

future so unlikely to be additional rigs

brought in uh for the US Gulf of Mexico

uh there is some potential for rigs to

go to Central America or the

Caribbean uh South America again quite a

small market for jackups uh We've

recently had a unit move from the uh

North Sea uh to uh Argentina for a

project specific project there and we've

also seen uh Petr brass is um has tended

for a jackup for PNA work uh in Brazil

so that's a specific project that there

that could bring in but in general uh

not probably not one of the major

regions for rigs to relocate to as

compared to uh Asia or Africa that's the

more likely market for uh for

jackups this time

I think you know the

um really the sort of the major Focus o

of uh not just the units that are on

suspension but also any units that are

available available in general has been

the potential for increased demand in uh

southeast Asia and West

Africa as uh bigger sort of uh areas

where potential growth Could Happen um I

say in those regions you know a lot of

excess you know when demand started to

pick up in the Middle East uh a lot of

rigs that were in other areas were

brought very quickly to to the Middle

East for work in in Saudi ramco so

utilization in uh these other regions uh

really tightened up so uh there's you

know now possibility of some those to

move back there or or you know move to

move to another region and I think also

you know there are a uh around 17

jackups still under construction at this

time so uh also potential for some of

those units as they deliver to enter the

market in Southeast Asia or

Beyond likely some of these walls some

of the units under construction are

being built in the Far East and may

instead work into the Far Eastern

Market there any further questions

Paul a couple pH couple more just coming

through I know we've got just a couple

of minutes left before we we s question

um one question there do you foresee uh

more than 22 Rigs being suspended is

there more out there that we've hearing

that's the that's the number that's sort

of been uh been announced at this time I

mean I think there is the you know

depending a lot of this is going to

depend on how Saud Saudi aramco arejust

going forward uh they contract they have

a lot of rigs under contract so you know

there there is maybe the potential in

coming years that we could see some more

suspensions or possibly that you know at

the end of this 12 months uh there is

the possibility that a ramco may decide

that they don't need to uh uh bring

these rigs back into the market so we

could see a mix of uh further

suspensions or or terminations but uh at

this time it's it's it's kind of list

has come out at around 22 so you know

further further act further uh

suspensions would you know that'd be

speculative this time but certainly

possible

okay um just picking on day rates we had

a few comments and questions coming

through about day rates so our forecast

is flattening and then expecting to

increase in yeah so what we've yeah we

we we're seeing some near-term

flattening um basically as uh you know

just as an unexpected boost in

availability and also uh contractors

working hard to

secure uh secure contracts uh for the

units that have come up you know

unexpectedly available so they're

working to sort of secure market share

on those so we've seen a little bit of a

some lower day rates and also Market

uncertainty tends to um Hal upward

movement in day rate slightly so I think

we'll see a little bit of effect of that

this continuing this year but in general

there's quite High utilization still and

a lot of demand out there for a fairly

limited supply of of uh jackups so I

think we should expect to see uh rates

start to pick up again uh you know sort

of

2025

okay interesting question around sort of

the the ramco and their controlling of

the market do you think drilling

contract is how they will perceive the

suspension going forward that there will

be S more reluctant to to to offer work

into the Middle East or stay away from

Iran cour Tenders in the future I's too

big a player I I think that's that's

that's a very large you know that's a

very large portion of the market and I

don't think anybody's going to uh put

off you know being in that what I think

you instead you might see is that some

companies may be this may be an impetus

to uh expand uh their businesses rather

than uh rather than shunning a rather

than shunning a large Market I think

it's more that you know uh I might see a

bit of

diversification uh in where companies

have their fleets um multiple drilling

contractors already work in you

know many many regions around the around

the globe and uh I think maybe perhaps

you'll see some Middle East focused ones

continue to expand uh their presence

globally okay rather than anybody

staying from uh from uh ramco in general

that that seems

unlikely okay so so I was I was summary

is uh we we believe this is a short

shortterm blip in the market for

utilization day rates and we expect the

Market to return

to early 2025 is that I well I I think

by 2025 we should start to see yeah we

should start to see much of the uh

excess Supply absorbed uh by

2025 um you know you know and and then

so we'll and then we'll see utilization

um remain

solid and forth okay well I'm conscious

of the time now that we're coming there

we we've still got quite a lot of uh

questions um what we will do for those

people unfortunately we haven't got time

to answer them all today we'll Reach Out

directly um to everybody um we have had

quite a lot of comments about today's

presentation obviously a topic that

everybody's interested in so what we

what we'll also do this time which is

the first is we we'll also send out a

document um of the questions that have

being asked and our answers so rather

than just to the individual we'll send

it to the whole audience so you can hear

some more of our intake what's going on

so um again that really concludes

today's presentation um I would like to

thank everybody for attending uh Matthew

for presenting some great great

information some great insights and um

as I mentioned earlier this is being

recorded and we will send the link out

uh in the next couple of days of the

website where you can follow up on the

information and then look forward to the

uh question answer document we'll send

out over the next couple of days so

again thank you for everybody and uh

enjoy the rest of your day thanks thank

you everybody appreciate you joining us

thank you