The US Gulf of Mexico drillship market is currently in quite an enviable position, Westwood Global Energy Group says, as from mid-July, marketed utilization of the 25-rig fleet stood at 96%, with 24 units either working or committed to start contracts in the next few months.
What is more, the fleet could soon find itself with 100% utilization, while in comparison with only a year ago in July 2018, contracted utilization stood at just 76%.
This scenario has been predicted by RigLogix, despite the fact that the timing is a bit ahead of the forecast schedule. On the supply side, there has been significant movement in and out of the area, and will continue to be the case for the rest of 2019.
There are currently four units in the region that will depart for contracts in Central and South America shortly. One of the four was already overseas but came to a Brownsville shipyard for some minor repairs. Conversely, there is one drillship currently working off Mexico that will return to the U.S. side of the Gulf for a contract starting in September
Westwood noted.
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Regarding fleet availability, considering those units could receive contract extensions, RigLogix indicates that there are three units coming free in 2019 and six in 2020, in spite of four of the latter number will not happen until the second half of the year. However, due to evidence that there are numerous planned drilling programs, Westwood expects all of these units to secure further work.
What is more, while the supply numbers will move up and down, strong demand will continue, and utilization will remain in the 95-100% range, assuming rig owners do not mobilize a large number of rigs to the region on speculation.
Additionally, Westwood expects new contracts in the $185-190,000 range to end shortly, with $200,000 possibly coming later this year or in the first half of 2020. Westwood also anticipates a second 20K BOP equipped contract to be signed this year at a rate substantially higher than the $450,000 fixed in 2018.
Generally, the consensus seems to be that many operators have seen the writing on the walls as it pertains to day rates trending up, and that they are simply trying to secure the best deals they can. However, some operators that were able to secure floaters at much lower rates, are said to be a bit surprised at the numbers being quoted now
