The global market for sixth-generation harsh environment semisub rigs stands at 100% utilisation for the first time in nearly a decade, with dayrates approaching the $500,000 mark.
Data from Westwood Global Energy’s RigLogix platform shows committed utilisation of these units has risen 14% in the last six months, and is now sold out – a figure not recorded since February 2014. The numbers include rigs either on hire or with an upcoming contract, across a fleet of some 27 active units.
While Northwest Europe covers the largest source of demand with 68% contracted days awarded this year, several rigs are being confirmed for new work or extensions in other regions such as Australia, Mexico, China and Namibia.
Dayrates for these rigs remained strong in comparison to most other rig types during the last oil price crash and the pandemic. Although struggling to surpass the mid-$300,000s since late 2015, this is now starting to change, Westwood noted.
Average dayrates for these units fixed year-to-date are now $394,000, which is a 32% increase compared to the full-year average for 2022 and is the highest average reached since 2014.
This year, Transocean and Odfjell Drilling have been particularly successful in driving up dayrates for these assets, securing new deals with rates as high as $484,000, $457,000, and $420,000, respectively. These three fixtures do not begin until the first quarter of 2025, first quarter of 2024 and second quarter of 2024, respectively.
“The demand outlook for these high-specification rigs looks very bright, and recently there has been a wave of multi-year requirements brought to market from the likes of Equinor and Var Energi in Norway, which we believe represents their recognition of shrinking availability, fear of missing out on the right specification assets for drilling campaigns and, most worryingly, rising dayrates that can affect overall project economics,” wrote Teresa Wilkie, research director at RigLogix.
Westwood said it anticipates dayrates in this sector to continue increasing worldwide with deals secured at or above $500,000 for contracts beginning in late 2024 and early 2025 as demand for harsh environment rigs rises, coupled with a lack of newbuild assets or reactivation candidates. There are currently only three cold-stacked sixth generation assets that could be added to the fleet if reactivated and just four newbuilds in shipyards.
