David Carter from Bassoe Offshore not too long ago stated: “Saudi Aramco simply gave the jackup market a shot of adrenaline. Rig house owners ought to be loving what they’re seeing.”
• Nearly 40% (113 rigs) of the 290 jackups on contract right this moment work within the Middle East (that is up from round 40 rigs and 13% of the market 20 years in the past).
• Over 16% (47 rigs) of jackups worldwide work in Saudi Arabia for Saudi Aramco (and Saudi Arabia accounts for over 40% of the jackup market within the Middle East).
• So far in 2018, oil corporations have added practically 90 years of jackup drilling backlog to the worldwide rig fleet.
• Saudi Aramco alone is accountable for 58 of the 90 years of added jackup backlog. That’s 65% of all jackup drilling days added this yr for a rustic that represents 16% of the jackup market.
• Earlier this yr, we famous that there may very well be a danger sooner or later that ARO Drilling, as the popular proprietor in Saudi Arabia, would go away different rig house owners with fewer alternatives within the nation. Of the 18 contracts awarded by Saudi Aramco this yr (not counting short-term extensions), solely seven have been awarded to different house owners like Ensco, COSL, and ADES. But ARO Drilling has solely 16 leased or owned rigs, and with demand from Saudi Aramco anticipated to stay at or surpass the 50-rig mark over the subsequent few years, the impact of ARO Drilling on different house owners isn’t a serious concern but.
• Even with ARO Drilling’s plan to construct 20 jackups over the subsequent ten years, the demand state of affairs in Saudi Arabia seems to be nice. Of all contracts awarded worldwide this yr, Saudi Aramco has supplied the longest phrases: practically 1200 days on common in comparison with 485 days for the remainder of world common.
• Recent Saudi Aramco tendering exercise consists of seven rigs which weren’t beforehand drilling within the nation. According to Bassoe Analytics, over 20 jackups are scheduled to return off contract in Saudi Arabia in 2018 and 2019. It will be assumed that a few of these 20 rigs might not get renewals because the seven rigs are available in, however this nonetheless leaves a major alternative for extra contract awards over the subsequent yr. With all 16 of ARO Drilling’s rigs dedicated till 2021, which means extra contracts or contract renewals for different rig house owners.
• While recently-added demand in different international locations pales compared to Saudi Arabia, oil corporations in Middle Eastern international locations just like the UAE and Qatar are ramping up new drilling tasks. ADNOC within the UAE has simply concluded a six-rig, multi-year tender, and Qatargas is within the strategy of concluding their six-rig tender for startup in late-2019. These packages will add one other 40 years to jackup contract backlog.
• Overall jackup utilization within the Middle East stands at slightly below 75%, and for now, dayrates are nonetheless low for many jackup fixtures within the Middle East (outdoors of Saudi Arabia). We estimate that the most recent ADNOC tender noticed charges down within the $35,000-$45,000 vary.
• With Saudi Arabian demand holding sturdy, rigs within the nation will likely be much less prone to go away and compete in different areas of the Middle East. And as extra contracts are awarded within the area, dayrates will rise. Rig house owners who’ve been prepared to attend it out a little bit longer ought to find yourself reaping the rewards of upper utilization and extra dayrate management as a budget contracts get crammed. (Source: Bassoe Offshore)
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