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Transcript of Hutton ODS
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Offshore Drilling Rig Market Outlook
Rod Hutton ODS-Petrodata
2011 ODS-Petrodata. All Rights Reserved.
Marine Money Conference, Oslo
May 26, 2011
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Today's agenda
The offshore rig market Newbuilds
Whats happening by market segment
Jackups
Midwater
Deepwater North Sea
2 2011 ODS-Petrodata. All Rights Reserved.
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Offshore rig market
A new round of rig building is underway
Some consolidation already taking place
Demand shifting to higher spec jackups
Raising questions about older units
Midwater rig developments restricted to harsh environment
units
Deepwater is the growth area
3 2011 ODS-Petrodata. All Rights Reserved.
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The current picture
65.00
70.00
75.00
80.00
85.00
90.00
95.00
100.00
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
Utilisation(%)
World Rig Total Contracted Utili sationTotal offshore fleet January 2002 - Apri l 2011
Drillships Jackup s Semis
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New rigs just keep on coming
5 2011 ODS-Petrodata. All Rights Reserved.
14
11
17
8
7
21
21
2
27
1
1
4
2 2 2 1Drillship(51)
Semisubmersible(21)
Jackup(69)*
Newbui ld Rigs - Year in ServiceAs of May 16, 2011
2011 2012 2013 2014 2015 2016 2017 2018
* Excludes the "Iranian Ten"
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With a surge of orders in the past 12 months
6 2011 ODS-Petrodata. All Rights Reserved.
30
3
46
4
19
2
26
4
0
5
10
15
20
25
30
35
40
45
50
Drillships Semis* Jackups Other
New Offshore Rig ProjectsAnnounced Ju ly 1, 2010 to May 16, 2011
Ordered/Planned
Options
* Includes monoc olumn units
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56% 60% 59% 56%
20%23% 24%
23%
7%4% 6% 12%
17% 14%12% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1985 1995 2005 2014
Offshore Fleet Make-up(if no attrition)
Others*
Drillship
Semisubmersible
Jackup
*Arctic rigs, drill barges, submersiblesand tender-assists
Overall fleet makeup has changed little over the
years
7 2011 ODS-Petrodata. All Rights Reserved.
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The jackup market
Global market seemingly insensitive to everything
Newbuilds are adding to the fleet not replacing it withobvious consequences
US market apparently in terminal decline Focus shifting to higher spec jackups
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Situation has changed considerably since the oil price
crash
9 2011 ODS-Petrodata. All Rights Reserved.
60
65
70
75
80
85
90
95
100
ContractedUtilsation(%)
Jackup UtilisationIndependent Leg Uni ts
301'+
300'
0-299'
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300 ft and LessUnder Construction o r
On Order, 15
300 ft and LessDelivered, 18
301 ft and GreaterDelivered, 74
301 ft and GreaterUnder Construction or
On Order, 53
Newbui ld Jackup Orders Since 2005
Most but not all jackup owners going for long
legs
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The bifurcation is forecast to continue
11 2011 ODS-Petrodata. All Rights Reserved.
0
50
100
150
200
250
1Q01 1Q03 1Q05 1Q07 1Q09 1Q11 1Q13 1Q15 1Q17 1Q19
Rigs
Global Independent Leg JackupsRated Water Depth 300ft versus 301ft
Mid-case Demand Forecast Comparison
301ft Mid-case Forecast
300ft Mid-case Forecast
Whichwould mean even more new jackups!
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The Midwater Fleet
Not a volatile market
Niche newbuilds only
Not much scope for more upgrades
Widely distributed
Old but serviceable
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0
10
20
30
40
50
60
70
80
90
100
110
120
130
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Midwater Rigs: Contracted vs Non-contracted(RWD
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And not a lot will change outside niche markets
14 2011 ODS-Petrodata. All Rights Reserved.
0
1
2
3
4
5
1997 1998 2005 2006 2007
NumberofOrder
s
Midwater Rig Orders1997 to 2011
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Mostly fairly old
0
2
4
6
8
10
12
14
16
1970 1975 1980 1985 1990 1995 2000 2005 2010
Numberofrigs
Midwater Fleet*Year in Service
* Drillships and semisubmersiblesrated water depth 3,000 feet and less
15 2011 ODS-Petrodata. All Rights Reserved.
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Deepwater market remains strong
Is it price or demand prompting new orders?
There are a lot of uncontracted newbuilds in the pipeline
Not to mention the normal turnover
However, the ultra-deep market in particular is holding its own
and new areas are emerging
16 2011 ODS-Petrodata. All Rights Reserved.
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Recent demand growth has varied widely
17 2011 ODS-Petrodata. All Rights Reserved.
0
10
20
30
40
50
60
Africa (West &South)
Asia-Pacific Mexico &Central America
Mediterranean& Middle East
North America NorthwestEurope
South America
Contracted
Rigs
Regional Change in Deepwater Fleet*Contracted Rigs 2005 vs 2011**
2005 2011**
* Drillship s and Semisubm ersibles with 3,001 ft Rated Water Depth and Deeper** January to May
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2011 ODS-Petrodata. All Rights Reserved.
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Even before the Deepwater Horizon accident
there were potential problems with the deepwater
and even ultra-deepwater rig markets
Rigs coming off contract (as is normal)
Sublets available
Backlog falling
New uncontracted rigs arriving
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26 Uncontracted ultra-deep newbuilds due before 2014
2011 ODS-Petrodata. All Rights Reserved.
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But outlook still good
Return of deepwater drilling to the US Gulf
High oil price boosting E&P budgets
Considerable pent-up demand in several regions e.g.interim demand off Brazil, development programmes
worldwide
Asia-Pacific the next hot spot ?
20 2011 ODS-Petrodata. All Rights Reserved.
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North Sea outlook floaters
UK
UK Standard semi day rates have remained around USD250,000 for 2 years
Bulk of UK semi work remains short-term UK tax change may discourage drilling
Norway
Statoil tendering to create new standard water workhorse
fleet, and to shift some work to well intervention units Long-term programmes still dominate in Norway, in contrastto UK sector
Barriers to entry constricting Norway supply
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Smaller fields leading to falling demand
22 2011 ODS-Petrodata. All Rights Reserved.
0
5
10
15
20
25
30
35
2000 Q1 2003 Q1 2006 Q1 2009 Q1
UK vs Norway semi demand
Norway UK
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Norway offering longer term work
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2000 2002 2004 2006 2008 2010
Days
Average new charter lengths UK vs Norway
UK Norway
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North Sea outlook jackups
Three distinct markets: Southern UK/NL/DK (21); UK
Central North Sea (12); and Norway (7)
Increasing high-spec supply up to 25 units capable ofCNS work
Southern North Sea jackups at full utilisation
Older units being sold
Growth in high-spec jackup market in UK and Norway
High-spec market being driven by good oil price, and bycompeting with semi market
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Focus on North Sea high spec newbuilds
0
5
10
15
20
25
30
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan Jul-14
Rigs
North Sea jackup supply (excluding Norway)
Potential NS High Spec Fleet NS Standard jackup fleet
25 2011 ODS-Petrodata. All Rights Reserved.
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Final thoughts on the offshore rig market
Without significant scrapping there is probably limited
upside for jackup rates
Midwater market will be pressured by deepwater rigs forsome years
Deepwater market has some short-term issues but futurestill looks very good
26 2011 ODS-Petrodata. All Rights Reserved.
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Contact Us
O S
Should you have any questions or need additional information,
please contact us at one of our regional offices or visit us online:
DUBAIHOUSTON
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T +1 832 463 3000
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Market Street
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T +44 1224 597800
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Norway
T +47 21 05 90 00
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T +971 4 3117118
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04-29 Nordic European Centre3 International Business Park
Singapore 609927
T +65 6890 1616
www.ods-petrodata.com
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