Seadrill Limited entered into new contracts today for the construction of two high specification jack-up drilling rigs at Dalian Shipbuilding Industry Offshore Co., Ltd. (DSIC Offshore) in China. The newbuild rigs are scheduled for delivery during the second and third quarters of 2016, and the total project price per rig is approximately US$230 million.
This is the 4th such order this year after having ordered a pair of F&G JU2000E jack-ups in February, March, and June.
According to their press release, Seadrill now has in total ten jack-ups under construction at DSIC Offshore of which two are scheduled for delivery in 2013, five in 2015 and three in 2016.
Seadrill expresses significant optimism in the jack-up market noting that,
“The global jack-up market is at an inflection point as approximately 60% of the global contracted fleet is built before 1993. Almost 100 newbuild jack-ups have been delivered since 2005. However in the last two years we have seen increased utilization and the number of stacked rigs decline to multi-year lows. Utilization rates have exceeded 90% while average dayrates, unmet demand and average contract lengths have all increased.”
“We are of the opinion that the current orderbook falls well short of adequately supplying oil company needs going forward. Currently, the orderbook stands at approximately 115 units of which approximately 50% are not competitive on a global basis. Most of these uncompetitive units are either low specification or destined for markets with regional factors that will limit their global mobility.”
Seadrill’s construction program now totals 24 units, including 9 drillships, 2 harsh environment semi-submersibles, and 13 high specification jack-ups. In addition the Company has fixed priced options for two ultra-deepwater units.
Per Wullf, CEO of Seadrill Ltd. added,
“Seadrill has focused its’ newbuild activity on the high end of all asset classes since the Company’s inception in 2005. High specification units have historically commanded the highest dayrates and utilization rates and we fully expect this trend to continue. The market for high specification jack-up units is poised for a significant uplift in dayrates and we continue to invest in order to put Seadrill’s shareholders in a prime position to benefit. “