Deepwater Oil Rigs May Fetch $600,000 a Day as Spending Expands

(Bloomberg) —

The price to rent a deepwater drilling rig may climb to near record levels if demand from oil companies continues to increase in the coming years, according to the head of the world’s biggest offshore rig contractor. 

Robert Eifler, chief executive officer at Noble Corp., said Friday in an interview that he’s planning for relatively flat demand growth industry wide for floating drilling rigs next year followed by expansion starting in 2026 that could add about 10 rigs to the roughly 150 working around the world. If it happens, from that point forward, “it’s possible” rates could climb to $600,000 a day, he said.

“We think dayrates will trend upwards,” Eifler said. “We’re signing one- to three-year contracts right now at around $500,000 a day.”

Global deepwater spending by oil producers is forecast to grow to an average of $79 billion in 2026 and 2027, according to Noble, citing research from Rystad. That would be a 20% hike from the average annual amount between 2023 and 2025. It’s a marked turnaround from the dark days offshore drillers endured as the rise of shale made many deepwater projects obsolete, and then back-to-back oil busts crushed demand and cash flow.

Today, Eifler sees an offshore drilling environment marked by balance and discipline in which explorers can get a rig if they want one. In previous boom times, particularly between 2010 and 2014, explorers raced to contract rigs for fear the supply of offshore vessels would run out.

“It would be another few years and a continuously improving market that would actually drive true supply scarcity in our business,” Eifler said. “I don’t think we’re on the brink of that right now.”

© 2024 Bloomberg L.P.

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