Offshore Drillers See No New Rigs Even as Demand Nears 2019 Peak

(Bloomberg) —

As the world’s biggest offshore drillers gear up for more than $500 billion in new investments in the coming years, don’t expect rig contractors to meet the boom with a new round of vessel building.

Second-quarter earnings calls from the biggest offshore drillers over the past week revealed little enthusiasm to build costly new rigs that take years to roll out. Instead, the rig owners will maintain tight global supplies in order to push day rates higher.

“We believe that we are in the early stages of the next long-term upcycle, albeit one conspicuously without the frothy asset bubble conditions that drove the supply side off the rails,” Robert Eifler, chief executive officer of Noble Corp. — the biggest offshore-drilling contractor by market value — told investors last week on a conference call.  

The number of rigs drilling for oil and natural gas offshore has climbed 50% since the depths of the Covid-19 pandemic in late 2020. More than $500 billion in final investment decisions are expected between now and 2025, with more than $200 billion of that going to deepwater, according to SLB, the biggest oil-services provider.

A new rig can cost as much as $850 million to build, Noble said.

© 2023 Bloomberg L.P.

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