Insight
Deepwater GoM rigs: What's next?
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Many operators in deepwater Gulf of Mexico (GoM) are locked into long-term rig contracts at high day rates, a legacy of the tight rig market in the first half of this decade. The increasing complexity of deepwater projects and rise in exploration and development of the basin's frontier plays drove an increase in the number of new-build, high-specification drillships in the region. Since the collapse of oil prices, operators have adapted by allowing contracts to expire, terminating contracts early and sub-contracting rigs at discounted rates. The current oversupply in the rig market will lead to decreases in rig rates that may spur additional infill activity, but the resulting cost savings alone will not be enough to sustain growth in the frontier plays of deepwater GoM if the low oil price environment persists.
Table of contents
- Executive Summary
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Rig count and utilisation decline
- Operators terminate contracts and idle rigs to conserve capital
- New rigs enter GoM but existing rigs offer opportunities for savings
- Majors are most exposed to long-term contracts but carry the most reserves upside
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Scenario Analysis: MODU demand under varying future price levels
- Demand deteriorates in sub-US$30 Brent world
- Demand stagnates if Brent remains between US$30-50
- Supply-demand imbalance corrects if Brent rises above US$50
- Declining day rates impact marginal projects
Tables and charts
This report includes the following images and tables:
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Monthly MODU count, 2010-2020MODU demand under different Brent scenariosEarly contract terminations
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Short-term vs long-term day ratesMODU contract backlogDeepwater GoM MODU supply and demand, 2015-2020
What's included
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