Deepwater GoM rigs: What's next?

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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.

What's included

This report contains

  • Document

    Deepwater GoM rigs: What's next?

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Table of contents

  • Executive Summary
    • 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
    • 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 6 images and tables including:


  • Monthly MODU count, 2010-2020
  • MODU demand under different Brent scenarios
  • Early contract terminations
  • Short-term vs long-term day rates
  • MODU contract backlog
  • Deepwater GoM MODU supply and demand, 2015-2020

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