cimc & awilco drilling pure play mwhe drilling …...there are 11 jack-ups in the ncs sector...
TRANSCRIPT
1
SEMTECH 2018NCS rig market overview
2
Things aren’t that bad (sort of)Main themes
• Oversupply isn’t as bad as it looks• Contracting activity increasing• Dayrates will start to rise• New rigs will get contracts• Middle East, Southeast Asia for jackups• South America for deepwater• North Sea for midwater growth
Photo by Svein Åge Berge
0
20
40
60
80
100
120
140
160
180
US GOM Middle East Far East SE Asia Mexico Indian Ocean S America W Africa Med/BlackSea
NW Europe
# of rigs on contract, 2000-2018
Regional focus has shifted since year 2000
3
Dramatic fall in rig count in US Gulf partially offset by Middle East; deepwater regions haven’t lived up to their potential
131 rigsfrom 2000
66 rigsfrom 2000
36 rigsfrom peak
30 rigsfrom peak
49 rigsfrom peak
38 rigsfrom peak
35 rigsfrom peak
19 rigsfrom 2000
9 rigsfrom peak
13 rigsfrom peak
Data from IHS
On paper, utilization hasn’t picked up much yet
4
0
50
100
150
200
250
300
350
400
450
Jan
2010
Apr 2
010
Jul 2
010
Oct
201
0Ja
n 20
11Ap
r 201
1Ju
l 201
1O
ct 2
011
Jan
2012
Apr 2
012
Jul 2
012
Oct
201
2Ja
n 20
13Ap
r 201
3Ju
l 201
3O
ct 2
013
Jan
2014
Apr 2
014
Jul 2
014
Oct
201
4Ja
n 20
15Ap
r 201
5Ju
l 201
5O
ct 2
015
Jan
2016
Apr 2
016
Jul 2
016
Oct
201
6Ja
n 20
17Ap
r 201
7Ju
l 201
7O
ct 2
017
Jan
2018
0
50
100
150
200
250
300
350
400
450
Rigs on contract 2010-2018
Jackup Semisubmersible Drillship
40
50
60
70
80
90
100
40
50
60
70
80
90
100
Jan
2010
Apr 2
010
Jul 2
010
Oct
201
0Ja
n 20
11Ap
r 201
1Ju
l 201
1O
ct 2
011
Jan
2012
Apr 2
012
Jul 2
012
Oct
201
2Ja
n 20
13Ap
r 201
3Ju
l 201
3O
ct 2
013
Jan
2014
Apr 2
014
Jul 2
014
Oct
201
4Ja
n 20
15Ap
r 201
5Ju
l 201
5O
ct 2
015
Jan
2016
Apr 2
016
Jul 2
016
Oct
201
6Ja
n 20
17Ap
r 201
7Ju
l 201
7O
ct 2
017
Jan
2018
Total utilization 2010-2018
Jackup Semisubmersible DrillshipData from IHS
And neither have dayrates
5
0
100,000
200,000
300,000
400,000
500,000
600,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Average contract fixture rates 2010-2018
Jackup Semisubmersible Drillship
Higher number of undisclosed rates
recently
Data from IHS; photo is author’s own
0
100
200
300
400
500
600
700
800
Jan
2010
Mar
201
0
May
201
0
Jul 2
010
Sep
201
0
Nov
201
0
Jan
2011
Mar
201
1
May
201
1
Jul 2
011
Sep
201
1
Nov
201
1
Jan
2012
Mar
201
2
May
201
2
Jul 2
012
Sep
201
2
Nov
201
2
Jan
2013
Mar
201
3
May
201
3
Jul 2
013
Sep
201
3
Nov
201
3
Jan
2014
Mar
201
4
May
201
4
Jul 2
014
Sep
201
4
Nov
201
4
Jan
2015
Mar
201
5
May
201
5
Jul 2
015
Sep
201
5
Nov
201
5
Jan
2016
Mar
201
6
May
201
6
Jul 2
016
Sep
201
6
Nov
201
6
Jan
2017
Mar
201
7
May
201
7
Jul 2
017
Sep
201
7
Nov
201
7
Jan
2018
Mar
201
8
Bifurcation - rigs on contract 2010-2018
Total demand Old rigs (pre-2000) New rigs (post-2000)
But rig age makes a difference
6
When market declined, old rigs
suffered more
Data from IHS
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Jackups
Jackup (pre-2000) Jackup (post-2000)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Semisubs
Semisub (pre-2000) Semisub (post-2000)
0
100,000
200,000
300,000
400,000
500,000
600,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
Drillships
Drillship (pre-2000) Drillship (post-2000)
New rig dayrate differential hasn’t come back yet, but it’s coming
7
But contracts are shorter And floater rates have dropped by higher % than jackups due to long term contracts at high rates ending
Data from IHS
Oversupply is decreasing as number of competitive rigs declines
8
65% utilization
57% utilization
58% utilization
Data from Bassoe Analytics; photo is author’s own
582 493 426151
89 67
275
Total supply Underconstruction
Current supply Uncompetitive Current comp.supply
Rigs on contract Uncontractedsupply
Current jackup fleet status
148 139 12152
9 18
69
Total supply Underconstruction
Current supply Uncompetitive Current comp.supply
Rigs on contract Uncontractedsupply
Current semisub fleet status
134 114 10142
2013
59
Total supply Underconstruction
Current supply Uncompetitive Current comp.supply
Rigs on contract Uncontractedsupply
Current drillship fleet status
The best will thrive as the rest leave
9
• Operator quality reputation trumps everything – efficiency, better management systems
• Working rigs are preferred
• New rigs are preferred
• The longer rates stay low, the number of non-competitive rigs will increase
• Doesn’t matter what the published stacking status is
• Rigs are discreetly leaving the fleet
Photo is author’s own
Nearly 200 rigs have left the fleet since 2014
10Data from Bassoe Analytics; photo by Roy Luck (Creative Commons)
• Up to 50 more rigs to be scrapped this year
• Remaining inactive Paragon rigs will go (up to 14 rigs)
• 200-300 additional retirements possible by 2021
• Most old drillshipsare already gone
17
39
34
48
15
4 46 7
5
2014 2015 2016 2017 2018
Recyling and conversion sales 2014-2018
Recycling Conversion
Nobody really knows what “real supply” is anymore
11
Real supply: 340-518?
Real supply: 87-130?
Real supply: 117-121?
Data from Bassoe Analytics; Photo by Maersk Drilling
All-time high demand
397(2013)
163(2013)
86(2013)
Potential real supply based on current competitive fleet plus newbuilds
264 76 125 15 38
0 100 200 300 400 500
Potential real supply - jackups
New rigs Newbuilds Old rigs, drilling Newbuild non-deliveries Old rigs, no future contracts
78 9 32 11
0 20 40 60 80 100 120
Potential real supply - semisubs
New rigs Newbuilds Old rigs, drilling Old rigs, no future contracts
97 20 3 1
0 20 40 60 80 100 120
Potential real supply - drillships
New rigs Newbuilds Old rigs, drilling Old rigs, no future contracts
12
Pool of 163 old rigs 38 (stacked) 125 (drilling)
Pool of 43 old rigs 11 (stacked) 32 (drilling)
Pool of 4 old rigs 1 (stacked) 3 (drilling)New rigs likely to be retired
85% utilization is possible
Data from Bassoe Analytics; photo by Maersk Drilling
?
518 397 467
51 90
Total competitivesupply
Expected demand Required supply for85% utilization
Oversupply Estimated attrition
Jackups - 85% utilization scenario
130 107 126
4 25
Total competitivesupply
Expected demand Required supply for85% utilization
Oversupply Estimated attrition
Semisubs - 85% utilization scenario
12186 101
20 4
Total competitivesupply
Expected demand Required supply for85% utilization
Oversupply Estimated attrition
Drillships - 85% utilization scenario
13
Bright spots in the market will support rig demand growth
Brazil/South America:deepwater
Southeast Asia:deepwater/jackups
North Sea:HE semisubs
Middle East:jackups
Rodrigo Soldon
Hoi An
Hans Juul Hansen
Dorinser
14
Rig values on the rise, but still well below replacement cost
...except for MWHE
...and nobody’s going to build anything else anyway
Data from Bassoe Analytics/Rig Valuation Tool, photo by Svein Åge Berge
220
575 550600
100
250 250300
140
275 300
425
180
450 425 450
Premium 400ft jackup 7th gen drillship 6th gen semisub -benign
6th gen semisub -harsh/SUT
Rig value development 2014-2018 (USDm)
2014 2016 2018 Current replacement cost
15
Norway part of non-OPEC supply growth domination
mb/day
Data from IEA, photo by Svein Åge Berge
-1
0
1
2
3
4
UnitedStates
Brazil Canada Iraq Iran Norway Colombia Indonesia China Mexico Angola Venezuela
Changes in global oil supply capacity 2017-2023
16
0.0
0.5
1.0
1.5
2.0
2.5
2013 2014 2015 2016 2017 2018 2019 2020 2021
NCS Oil production (mBOE/day)
Historic production Reserves Resources in fields Resources in discoveries
Rising Norwegian production from J. Sverdrup and Barents
Data from NPD, photo by L.C. Nøttaasen (Creative Commons)
17
Barents Sea growth will drive demand for winterized rigs
Photo by Max Dawncat (Creative Commons)
• Over 4 Bboe of oil & gas discovered so far
• 2017 was disappointing, but operators aren’t giving up
• The Barents will be a key region in maintaining Norwegian production through the next decade
• Annual spending could reach $8 billion by 2024
725 7401165 1370
4000
0500
10001500200025003000350040004500
North Sea NorwegianSea
Barents(south)
Barents(north)
NCS
Estimated undiscovered resources - NCS (m3)
Data from NPD, Rystad
NCS production costs have reached their lows – efficiency will be in focus and favor new rigs
18
100 102 99 95 95100 10287
74 69
020406080
100120
2013 2014 2015 2016 2017
Cost development for operating fields (2013 = 100)
Forecast autumn 2013 Autumn 2017Data from NPD, Photo by Svein Åge Berge
Jack-ups in the NCS sector
• Existing jack-ups can operate in up to 150 meter water depth only• There are 11 Jack-ups in the NCS sector with 10 units are operating
for Statoil, AkerBP, Lundin and ConocoPhillips– 9 of these are GustoMSC CJ70 design including the two Cat J for KCA Deutag– One is GustoMSC CJ62 and one Keppel FELS N Class
• Long term contracts with dayrates from USD 270 000 to USD 425 000
19
Quick overview of contract status –jackup market is not as interesting. There are no new rigs, and existing
rigs have long term contracts. Newbuilds unlikely, some attrition, basically boring. Semis are where
it’s at.
• 18 NCS rigs (6 in UK/Denmark)• 10 out of 12 drilling or with future contracts in
Norway = 84% utilization• No newbuilds on the way• Attrition of 2 rigs expected• Stable to positive outlook on rates and demand
NCS jackup market to remain stable
Data from Bassoe Analytics
9
1 12
11 1 1 1
Norway UK Denmark
18 jackups with SUT
CJ70 KFELS N Class CJ62 CJ50 Hitachi Giant
Survey 1
• Go to bassoe.no/st1
• Will leading dayrates for NCS semisubs reach $350k by 2019?
• Yes• No
20
21
NCS semi demand picking up • Access to vast new acreage in the Northern region of Norway and into the Barents
• Reduced break even cost for field development
*Representing the average level of demand in the 10 year period pre the 2014 oil price fallData from IHS, Bassoe AnlayticsPhoto by Svein Åge Berge
0
20
40
60
80
100
120
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Oil
Pric
e U
SD
Rig
cou
nt
NCS rig demand vs. oil price
Peak rig count Average Demand 2005-2016: 19 Units Annual Average oil price
22
Current NCS semisub fleet profile
Data from Bassoe Analytics, Photo by Svein Åge Berge
42 SUT semisubs in fleet
15
5
1
10
3
8
Drilling on NCS or withfuture NCS contract
Drilling (Canada/UK) Warm stacked (NCS) Cold stacked (NorthSea)
Cold stacked(elsewhere)
Newbuilds
NCS semisub fleet status
23
Nearly all hot SUT rigs have backlog through 2018
Data from Bassoe Analytics
24
North Sea Floater rates rising• Rates in Norway and the UK fell sharply in 2014
• Rates today about USD 140,000 in the UK and about USD 250,000 in Norway, and rising
• Operating costs down significantly to around USD 65,000 in the UK and about USD 120,000 in Norway
• Rate increases expected as market improves and squeezes out remaining viable oversupply
0
100,000
200,000
300,000
400,000
500,000
600,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
North Sea semisub average fixture rates
UK NorwayData from IHS, Bassoe Anlaytics, Photo by Svein Åge Berge
25
• 9-16 rigs likely to be non-competitive within 2-5 years
• Those which stay in the market likely to move out (UK)
• Short drilling jobs don’t support investments in old rigs
• Safety, environmental risk profiles higher
• Generally lower operational efficiencies
Data from Bassoe Analytics, Photo by Svein Åge Berge
Older NCS rigs to be phased out as cost, obsolescence, and oil company preferences prevail
12
4
Cold stacked Drilling
16 NCS semisubs 16 years of age or older
Only 3 newbuild rigs left
26
West MiraMarch/December 2017
Bollsta DolphinMarch 2017
Stena MidmaxSeptember 2017
West RigelDecember 2017
CS-60 GM-4D
North Dragon
Beacon Atlantic
Beacon Pacific
Survey 2
• Go to bassoe.no/st2
• Do you think there could be a shortage of semisubs for the NCS which would create the need for more newbuilds?
• Yes• No
27
28
Potential shortage of NCS semis?
Data from Bassoe Analytics, Photo by Svein Åge Berge
42
27
16
15
4
6
1
NCS compliantsemisubs
Likely non-competitive
Competitive Cat-D NCS rigs outsideNorth Sea
Competitive supply Future newbuildsupply
NCS-compliant semisub supply forecast
Premium NCS rigs earn higher average day rates than Tier-2 rigs
29
Tier-2 rigsPremium rigsGraph shows historical earned day rates and future day rates based on current contracts and/or recent fixtures
Data from IHS, Bassoe Analytics, Photo by Svein Åge Berge
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2000 2005 2010 2015 2020 2025
Premium vs. Tier 2 NCS semisub dayrates
30
Will there be more newbuild orders?• Awilco’s got 3 options
• Upgrades of existing rigs not likely
• Reduced premium yard capacity Korea (HHI and DSME not focusing on drilling rigs)
• Few yards in China with experience: CIMC Raffles & COSCO - completion risks?
• Singaporean yards likely to remain market leaders, but at high prices
• Next generation SUT rig orders expected, but no boom
• Consolidation likely
Photo by International Labour Organization/Creative Commons
But next generation rigs will be built as technology takes over
31
Next generation NCS semis will focus on:
• Battery technology and zero discharge – no DP
• Intelligent Green Future (IGF) technology
• Digitalization, Artificial Intelligence and Integration
• Production drilling and handling horizontal trees on deck
• Optimized, modern hulls; sufficient weight and deck space Photo by John Seb Barber/Creative Commons
Survey 3
• Go to bassoe.no/st3
• When will the first “next generation” rig be ordered?
• This year• Before 2020• After 2020• Never
32
33
Oslo London Houston Rio
+47 2300 [email protected]@[email protected]
+44 207 352 [email protected]@bassoe.no
+1 713 850 [email protected]@bassoe.no
+55 21 9988 [email protected]
www.bassoe.no