A wave of negative news for the industry
The drilling industry has been swept by a wave of negative news, with both the offshore and land drillers experiencing significant reductions in utilizations and day rates.
On the upside, the outlook for subsea equipment awards is more promising as drillers move forward on several large deepwater projects.
Midwater demand the softest; new offshore rig orders dormant
Midwater are likely to experience the most significant deterioration in demand, followed by deepwater, which is expecting less pronounced declines in the past few years. Despite the recent softness, ultra-deepwater demand is likely to remain flat. With depressed offshore rig rates and dwindling cash flow, offshore newbuild opportunities remain dormant.
Land drilling likely to see the recovery first
While the industry still has excess capacity of land rigs, the newer, high spec AC engine rigs as well as the pad-capable rigs (with moving systems) are likely to reach 90%+ utilization by late 2016. Given the expected tightness for the AC land rigs by late 2016, dayrates could begin to modestly recover in the near future.