Offshore drilling daily rates could rise to $500,000, say executives

Diamond Offshore Drilling

14/09/2022 14:57

By Nerijus Adomaitis
    OSLO, Sept 14 (Reuters) - Rental rates for offshore oil and
gas rigs could rise to $500,000 in the coming months, company
executives said on Wednesday.
    Daily costs to hire a rig, known as the dayrate, have
already more than doubled from two years ago to some $300,000,
with some top-end rates reaching close to $400,000, according to
Oslo-based brokerage Pareto Securities.
    Drilling companies are in a stronger position to demand
higher rates to rent their equipment after several lean years
led to a wave of mergers and pushed them to scrap older rigs,
leaving fewer available now that demand is rebounding.
 urn:newsml:reuters.com:*:nL5N2XA484
    In addition, oil firms are scrambling for new resources to
replace lower Russian crude supplies due to Western sanctions
over Moscow's invasion of Ukraine. 
    Major driller Transocean  RIG.N  expects the dayrate rising
even further from present levels and to hit the $500,000 mark.  
 
    "It's inevitable if the macro (environment) stays intact,"
Chief Financial Officer Mark Mey told an energy conference.
    He later told Reuters he expected it to happen in about ten
months, when some of Transocean's rigs contracts end and new
deals will be signed.  
    Rival Seadrill  SDRL.OL  said the milestone could be passed
by year-end.
    "It could even happen by the end of this year. I've never
seen dayrates rising so fast," Chief Executive Simon Johnson
told Reuters. 
    Seadrill, which had to restructure its debts under U.S.
Chapter 11 bankruptcy process, may be able to pay dividends
again in the not-so-distant future, Johnson said.
    "For the first time in a long time there is a pathway to
sustainable dividend policy," he said. "The question for the
industry is going to be what to do with the cash."

 (Reporting by Nerijus Adomaitis, editing by Gwladys Fouche)
 ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net))