Floating rig utilisation has returned to pre-Covid levels, driving rates up 40% in the past year, according to a report by Wood Mackenzie.
And demand is forecast to increase by a further 20% from 2024 to 2025, the Edinburgh-headquartered research and consultancy group predicted.
Wood Mackenzie said active floater utilisation has rebounded from a low of 65% in 2018 to more than 85% in 2023 and day rates for best-in-class floaters have doubled in the past two years.
“Higher oil prices, the focus on energy security and deepwater’s emissions advantages have supported deepwater development and, to some extent, boosted exploration,” said Leslie Cook, principal analyst for Wood Mackenzie.
“Active supply is now more in line with demand and rig cash flows are positive. We expect demand to continue to rise.”
Much of this expected growth will come from the “Golden Triangle” of Latin America, North America and Africa, as well as parts of the Mediterranean.
Wood Mackenzie projects that these areas will account for 75% of global floating rig demand through to the end of 2027.
Recent activity has pushed rates up 40% in the past year and Wood Mackenzie expects a further 18% escalation for floater day rates.
Before the end of the year, the research group estimates that rates of $500,000 per day or above may return for advantaged ultra-deepwater rigs.
Meanwhile, benign ultra-deepwater rigs have averaged $420,000 per day in the first half of 2023, with utilisation at 90%.
“With increasing demand and rates, we are approaching the tipping point for newbuilds and reactivations,” said Cook.
“We haven’t reached it yet, but for newbuilds, it’s not a question of if, but when.
“The need for decarbonisation, technological advancement, more efficiency and, ultimately, fleet replacement will drive a new cycle.
“If rig economics remain robust and rig companies see contractual risks abate, this could be sooner rather than later.”
