Rig Attrition Accelerates In 2020

(Global) Drillship Dayrates Plunge

The average age of drilling ships retired from service in 2020 has dropped dramatically as operators face plummeting lifetime revenues, according to research firm Westwood Global Energy. 

The firm reports that through the end of October a total of 38 rigs, including jackups, semisubmersibles and drillships, have been retired.

“Of that total, 24 were 30 years or older, but four of the five drillships removed from the fleet this year were 10 years of age or younger, with the fifth only a few months over 10 years,” said Terry Childs, head of RigLogix at Westwood.

9.2-year Average Attrition Age

Drillships were singled out as a particular weak point for upstream operations with a 9.2-year average attrition age for 2020, in “stark contrast” to 36 years for the 17 jackups and 27 years for the 16 semi-retirements.

“Most rig owners are far from payback for rigs they ordered in the previous building boom, where construction costs ranged from around US$500 million to over US$800 million,” Childs added.

The five drillships retired in 2020 were owned by Valaris and Noble Drilling, and only two of the five ever earned a dayrate under US$350,000.

Dayrates Underwater

RigLogix lists 14 units within the current fleet of 100 drillships (excluding 17 units under construction), that have been inactive for two or more years and have their SPS overdue or due this year.

“The odds are not very good that more than one or two of the (14) rigs will ever make their way back into the fleet given that the U$500,000 to U$735,000 dayrates many of these rigs earned for a few years are not likely to be seen again,” Childs said.

Headquartered in London, Westwood Global Energy provides market research and consulting services to the energy industry worldwide.
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