As they continue eating through backlogs without replacing them with new business, cash flow for these companies will deteriorate further. In particular, operators like Pacific Drilling S.A. In the absence of production cuts from OPEC, the effects of booming shale supplies in North America, mounting worries about China’s crude demand, and a stagnant European economy, oil is likely to drift lower in range-bound trading in the short term at least, piling more misery on the hapless drillers.Īs it is, many of them are trading close to their 52-week lows and have significantly underperformed the broader market in recent months. However, fundamentals suggest that the odds are firmly stacked against a sustained rally. The uncertainty of oil prices means that the future direction of the commodity’s movement is anybody's guess. This excess capacity, in turn, has led to significantly lower utilization/dayrates. Secondly, with large, multinational energy firms looking to reign in their skyrocketing capital expenses, the offshore drilling space is witnessing intense competition, as multiple firms chase a single contract.
This, in turn, has meant less work for the beleaguered drillers as offshore exploration for new oil and gas projects has almost come to a standstill.
With crude prices oscillating between $40 and $50 a barrel, the top energy companies have cut spending (particularly on the costly drilling projects) on the back of lower profit margins. Additionally, Transocean announced that the sixth generation semi-submersible Transocean Barents, third generation semi-submersible GSF Rig 140 and the jackup GSF Galaxy II are currently idle.
#Pemsa drilling offshore fleet update
The latest update is even worse than the prior ones with neither new contracts nor contract extensions.
RIG foreshadowed the difficulties faced by the industry with its own monthly fleet update. Before Ocean Rig’s disappointing status report, world’s largest offshore driller Transocean Ltd.
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