Drillships back to pre-Covid levels as owners test $200K ‘ceiling’ on day rates

Drillships back to pre-Covid levels as owners test $200K ‘ceiling’ on day rates

The “psychological ceiling” of $200,000 day rates for offshore drillships will be broken “more routinely” now that the market has reached pre-Covid levels.

Westwood Global has issued new analysis, with some reasons to be cheerful for the “battered and beleaguered” drilling market.

Drillship utilisation globally has reached 82%, the highest for any month since February 2020, according to the firm.

It comes as supply declines as units are retired, and demand returns – with 55 campaigns planned for 2021 alone, of 152 total.

The “rule of thumb” is that utilisation rates need to hit 85% to boost day rates, which have typically been around $187K.

With usage just shy of that, there's “cautious optimism” for this year and 2022, Westwood said.

Some firms like Korea National Oil Company (KNOC), have already breached the $200K mark, paying a $210,000 day rate for Maersk Drilling, and BHP paying Transocean $215,000 in the US Gulf, but most have stayed below.

Drillship owners have been better off than jack-up rig owners and semisubmersibles in terms of contract terminations, Westwood said.

Still, owners have lost more than $350m from seven of eight cancellations since March 2020.

Terry Childs, head of RigLogix at Westwood Global, said: “As utilisation improves, the balance of buying power will