Offshore rig prices climb amidst deepwater drilling boom

David Wethe, Bloomberg June 12, 2023

(Bloomberg) – Drilling for oil in miles-deep ocean water is booming again with rig-rental prices forecast to climb another 18% after doubling over the past couple years, according to Wood Mackenzie Ltd.

Prices to rent the most advanced offshore drilling rigs averaged $420,000 a day for the first half of this year, as roughly 90% of the industry’s active fleet is contracted for work, the energy consultant wrote Monday in a report, surpassing pre-Covid levels. Rig rates may hit $500,000 a day or more by the end of the year, it added.

“Higher oil prices, the focus on energy security and deepwater’s emissions advantages have supported deepwater development and, to some extent, boosted exploration,” Leslie Cook, an analyst at Wood Mackenzie, wrote in the report.

In recent years, owners of sea-going rigs have been scrapping vessels that at the height of the deepwater boom commanded rents of more than $500,000 a day. The offshore industry is showing signs of a rebirth, particularly for floating rigs that can operate in seas deeper than about 300 feet (90 meters), as the world’s biggest oilfield contractors expect growth to shift away from shale in coming years.

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