A new white paper has been released by Westwood Global Energy Group (WGEG) to mark the launch of a new interactive forecasting tool for the global offshore rig market, the result of a round of significant investment by WGEG. RigOutlook, previously confined to a biannual PDF report, now gives users the ability to see forecast demand, supply, utilisation, and day rates on a global and regional basis covering the next five years. The newly-released white paper is intended to give you an introduction to Riglogix's newest offering and highlight some initial outputs, as well as outlining the methodologies, limitations, and considerations.

While there have been improvements in the offshore rig market in the last 12-18 months, utilisation remains well below the 2010-14 average of c.76% – the last ‘up-cycle' seen in the industry. A total of 460 MODUs were working globally in May 2019, the highest level of activity since May 2016 (466 rigs working). Over the same period, supply has decreased due to 207 MODUs being removed from the fleet, although 101 newbuild deliveries have also been made. Global utilisation across the total MODU fleet now stands at 59%, 12 percentage points higher than the lows of February 2017. Higher utilisation across the fleet has started the processes of increasing the day rate set for new contract awards (‘leading edge day rate'), although these effects are no doubt more notable in more niche markets such as the Norwegian North Sea.

Historic Leading Day Rates by Rig Type and Date of Award, 1st Jan 2010-1st June 2019. Line is Generated using GAM Smoothing.
Source: RigLogix / RigOutlook

While there remain some regional markets which continue to be challenged, the rig market as a whole appears to have emerged from one of the worst downturns in its history. Over the coming months and years, demand is expected to continue to increase as a backlog of delayed projects continues to be worked through, and aging, under-spec rigs continue to be retired. Whilst, even in the most optimistic scenario, it seems unlikely that the offshore rig market will return to the heights of the previous upturn, there should no-doubt be cautious optimism.
Source: Westwood Energy