The Norwegians have always seemed to have had an innate instinct as to when the green shoots of a recovery from a downturn point their little heads through the darkness. It would appear that history is repeating itself with the recent news reports concerning Norwegian contractors Awilco Drilling and Borr Drilling.

Awilco have taken the drilling industry and indeed the shipyards by surprise and given rise to a wave of optimism by placing an order for the construction of a new harsh environment mid water semi-submersible, the first order for a new offshore rig since August 2015. The lucky recipient of this $435m contract is Singapore’s KeppelFELS, still reeling from the downturn and their involvement in the Brazilian “carwash” scandal. The Awilco order, for a Moss Maritime CS-60 ECO design unit comes in the same week as Sete Brazil and Petrobras finally settled their disputes leading to the likely continuation of the construction of two (2) UDW semi-subs for Keppel and two (2) drillships for Jurong shipyard. Some compensation at least for Keppel although another four (4) semis they had under construction for Sete have now been cancelled.

Awilco have noted the increased activity levels in the North Sea harsh environment sector and noted the rise in rates and have been quick to order a new modern rig to take advantage of this upswing as well as to replace their aging existing rigs. Semis WilPhoenix and WilHunter were both built in the early 1980’s and will find it increasingly hard to compete against the modern and highly efficient harsh environment rigs that have been built over the last few years. There are three (3) brand new HE rigs sitting in China awaiting acceptance at present. In addition, Awilco have options to build three (3) more Moss Maritime rigs to be exercised 12 months, 24 months and 36 months from March 2018. Note too that Transocean have recently said they are on the lookout to acquire one or more harsh environment assets

Meanwhile the rise of fellow Norwegian contractor Borr Drilling continues its upward surge. The new start-up company, with origins in Seadrill, began by acquiring Transocean’s jackup fleet, a total of fifteen (15) units, five (5) of which were still under construction. They followed this up by acquiring nine (9) more stranded jackups from PPL Shipyard in Singapore and then in January were reported to be in discussions with KeppelFELS to acquire around six (6) of their stranded assets. The latter deal has not yet moved forward, at least publicly, and is likely still in the negotiation phase. Not content with this, Borr have now made an offer to acquire Paragon Offshore, the somewhat ill-fated offshoot of Noble Drilling. The latter had carved out all its aging assets into the new company which was destined to have little chance of surviving a downturn. Indeed, Paragon duly went into Chapter 11 Bankruptcy, emerging in 2017, and has since then been divesting itself of many of its idle and aged units, either sold for scrap or sold for conversions to MOPU’s.  At time of writing they have managed to rid themselves of thirty (30) of their “legacy” units (nice term for very old) all built between in the late 1970’s or early 1980’s.

What have Borr acquired for their $232.5m? Asset wise Paragon has a current fleet of twenty-two jackups and one floater. Of these eight jackups are cold stacked and veritable candidates for scrapping as they have all been idle for quite a while and were all delivered between 1972 and 1984. Paragon currently also have another eight jackups currently warm stacked with another three due to join them at completion of their current contracts during 2018. All but one were built between 1979 and 1984 and really should also be candidates for the scrap yard. The solitary exception is the 2014 built Prospector 5, a F&G JU2000E premium unit acquired from Hercules together with a sister rig, the 2012 built Prospector 1, back in November 2014.

Seven units are currently contracted including the lone floater and the North Sea spec Prospector 1 and another jackup will start a new charter in the coming months. However, three (3) of these will be off charter before the end of this year. Paragon have a current backlog of $204m which is unlikely to be the most attractive and significant aspect of an acquisition by Borr. What Borr is after, similar to their antecedent Seadrill, is a stable and experienced management structure and organisation, a solid management system and at least two quality assets. This is the same model as followed by Seadrill when they first started and acquired an organisation and experience by buying Smedvig. Another advantage for Borr is that they also acquire Paragon’s experience and track record which will assist them to qualify for tenders where often operators’ are unwilling to give new start-up company a chance, preferring a company with experience and a track record. Paragon currently have operations in the North Sea, Middle East and South Asia and have previously worked in Mexico, the Gulf of Mexico, South East Asia and West Africa.

Another potential advantage for Borr is that they might be able to substitute some of their idle new builds for a contracted Paragon unit though this will be limited by the paucity of Paragon’s contract portfolio. Vantage used this trick last year in acquiring a Hercules jackup while the latter were in Chapter 11 and substituting their modern jackup Sapphire Driller mid-way into a 5 year charter. Borr have twelve (12) idle uncontracted units at present and another nine (9)to be delivered this year and in 2019. They are in sore need on contracts.

Meanwhile Borr have issued a rallying cry to its competitors and are taking up the high ground in the fight to reduce the jackup rig fleet where almost 50% of the world’s assets are over 30 years old. They have been encouraging “responsible owners” to rationalize their fleet and consolidate the fragmented market. The company’s strategy is to focus on operating modern high spec assets and they will only consider putting Paragon’s aging fleet back to work if there is no high reactivation costs involved and  they are also cognizant of complying with modern safety standards and drilling efficiency. If they are to practice what they preach and Walk the Talk then we can expect the entire Paragon fleet except for the two JU 2000’s to be scrapped or sold for other non-drilling. Borr is currently doing this for four (4) not so old F&G L780 Mod V jackups acquired from Transocean which Borr have labeled as non-core.



The news revealed by Singapore’s Business Times, and later confirmed by Keppel, that Norway’s Borr Drilling are negotiating with the shipyard to pick up six (6) of Keppel’s eleven (11) stranded jackups is just the latest in a series of efforts by Singaporean and Chinese shipyards to divest themselves of their surplus jackups after failing to persuade the original owners to take delivery.

Borr were known to have been in discussions with Keppel last September and October before they decided instead to seal a deal with rival Sembcorp Marine to pick up nine (9) BMC Pacific Class 400 jackups for a total price of $1.3bn from PPL shipyard who thus rid themselves of their surplus inventory in one fell swoop. Originally priced at between $208-$214m each (PPL are likely to have received a 20% down payment at time of order,) this, at $144m each, is still a decent discount for Borr. It was said at the time that Keppel had been unwilling to match the discount offered by PPL.

The new Borr/Keppel deal, of six (6) rigs for $960m, if consummated, suggests a price of $160m per rig but this could be misleading as Keppel has three different designs under construction all priced differently. Sources in Singapore have indicated that the six (6) are four B Class units, (one of Grupo R’s, one of Fecon’s, the Clearwater unit and Keppel’s speculative rig) plus the TS Topaz which is a Super B Class and the TS Jasper, a $500m N Plus Class North Sea spec jackup. The total contractually agreed price with the original owners for these six (6) rigs was $1.575bn. If it is true that $160m is being agreed and true that it includes the six (6) rigs I have listed above then it is a bargain.

And there has been some movement in China to divest themselves of their stranded jackups. China Merchants have either thirteen (13) or seventeen (17) jackups under construction depending on which source you believe, two ordered by related company China Merchants Capital, six (6) by Singapore’s Bestford, a company linked to Labroy’s founder Tan Boy Tee, two by Hongmao Shipping/Hai Heng Ship Engineering out of Tiajin, all of which are GustoMSC CJ-46 units plus three (3) GustoMSC CJ-50 units, two ordered by Hai Heng and one by Vanda Offshore believed to also be Tiajin based and yet another speculator who jumped on the bandwagon. CMHI has managed to offload the two China Merchants Capital units to Singapore’s I-Ships Management on a bare-boat agreement with an option to purchase and the two are already operational, working in Iran. The agreement also has provision for I-Ships to acquire a further four CJ-46 units, likely those of Bestford, though this has not yet transpired. CMHI also reached an agreement with Singapore’s Energy Drilling for the tender assist specialist company to market another CJ-46 jackup, Bestford 5, with an option to operate the rig if E-Drill were to win a contract. With no jackup experience this is a big ask on the part of E-Drill.

CIMC Raffles however are following a different path. After taking over the two Frigstad 7th generation UDW semis, renamed Bluewhale 1 and Bluewhale 2, the yard formed a drilling company, Bluewhale Offshore, to operate the rigs and set up an office in Singapore. Subsequently they have added five surplus jackups and three undelivered harsh environment semis to Bluewhale’s marketing fleet. Three of the jackups are F&G JU2000E design units, Cerebus and Phoenix, originally ordered by Central Shipping Monaco who terminated their construction contract in May last year, and the Coastal Driller 4002 ordered by Malaysian marine contractor Coastal Contracts with this rig in limbo due to ongoing arbitration proceedings between the two companies over the first jackup built for Coastal at the yard. The other three jackups are of the minimalist F&G Super M2 design, two of which were speculative by the shipyard and which failed to find buyers, with the other being the Caspian Driller currently bare-boated to Momentum and working in Turkmenistan. To date Bluewhale Offshore have been unsuccessful in finding work for any of their fleet.  

The other two Chinese yards with the highest exposure are Shanghai Waigaoqiao (SWS) and Dalian Shipbuilding (DSIC) with ten (10) and nine (9) jackups respectively left on their shelves. In SWS’s case three units are destined for Northern Offshore, a bona fide drilling contractor who will accept delivery of all three eventually. SWS have now offloaded the remaining seven (7) rigs and transferred ownership to Tianjin China Shipping Jianxin Offshore Engineering, a financial leasing company established by SWS parent CSSC. The rigs are three ordered by Prospector Offshore who are now out of business, two for in-house CSSC Leasing and two for Singapore based ESSM with whom the shipyard is currently in arbitration after ESSM refused to take delivery due to alleged late deliveries.

In DSIC’s case the fate of their jackups rests with two drilling contractors, Seadrill who have eight (8) units on order and Indonesia’s Apexindo. The latter are likely to take delivery at some point when the market improves but the Seadrill units are of course subject to the ongoing re-structuring of the Norwegian outfit and their ability to raise enough funds to pay for not only the jackups but also four UDW drillships on order in South Korea.

What of the other Chinese yards? ZPMC have four jackups under construction or completed awaiting acceptance. Three of these, Jap Driller, Lovansing and Lovanda are believed to have Norwegian owners and there has been no word on these since 2016. The other is a rig for KS Drilling who may take delivery eventually and have been actively marketing the rig in Indonesia. They would probably be equally willing to sell the unit.

CSSC have been building three rigs of a new design, Zentech R-550-D, for Alliance Offshore, a subsidiary of TSC Group Holdings and have successfully delivered the first which was sold to Indonesian outfit Harmoni Drilling but has remained idle in the shipyard since December 2016. There has been no recent news on the other two, one of which was to have been delivered late last year and the other scheduled for mid 2018.

CSIC have also been left holding the baby, on five jackups, four ordered by FTS Derricks, a subsidiary of Singapore’s Falcon Energy who cancelled their construction contracts last month as they could not pay for the rigs, and another by Singaporean speculator ES Holdings from whom nothing has been heard for some time.

Meanwhile COSCO would appear to be the one rig with little to worry about. They have five (5) rigs under construction, two for Northern Offshore, one for KS Drilling, one for India’s Dynamic Drilling and one for Foresight Offshore. All these owners are bona fide drilling contractors and likely to take delivery eventually, albeit only when the market improves.

Of the rest, Indonesia’s DDX Paxocean shipyard in Batam have been unable to persuade Petrolor Oilfield Services, a Chinese company, to accept delivery of its two CJ-46 jackups, both of which are complete and stacked in the shipyard, one since 2015 and the other early in 2017. China’s Zangzijiang shipyard has one unit ordered by MENA Offshore pending delivery after completion in 2016, CPLEC have two jackups of their own design to find buyers for and lastly Tai Zhong Binhai shipyard also have a rig which is said to have been completed in late 2016. It is a new Chinese design and the yard’s first foray into jackup construction which are probably serious disadvantages when it comes to find a buyer.

 In summary, new rigs are beginning to find buyers and shipyard have been prepared to think outside the box of ways to lessen their inventory. The Singapore yards have a considerable advantage in that they will have already received a 20% down payment from the original owners (and possibly even progress payments) which allows them more leeway to offer discounts whereas the majority of rigs ordered in China only required a down payment of 5%.  Also from a quality perspective it was always likely that the Singapore rigs would be sold first. With Borr proving to be the exception that proves the rule, it is fairly certain that the only jackups that will actually be delivered this year will be those with a contract to go to.


The recent announcement by Diamond Offshore that they have decided to mobilize moored deepwater semi Ocean Onyz from cold stack in the Gulf of Mexico all the way to the Asia Pacific, aboard an expensive Heavy Lift Vessel to boot, suggests that Diamond, for one, have noticed the dearth of floaters within the region capable of drilling in shallow to mid water depths. The Ocean Onyx, an ODECO Ocean Victory Class design, was built in 1973 and started life as the Ocean Voyager. It underwent a major overhaul and was rebuilt at KeppelFELS in 2013, in the process being renamed Ocean Onyx and now classed as a fifth generation floater. The rig is rated for 6,000ft water depths, has an eight-point mooring system and living quarters for 140-men and is perfect for this region, especially for Australia where they tend to prefer 8-point moored semis. It worked in Trinidad and has been cold stacked in the US Gulf since early 2016. Diamond have said it will remain cold stacked when it arrives in Malaysia and will not be reactivated until a contract is found for it. In reality, this might not take too long.
The region’s mid water floater fleet has been critically degraded during this downturn. From 2011 onwards, we have lost a whole flotilla of floaters to the scrap yard, all of which had been plying their trade in the region until they were removed from service. The list includes Atwood Falcon, Atwood Eagle, Ocean Epoch, Ocean General, Ocean Quest, Transocean Legend, GSF Explorer, Sedco 601, Noble Discoverer, MG Hulme and more recently Songa Venus and Naga 1/Hakuryu 3.
In the mid water market sector this leaves us with Doo Sung, Ensco 5005, Songa Mercur, all currently cold stacked, plus Deep Venture and Stena Clyde currently warm stacked and lastly with Hakuryu 5 and Saipem’s Scarabeo 7 which are the only mid water floaters currently operational.
Of the cold stacked units Doo Sung has already been up for auction twice and is now the subject of a third auction to be sold off as scrap. Songa Mercur is under arrest in Singapore as a result of the bankruptcy of Opus Offshore and is set to follow Songa Venus in being auctioned off for scrap before year end. There has been no recent comment with regard to the fate of 1982 built Ensco 5005 but Ensco have stated that the acquisition of Atwood Oceanics could allow then to further reduce their fleet of aging units which could include the former Nymphea and Pride South Atlantic.
With the Stena Clyde, now 41 years old and comfortably the oldest rig in the region, closeted in Darwin Australia and therefore unlikely to bid on work in South East Asia, it is been left to the Hakuryu 5 to garner any work going in the region and it has succeeded in finding work in  every year since 2013. It is currently contracted through until Q3 2018. The Scarabeo 7 is chartered by ENI on a long-term charter that began in 2014 and is not available until June 2018.
The deepwater segment, to which the Ocean Onyx will rightly belong, has one rig cold stacked, Ocean America and three operational, Ensco 5006, Ocean Apex and Ensco MS-1, all contracted in Australia and likely to remain there.
Some recent contract awards for mid water floaters at the higher end of the 400ft-4,999ft mid water range have been awarded to moored ultra deepwater units such as Ocean Monarch, one of five moored rigs rated between 8,000ft and 10,000ft water depths currently in the region. But there are currently six (6) tenders outstanding for moored semis that are able to work in water depths under 1,000ft and the operators are struggling to find a suitable rig. The one operator who has felt the unavailability of a shallow water moored floaters most of all is Pertamina Hulu Energi North Sumatra Offshore in Indonesia who have frantically been scouring the market for a semi capable of working in 345ft water depths and had zero response despite three tenders issued and a one-year charter on offer.
So, it is not surprising that Diamond believe there are more potential opportunities for a moored semi over here rather than in the US Gulf. What is a little strange is that Diamond have two moored semis currently cold stacked in the region already, Ocean America (built 1988) and Ocean Rover (1972). Maybe this is a hint that these two may not be around for much longer.
It would not be a surprise to see more mid water moored floater arrive in the region. Mind you there are only fifty-eight (58) competitive units left around the world in the 400ft-4,999ft class, 69% of which were built between 1973 and 1989. Nineteen (19) are cold stacked and likely primary candidates for the scrap yard in the near future. Sixty-three (63) of this class have already been scrapped. Could this sector be the first to see some new building?



Borr Drilling’s recent splurge in the jackup market, acquiring Transocean’s fleet of ten (10) rigs plus the five (5) that Transocean had under construction at KeppelFELS, and now another nine (9) “stranded” rigs from Singapore’s PPL shipyard, added to the two (2) distressed units they purchased off Hercules earlier, will give them eventually a fleet strength of twenty-six (26) units, catapulting them into fifth place behind Ensco, COSL, Shelf and Paragon and ahead of Seadrill, Noble, Maersk and Rowan – although if the rumours about Rowan acquiring Maersk are correct they will drop down one place.

The new boy in town will have a very modern fleet. Once all the new rigs are delivered, between now and early 2019, Borr will have an average fleet age of around 5 years, comfortably the youngest fleet amongst its international competitors, especially against Ensco, Paragon and Shelf who still have a significant fleet of “legacy” rigs.

So, is this a good deal?

Many analysts have been negative about the acquisition of the nine (9) rigs from PPL. I contend that they have not looked at this carefully enough nor considered it in the light of the wider world of our worst ever downturn which would seem to have bottomed out with some green shoots of a recovery.  

It is surely good business for both parties. Having been lenient for almost two years after the rigs were completed PPL eventually lost patience with Oro Negro  and Perisai, both of whom are in financial strife and who never looked likely to raise the funds needed to pay off the shipyard. PPL, at the time the orders were placed in 2013 and 2014, have already pocketed the 20% deposit on the sales price of $208 million per rig from both Perisai and Oro Negro as well as from Marco Polo. Throw into the equation the fact that there is a total of around eighty-six (86) new “stranded” jackups sitting around in various shipyards in China and Singapore looking for new owners then making a loss of just $15m for nine (9) rigs in this depressed market is in my opinion clever business. Let’s see what the Chinese rig builders and even KeppelFELS eventually get for their rejected units. They are going to have to wait a long time before they can sell them for more than $145m. The bonus for PPL is that they have also divested themselves of three (3) rigs they had blundered into building on speculation, caught out by the downturn. Someone in the yard must be heaving a sigh of relief.

it is rumoured that Borr had also approached KeppelFELS who it is said did not offer quite the same discounts thus leading to the deal with PPL. They do not seem to have approached any Chinese shipyards but zeroed in on a yard with a proven product design and known for consistent quality.

From Borr’s perspective they have acquiring nine (9) 400ft water depth capable premium rigs for around $145 million apiece at a total of $1.3bn which contrasts with the $200 million they would have to have paid just three years ago. This must be a coup. An initial down payment of $500 million is to be made and Borr have already raised this with a very recent equity offering. The balance of the $1.3 billion is being financed by a loan raised by the shipyard on which Borr is paying interest.

Some analysts though are concerned that Borr will collapse as they have no track record and are highly unlikely to find it easy to contract their entire fleet anytime in the foreseeable future. Borr, with experienced management from Noble and Seadrill, will surely have factored this into their equation as well of being assured of funding and will be expecting the initial two years to be tough. But they will see themselves well placed when the market does return. They will have a nice mix of North Sea capable units and highly capable jackups for more benign environments. They have two jackups currently contracted in South East Asia, with Chevron in Thailand, and one that is currently idle and in addition have two with contracts in West Africa. Their integrated services arrangement with Schlumberger, who have a 20% stake in the company, is also expected to provide some work. 

One worry for this region is that once the PPL and KeppelFELS rigs start emerging from the shipyards, beginning at the end of this year, fourteen (14) in total to join the three (3) already here, they will flood the Asia Pacific market as they are more likely to remain located over here until a contract is found for them elsewhere and will doubtless be offered for work within the region. This will play havoc with the regions utilization rates – unless of course Borr makes some strategic mobilizations to other theaters, likely the KFELS Super B units.

Borr have named their rigs after Norwegian Gods. At this rate of acquisition they will soon run out of Gods but they will certainly need the help of the gods in surviving the next couple of years.


ONGC India have now opened the commercial bids for their tender for eight (8) jackups, spread over four categories, which drew bids from thirty-two rigs. They must be delighted with the results. Not so for drilling contractors who have looked on in astonishment at a new low rate for a premium jackup, around $25,000/day for a 2013 built rig that cost $160m to build.

The “low” bidder, and you can’t go much lower, of Category I for five (5) jackups was Greatship who offered their LeTourneau Super 116E design Greatship Chaaya, at rate not seen since the dark days of year 2000 and certainly the lowest ever rate for a premium rig built this century. Greatship added more misery to its competitors by also offering another premium rig, Greatship Chetna, a KFELS B Class unit delivered in 2009 at a cost of $180m, at another lowly rate of around $27,000/day and was inevitably low bidder in the Category IV class for an HPHT rig. This category had drawn nine bids, all premium rigs.

The other low bidder, for Categories II and III was, as expected, Shelf Drilling, with dayrates offers around $32,000/day. The 1982 built JT Angel was low bidder for Category II and for Category III Shelf offered two rigs, 1982 built Harvey Ward and 1978 built Galveston Key, at the same rate although only one of these will be awarded a contract.

As is their wont ONGC will now offer the remaining four available slots in Category I to the next four lowest bidders providing they match the Greatship rate. This will be between Dynamic’s Victory Driller and Valiant Driller and Shelf’s Ron Tappmeyer, Trident 12 and Compact Driller, all apart from the latter built between 1978 and 1982. For “legacy” rigs in India’s low operating cost environment the rates offered by Dynamic and Shelf appear to be about right in today’s cut throat world. After all there is realistically little alternative except for the scrapyard. 

Greatship and the other winners that agree to the Greatship rate will have to live with those rates for three (3) years.

Spare a thought for the biggest loser. Aban offered a total of ten (10) rigs, 66% of their entire fleet, and not one will be in line for a contract. Jindal and Hallworthy too, offering a combined six (6) rigs, also lost out.

Spare a thought too for the “legacy” rigs that will lose out. One of Harvey Ward or Galveston Key, both Dynamic operated Paragon M116 and Paragon L786, Aban III, Aban IV, Foresight Driller III and Foresight Driller IX. Surely it’s time for a final voyage to Alang?


Back in August 2015 in a blog entitled “CONTRACTORS THROW EVERYTHING BUT THE KITCHEN SINK AT ONGCI noted that Contractors had offered twenty-four (24) jackups for just eight (8) contracts on offer. There were also forty-one (41) floaters offered for just seven (7) slots.


Well history is repeating itself for the Indian NOC’s most recent tender, again for eight (8) jackups. Only this time thirty-two (32) rigs have been offered them.


What is interesting is that the only recognized international contractor bidding this time is Shelf Drilling, who are based in Dubai, and have nine (9) jackups already in country four (4) of which are still working there and five (5) warm stacked which have recently finished charters with ONGC. There was a bid from China Petroleum Offshore Engineering but they withdrew and Selective Marine Services, connected to Singapore’s Ezion, was the only other non-Indian bidder offering a 1973 built jackup with the intriguing name of “Noah’s Ark”.


Shelf of course have been embedded in India for a very long time, initially as Transocean before being hived off, with “legacy” jackups such as Trident 12, which has been there since year 2000, and many of the venerable Reading and Bates jackups that Transocean inherited when they acquired that company. Shelf have offered seven (7) rigs to ONGC for the latest tender.


So why just Shelf? The main reason that even in these hard times international contractors have shied away from bidding into India is the preponderance of Indian owned rigs which they presumably feel they cannot compete with. Aban, the biggest Indian contractor, has offered ten (10) rigs out of a jackup fleet of fifteen (15), including two (2) that are currently in South America and two (2) in South East Asia.  Next biggest is Dynamic/Dynasty who have offered five (5) rigs, a mix of new and old all of which are currently in India. Jindal have offered three (3) modern premium rigs, two of which are stacked in the Middle East, Greatship have two on offer, both premium rigs and lastly Hallworthy, based in the UK but with Indian heritage have offered two venerable rigs and one that is still under construction in China. All in all, twenty-three (23) rigs have been offered by Indian contractors for just the eight slots. Fifteen (15) out of the twenty-three are premium rigs built after 2002.


So, it is not difficult to understand the reluctance of international drillers to participate in Indian tenders where there is already a surfeit of Indian owned units available and which are already in country and who have, as domestic contractors, a perceived advantage.


On the face of it you would not expect Shelf to have much of a chance either. However, all but two of their rigs offered in this tender are older than thirty (30) years and likely have no residual value. They have also mostly been in India for a decade or more working for ONGC who will know them well. It is really the last chance saloon for the older rigs who face a very uncertain future if they do not pick up a contract. They are likely to be offered cheap. ONGC is known to award on price and do not generally worry too much about age or condition. So it comes down to the dayrate and legacy rigs can generally be offered cheaper than premium rigs built after year 2000. ONGC always first award to the lowest bidder and then offer the next seven in line the chance to match the low bidder. The trick is to get into the top eight lowest bidders and it would be a surprise if Shelf did not get a few rigs in the short list.


What will become of the rigs that don’t manage to sweep up an award? That is 75% of the rigs offered. Thirteen (13) of these were built in the 1970’s or early 1980, five (5) of them owned by Shelf. You would expect that for the Shelf rigs this is their last throw of the dice and if they miss out this time then it is likely a final voyage to the Alang scrapyards is to be their next destination. They are unlikely to find work outside of India where the premium rig is king. What will befall of the elderly Indian owned rigs is hard to judge. So far there has not been any Indian owned rigs scrapped.


Perhaps not just everything but the kitchen sink has been thrown at ONGC this time around, it is also everything under the Indian sun.



The Season of the Which (company) is amongst us.

CA16901The forecasted and inevitable merger and acquisition season appears to be amongst us. We have already seen an increasing number of acquisitions of individual distressed rigs over the last year or so by the likes of Advanced Energy Systems, Arabdrill, Vantage, Ocean Rig and White Fleet Drilling, but company mergers have been dormant through the worst part of the downturn. But with green shoots of a recovery now evident, and with a host of distressed or restructured companies around, M&A activity is underway.

After Borr Drilling bought out Transocean’s jackup fleet plus a couple of distressed jackups from Hercules, Transocean turned around and is investing the money into Songa Offshore. This follows the earlier acquisition of Atwood Oceanics by Ensco. 

The Ensco / Atwood merger does has an impact in this region, providing Ensco with a strong presence in Australia where they have been a regularly occasional player since early 2000’s, often the half rig in a one and a half jackup market. They will now have a firm floater presence there. The Atwood jackup fleet, all modern premium rigs, will allow Ensco to phase out more of its older fleet, most likely their present five (5) cold stacked jackups. Ensco has already scrapped nine (9) of its jackup fleet and sold off at least four (4) others.

Transocean obviously have their sights on dominating the harsh environment floater market with their $3.4bn acquisition of Songa.  Songa have four (4) very modern semis all on long term charters with Statoil in Norway as well as three (3) 1970/1980 vintage mid water floaters that are currently idle and which Transocean will surely scrap, probably with a few more of its own elderly floaters. Until this happens Transocean will operate a fleet of fifty one (51) floaters, with thirty (30) UDW units (and four (4) more under construction), eleven (11) harsh environment floaters, three (3) deepwater floaters and seven (7) mid water floaters. The Songa acquisition also strengthens Transocean’s footprint in Norway.

With sixty (60) different drilling contractors operating floaters and one hundred and twenty (120) jackup drilling contractors around the world, there is a lot of scope for further M&A activity. Naturally the Ensco and Transocean deals have stimulated much speculation by analysts as to who is the next in line. Odfjell seems to be a common pick to be on Transocean’s radar but their roster of prime acquisition candidates includes Ocean Rig, Pacific Drilling, North Atlantic Drilling, Seadrill Partners and Seadrill itself, Maersk Drilling, Rowan and Noble. Maersk Drilling may have just leapt to the top of the list with Total having just acquired Maersk Oil, giving the impression that Maersk are exiting the oil and gas sector.

But who are the buyers? The analysts are suggesting Diamond, Rowan, Noble, Ensco, Seadrill (after restructuring), Borr Drilling as well as Transocean. One thing is for sure, no-one is going to buy out a company with a fleet of 1980’s vintage rigs unless they are mixed in with an attractive number of modern premium rigs. We certainly need consolidation, especially in the jackup market, but it is hard to envisage the number of contractors being reduced by very many when most of them operate thirty (30) year old rigs or older. But the jackup market, with near one hundred (100) stranded new builds yet to be cut lose into the market, is not going to improve until the old rigs are scrapped and this means many contractors will also have to fall away or invest in the new rigs and scrap the old.

However. the big boys are definitely preparing for an upswing in the market. There is no doubt the rig market is going to look very different a year from now. Meanwhile we are all guessing who is next.