Pressure Rising On Deepwater Rigs
BMI View: After a slowdown in the coming quarters, we expect the market for deepwater rigs to begin to recover over the medium term. Rig rates will suffer in 2014 from a slowdown in demand and a ramping up of supply, though increased investment in Africa and the Americas should support the market to a greater extent over the medium term.
After a strong showing in 2013, we believe that the coming quarters will see downward pressure on deepwater drilling rigs' utilisation rates and prices. Indeed, with a large number of rigs set to come online in coming quarters, compounded by a simultaneous move by E&P players to consolidate gains and limit spending, we expect demand to ease and rig day rates to fall. That said, over the medium term, with growing West African production potential and rising investment into the US Gulf of Mexico and Latin America, this should help to ensure a tighter market and support prices.
Investment Slowing In 2014
|Lots Of Newbuilds In The Pipeline|