OGUK Business Outlook 2021

BUSINESS OUTLOOK 2021

Drilling and Wells Activity (continued)

Despite some prospects of some increase in activity levels, market conditions are likely to remain significantly challenging for drilling and wells contractor companies this year. Data from IHS Markit indicate that current levels of semi- submersible rigs working on the UKCS are amongst the lowest rates on record (36 per cent utilisation). The number of contracted jack-up rigs has been slightly higher (50 per cent utilisation), but remains at low levels, with a number of units both warm and cold stacked. Utilisation rates for these rigs have consistently trended below 80 per cent since 2015, having typically been upwards of 80 per cent prior to that. These trends are also reflected in lower contracted day-rates. IHS does report a more optimistic rig outlook for 2022 as companies revisit work programs deferred during the pandemic, including well decommissioning campaigns, but the market will remain over-supplied. This is likely to lead to consolidation within the market as companies look to move some units to other regions or make decisions to scrap older assets.

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