[QUOTE=Doodlebug;131781]Transocean, just today on this site says they are spending billions
Those things are going somewhere.[/QUOTE]
Yeah, after they are delivered they will go somewhere to fix the problems first. Going cheap not necessarily the best way to go.
[QUOTE=PDCMATE;131809]Yeah, after they are delivered they will go somewhere to fix the problems first. Going cheap not necessarily the best way to go.[/QUOTE]
I agree…this plays right into the whole “CUT COSTS AT ANY EXPENSE” mentality that seems to be growing steadily. These will undoubtedly be drillships on the cheap in which many corners will be cut in order for them to be delivered $100-$150M less than the ships from Korea. Smaller, less automation, more Chinese materials, parts and equipment in them, built almost entirely by Bangladeshi labor. Hmmm…seems I have heard this song before, but where?
Me sees big floating piles of shyte comin roun the mountain when they come!
this from World Oil showing the trend of cutting costs by the majors to be accelerating
BY JOE CARROLL
IRVING, Texas (Bloomberg) – Exxon Mobil Corp., the world’s largest oil company by market value, lowered spending on new wells, offshore platforms and fuel plants by 13 percent after boosting reserves to a record last year.
Capital expenditures will average about $37 billion annually this year and for the next several years, compared with $42.5 billion in 2013, Irving, Texas-based Exxon said in a U.S. Securities and Exchange Commission filing yesterday.
Exxon plans to spend $6 billion this year on projects to reduce emissions linked to climate change and air, water and soil pollution, according to the filing. That level of expenditure would be even with 2013 and will continue at that rate next year.
Exxon increased the proportion of its reserves made up of oil to the highest in a decade in 2013 as shale-drilling expertise acquired in the $35 billion XTO Energy deal was mobilized to find crude, it said on Feb. 21.
Chairman and CEO Rex Tillerson is scheduled to brief analysts and investors next week on the company’s long-term exploration and development outlook at a meeting in New York.
Exxon shares have outperformed oil in the past year, advancing 8.2 percent compared with a 2.8 percent decline for Brent crude futures that are benchmarks for more than half the world’s petroleum
when is this trend going to trickle down to the support vessel fleets? Gotta be coming!
YUP! We’re definitely in a downturn
[B]Seadrill Sees Bigger Drilling Market Slowdown[/B]
Tuesday, February 25, 2014
OSLO, Feb 25 (Reuters) – The global oil drilling market will slow by more than expected over the next two years as energy firms save cash for dividends and delay exploration, Seadrill , the world’s biggest offshore driller by market capitalization, said.
Oil companies are struggling with cash outflows, while they also need to spend more just to maintain production levels at their existing assets, where depletion rates are high, Seadrill said on Tuesday.
“Combined with a relatively high dividend payout and increasing development cost to bring new production on stream, oil companies have limited opportunities to fund exploration activities,” Seadrill, the crown jewel is shipping tycoon John Fredriksen’s business empire, said in a quarterly results statement.
“In this regard, 2014 and 2015 may show slower growth in activity levels than earlier anticipated,” it added.
It added that it sees “limited value” in increasing its own dividend further and would preserve funds for buybacks or later dividends.
By 0913 GMT, Seadrill shares were down 6.4 percent, underperforming a 0.3 percent fall in the European oil and gas index.
Seadrill had been on an order spree, adding ultradeep drilling vessels in recent years, but said it would now focus on its existing fleet until it sees oil companies raise spending.
Rates in the ultradeep offshore market, the most lucrative segment, peaked close to $625,000 a day last year and have since fallen to around $575,000 for the so-called 6th generation rigs. Analysts have predicted that those rates will sink further to between $525,000 and $475,000 per day.
“Based on the fact that this pause in spending has not been caused by oil price declines gives us confidence that this is a momentary pause rather than a cyclical downturn,” Seadrill said.
It expects its first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) to be flat or lower compared with the fourth quarter following a number of operational issues with several vessels.
But it expects year-on-year profit growth above 20 percent in subsequent quarters, it added.
For the fourth quarter, the company reported a 27 percent rise in EBITDA to $768 million, just ahead of forecasts for $754 million in a Reuters poll of analysts.
(Reporting by Balazs Koranyi; editing by Gwladys Fouche and Jane Baird)
what on earth will happen with all these brand new drillships which are still being pumped out?
ya need to check rig utilization if thats low and plenty more coming on line and there is then there is going to be pricing pressure and maybe plenty of old crap scrapped so look out for companies with old crap as they are not going to be hired.
How will this affect OSVs and the hiring and retention of crews?
[QUOTE=Bayrunner;131977]How will this affect OSVs and the hiring and retention of crews?[/QUOTE]
If any of us knew that for sure we’d be hedge fund managers on Wall Street, not sailors.
Currently this is just a pause in big capital spending projects and to allow the global supply chain time to increase capacity so there is not a bidding war for services. Overall the world economy is improving and the demand for oil is increasing.
As we all know, unpredictable world events can suddenly change the available supply and price of oil.
Apparently, the utilization rate for DP-2 OSVs is 100%. There is presently no slack in the market and there is a bidding war to charter these vessels. Apparently, most new boats being built already have long term charters. Someone here probably knows what a more typical OSV utilization rate is in a healthy market. Or as an economist might say, “when the market is in equilibrium” with the right amount of slack in the system and supply and demand are in balance. The oil companies what more boats in the market so that the utilization rate will fall and there will no longer be a bidding war driving up OSV day rates to ridiculous levels.
Long term charters have been signed. Contracts to build have been signed. New boats are being delivered and going right to work. The oil companies are locked into continuing commitments. So how much can they cut back,10%? How long will that take to be felt in the market, months or years?
So my guess is that the boat companies will have to keep hiring to crew the new boats that have already been chartered. It would be unrealistic to expect more salary increases. It might be reasonable to expect companies to start reducing benefits, and adopting a two tier pay structures with “old hires” (current employees) frozen at current rates, and “new hires” brought on a lower rate. This is not uncommon in America. The question is how much lower might wages go for new hires? Smaller companies with older boats may flat out cut wages and benefits.
So anyone who is thinking of making a move to the oil patch might want to do it sooner rather than later. Also, they might want to try harder to get on with the bigger companies with mostly newer DP-2 boats.
Of course, it always makes sense to invest in oneself by upgrading licenses and certifications as quickly as possible.
now Maersk Drilling has a statement
[B]Global Oil Drilling Slowdown to Last Until 2015, Says Maersk[/B]
February 28, 2014 by Reuters
The current slowdown in offshore oil and gas drilling will last 12 to 18 months, and the market for rigs will rebound in 2015, Maersk Drilling said, providing a more optimistic forecast than other drilling firms.
Oil companies are only delaying projects, Claus Hemmingsen, the chief executive of Maersk Drilling, a unit of Danish shipping conglomerate A.P. Moller-Maersk, told Reuters on Friday.
“I would rather call it a short-term softness than anything dramatic,” Hemmingsen said in a telephone interview. “We see postponements, not cancellations, and I think that distinction is important.”
Activity in the deep waters off West Africa and Brazil will suffer the most, he said. “There’s two regions when you talk about deep water that stand out - that is West Africa and Brazil.”
Other drilling companies have warned that the market could be slow for the next two years as oil majors delay projects and cut capital expenditure to save cash for dividends, while drilling companies add new vessels, creating overcapacity.
Analysts expect oil and gas capital spending to rise by 4-6 percent this year, a big drop from years of double-digit growth as the biggest offshore drillers such as Shell, Chevron and Statoil cut their budgets the most.
Transocean, which owns the world’s biggest drilling fleet, predicted on Thursday it would take 18 to 24 months for demand to recover.
Seadrill, the world’s biggest offshore driller by market capitalization, warned this week that the sector would slow over the next two years.
But Hemmingsen foresaw that the dip in the market would last for 12 to 18 months.
“I actually think it’s (going to be) shorter, because I see some activity and interest,” he said.
“We’ll see the market returning to a strong balance of supply and demand,” Hemmingsen said. “These projects that are being postponed will come back. In 2015 and beyond, we’ll see the market continuously on the strong side.”
Hemmingsen said Maersk, which take delivery of six new rigs this year, will need several more units to meet its 2018 target for a $1 billion net profit but that no newbuild orders were imminent.
Of course, 2015 is not a very long projection and Maersk seems to have one of the more positive opinions on this however who knows except that it is abundantly clear that the energy majors are now in a major cost cutting midset. Can dayrates not suffer? What will happen to the boots on the deck?
IMHO I think the offshore market wants to see how the USA land based energy exports effect the market over the next few years?
rules and regs will be higher and whoever has new rigs will get the jobs in the next upturn
[QUOTE=powerabout;132053]IMHO I think the offshore market wants to see how the USA land based energy exports effect the market over the next few years?
rules and regs will be higher and whoever has new rigs will get the jobs in the next upturn[/QUOTE]
I agree that shale oil is a game changer for the US economy and the world economy. Its the primary reason that the US is finally recovering from the Great Recession.
Hell no. The US should not be doing any unrefined oil exports. We’ll eventually need all our oil and most of our gas right here in the US. We need to lower US energy costs to help offset our higher labor costs and lower government subsidies so that US companies can bring good manufacturing jobs back to the US and compete in the world economy.
I strongly disagree that daily rates for the individual mariner in the GOM will go down for current employees and certainly not for any licensed engineer.