This morning, Diamond Offshore announced a contract agreement for the Black Rhino that implies about the lowest dayrate an ultra-deepwater (UDW) drillship built this cycle has ever received.
Specifically, Diamond Offshore inked a blend and extend agreement with operator Murphy to work the Black Rhino in the GOM for an additional 7 months. The incremental backlog implies a leading edge dayrate of roughly $220,000 per day. That’s down from a market peak of around $650,000 per day.
Source: Diamond Offshore, Oilpro estimates
Recently, the Noble Danny Adkins, a 6th gen semi delivered in 2009, reportedly received a similar dayrate near $200,000 (Noble didn’t disclose the dayrate, but industry sources indicate it was around the $200k/d mark). But modern construction high-spec drillships have been expected to perform a bit better than 5-year old semis like the Adkins. This new fixture is important because it marks leading-edge dayrates for new UDW drillships down to levels that lesser UDW floaters have recently received - a sign that a rig’s ability is no match for the excess availability in this market.
The last time leading edge dayrates for UDW rigs were this low, modern drillships weren’t even a glimmer in their owners’ eyes. UDW rigs haven’t earned dayrates consistently below $250,000 per day since the 2004-2006 time-frame. That was well before the latest construction wave, which heated up in 2010 and pushed over 100 newbuild UDW rigs into the market.
Source: Company Filings, Oilpro estimates
With drillship availability increasing and demand continuing to deteriorate, dayrates are likely to test cash operating cost break-even levels over the next 6-12 months, forcing contractors to make some very tough decisions. This realization is likely why Diamond and others are agreeing to these blend and extend arrangements - securing guaranteed work at $220k/d in this environment is a win for desperate UDW contractors.
Bankruptcies would be a good thing. Let the original high cost investors and their creditors take the hit, and let the drillships be resold to new investors at lower prices that can be supported with $200,000 a day in revenue.
[QUOTE=tugsailor;166735]Bankruptcies would be a good thing. Let the original high cost investors and their creditors take the hit, and let the drillships be resold to new investors at lower prices that can be supported with $200,000 a day in revenue.[/QUOTE]
try saying this to the hands on the ships today (at least those still at work) that they’ll have to go work for the new owners at 1/3 what they were earning before and then all those other offshore workers after all the “trickle down” takes place.
offshore people better put on their armored undies for the new reality a commin
I have heard about drilling layoffs, but I have not heard much about drilling pay cuts .
If and when, big pay cuts happen, or has probably already happened with lay offs, a lot of people will retire from drilling never to come back.
Guys that have been laid off and their Congressmen, need to get after the USCG in this new era of massive layoffs to stop issuing waivers to bring in foreign offshore oil patch workers and seamen, and to start revoking the waivers that have already been issued.
Wouldn’t it great if we could get Trump to make a campaign issues out of this outrageous give away of high paying American jobs to temporary foreign workers.
The Government should make long term low interest loans to US companies that want to buy newer drillships upon the condition that they shall be permenantly reflagged US.
[QUOTE=tugsailor;166751]I have heard about drilling layoffs, but I have not heard much about drilling pay cuts .
If and when, big pay cuts happen, or has probably already happened with lay offs, a lot of people will retire from drilling never to come back.
Guys that have been laid off and their Congressmen, need to get after the USCG in this new era of massive layoffs to stop issuing waivers to bring in foreign offshore oil patch workers and seamen, and to start revoking the waivers that have already been issued.
Wouldn’t it great if we could get Trump to make a campaign issues out of this outrageous give away of high paying American jobs to temporary foreign workers.
The Government should make long term low interest loans to US companies that want to buy newer drillships upon the condition that they shall be permenantly reflagged US.[/QUOTE]
People leave the industry during every slow down and never return. This slow down will be no different. In 2016 or 2017 (hopefully) things will pickup and there will be a flood of new entrants into the market to take the empty spots. People will move up the ladder and a new rush of people will fill in the entry level jobs.
[QUOTE=jbtam99;166776]So… devils advocate here, and correct me if I’m wrong, but wouldn’t they have to be built in the US to be flagged US? Like the idea though.[/QUOTE]
No. Drillships are not vessels that “carry freight for hire” between US ports. The Outer Continental Shelf falls outside the ambit of the Jones Act.
[QUOTE=tugsailor;166778]No. Drillships are not vessels that “carry freight for hire” between US ports. The Outer Continental Shelf falls outside the ambit of the Jones Act.[/QUOTE]
Welll… The “OCS” doesn’t fall outside the Jones Act so much… But in most situations the floating offshore facilities do, no matter how much OMSA complains.
Yeah, I thought that connecting to the bottom in the OCS made it a possible issue for a gray area on “coastwise” transportation. Disregard then. It’d be something I’d argue though for getting rid of foreign owned, run, and crewed subsea vessels though for sure…
[QUOTE=jbtam99;166776]So… devils advocate here, and correct me if I’m wrong, but wouldn’t they have to be built in the US to be flagged US? Like the idea though.[/QUOTE]
NO, US flag does not require US construction. You need to brush up on your regs. If that were the case, We would have NO MLL, NO Central Gulf, No Waterman, No Crowley Express Ships, NO APL Marine. (effectively, NO Merchant Marine)
[QUOTE=tugsailor;166751]I have heard about drilling layoffs, but I have not heard much about drilling pay cuts .
If and when, big pay cuts happen, or has probably already happened with lay offs, a lot of people will retire from drilling never to come back.
[B][I]Guys that have been laid off and their Congressmen, need to get after the USCG in this new era of massive layoffs to stop issuing waivers to bring in foreign offshore oil patch workers and seamen, and to start revoking the waivers that have already been issued.
[/I][/B]
Wouldn’t it great if we could get Trump to make a campaign issues out of this outrageous give away of high paying American jobs to temporary foreign workers.
The Government should make long term low interest loans to US companies that want to buy newer drillships upon the condition that they shall be permenantly reflagged US.[/QUOTE]
Unfortunately, not going to happpen. All those new Marine position postings for Vantage offshore in the GOM on RigZone are BS. They have zero intention of filling them with Americans. They even have multiple foreigners in the GOM right now working as [B][I]ASSISTANT[/I][/B] DPOs.
Those on GOM MODUS who will or already have lost their jobs as DPOS and Engineers let this shit go on at multiple companies while the time$ were good and they thought nothing of foreigners getting waivers applied to the manning certificates.
Chickens have come home to roost. The USCG doesn’t give one shit about it.
I don’t own them, flag them, or build them. I just navigate them, which is why I asked the question. Pretty sure that’s not on any license exam either. So lose the 'tude, but thank you anyway for your elucidation on that.
[QUOTE=Johnny Canal;166790]Unfortunately, not going to happpen. All those new Marine position postings for Vantage offshore in the GOM on RigZone are BS. They have zero intention of filling them with Americans. They even have multiple foreigners in the GOM right now working as [B][I]ASSISTANT[/I][/B] DPOs.
Those on GOM MODUS who will or already have lost their jobs as DPOS and Engineers let this shit go on at multiple companies while the time$ were good and they thought nothing of foreigners getting waivers applied to the manning certificates.
Chickens have come home to roost. The USCG doesn’t give one shit about it.[/QUOTE]
If the DPO or marine manager for Vantage is not a USA citizen then they would naturally have no problem filling positions with non USA citizens.
Like many other drilling companies I doubt Vantage is a USA incorporated company anyway. Probably Bermuda or Cayman Islands. Transocean was famously Swiss for awhile but perhaps they moved to the City of London which is not to be confused with the UK or England. The only people that could force this issue is the USCG who winks, nods and says “we’re on it.” Try complaining to your senator and see how much they care or do about the situation. You’ll get a nice letter back saying they will look into to or they support the US merchant mariner or some BS but no investigation will be launched or hearing held. They have been bribed…er got campaign contributions. The GOM merchant mariner has no lobby and the OMSA is not going to push too much lest they bite the hand that feeds them. Unions which have a bit of a lobby though probably not enough to make a difference are not allowed in the GOM therefore GOM mariners’ concerns are of little consequence.
Tengeneer, not to be wiseass, but have you or anyone written to USCG,congressmen or OMSA? This topic got me thinking when the hullabaloo about the Finnish Fennica was taking place. I want to find out why they are allowed here. I would at least like to get a letter or something, at least I can research more. When all we hear is jobs,jobs jobs. Anyway, give me something to do to start finding out.
[QUOTE=Doodlebug;167609]Tengeneer, not to be wiseass, but have you or anyone written to USCG,congressmen or OMSA? This topic got me thinking when the hullabaloo about the Finnish Fennica was taking place. I want to find out why they are allowed here. I would at least like to get a letter or something, at least I can research more. When all we hear is jobs,jobs jobs. Anyway, give me something to do to start finding out.[/QUOTE]
Yes, I did a few times and they were concerned, so they said. Of course I did not expect them to say they didn’t care as that would look bad. Two looked into it and said everything was legal and I never heard anything else. There used to be a an advertisement on the wall at the New Orleans airport for a legal group that specialized in making foreign workers legal offshore in USA waters. Anyway it is just a paper shuffle to show the USCG and ICE you tried to find USA workers but they just aren’t available. Neither ICE or the USCG ever say ,“Oh, really? Show more than some papers from your legal group, and we’d like to do some interviews.” Laid off DPOs everywhere but none available? Indian workers taking over IT jobs by the 1,000’s in the USA because no IT workers available? USA workers were required to train their Indian replacements at times like happened at Disney World. It is not the illegal foreign workers taking over menial USA jobs but the legal ones taking the best paying jobs with full complicity of USA corporations and the USA government that I find unsettling. The people behind this job theft own the government so I do not expect anything to change.
[QUOTE=Doodlebug;167609]Tengeneer, not to be wiseass, but have you or anyone written to USCG,congressmen or OMSA? This topic got me thinking when the hullabaloo about the Finnish Fennica was taking place. I want to find out why they are allowed here. I would at least like to get a letter or something, at least I can research more. When all we hear is jobs,jobs jobs. Anyway, give me something to do to start finding out.[/QUOTE]
It’s hard for joe nobody to get heard. However even a small advocacy group multiples your voice. If even four people can agree on an issue and take action that is more then four times more powerful than four like-minded individuals writing letters or whatever on their own. With a group there is a presumption of some expertise in the matter.
I’m no expert but I’d start with one or two like-minded individuals with a facebook page or the like. Nothing to lose really by trying.
[QUOTE=Kennebec Captain;167614]It’s hard for joe nobody to get heard. However even a small advocacy group multiples your voice. If even four people can agree on an issue and take action that is more then four times more powerful four like-minded individuals writing letters or whatever on their own. With a group there is a presumption of some expertise in the matter.
I’m no expert but I’d start with one or two like-minded individuals with a facebook page or the like. Nothing to lose really by trying.[/QUOTE]
I’ve said it before and I’ll say it again…we need John Konrad to head up a real genuine “American Professional Mariners Association” as opposed to the PHARCE started by that PHUCKING PHONEY Jack Hearns!
[QUOTE=c.captain;167615]I’ve said it before and I’ll say it again…we need John Konrad to head up a real genuine “American Professional Mariners Association” as opposed to the PHARCE started by that PHUCKING PHONEY Jack Hearns!
Who is with me on this?[/QUOTE]
The internet and social media make it easier for small, specific, single issue groups to form, change, dissolve, re-form etc.