Odfjell Drilling does not expect new drilling rig orders in the near future

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Drilling Rig Market Situation

Odfjell Drilling, a major operator of drilling rigs for harsh environments, notes that despite a reduction in the supply of such rigs, the likelihood of new orders for drilling platforms in the near term remains low. The company owns five semi-submersible drilling rigs and manages three more similar units.

In 2024, discussions about the potential construction of new drilling rigs have intensified. This is due to a tightening balance between supply and demand for semi-submersible rigs designed for harsh conditions, as well as the gradual aging of the global fleet.

Prospects for New Rig Construction

During the second quarter report, the industry's readiness to place orders for new drilling rigs was discussed. Currently, there are no contracts or markets that could support the construction of a new rig costing around one billion dollars. To make such a project viable, a long-term contract with a daily rate significantly higher than current levels would be required. Even if a shipyard were willing to take on such a project, the payment terms would differ substantially from those in the past.

In the short and medium term, the construction of new rigs is considered unlikely. Instead, extending the service life of the existing fleet is seen as a more probable scenario than the appearance of new drilling platforms.

Status of the Odfjell Drilling Fleet

The company’s fleet includes two rigs that are over 15 years old, but they can continue to operate safely for many more years. The last decommissioned rig served for 37 years, suggesting that the current rigs could function for at least 35 years, and potentially longer if life extension programs are implemented.

Market Outlook and Fleet Utilization

Demand for the company’s rigs in Norway remains stable. Outside the country, there are opportunities for operations in Namibia, Canada, and the United Kingdom.

All five of Odfjell Drilling’s owned rigs are fully contracted through the end of 2027. Of the managed rigs, Deepsea Yantai is operating in Norway, Deepsea Mira is idle in Namibia, and Hercules is preparing for a new long-term contract with Suncor in Canada, which is set to begin in early 2027.