Offshore rig values have declined almost 42 percent in 12 months, equating to a loss of around $30 billion.
That’s according to Bassoe Offshore, which noted that the offshore rig market has had “a pretty bad year”. The company outlined that the pandemic and collapsing commodity prices have resulted in dozens of cancelled rig contracts, project delays, increasing numbers of stacked rigs, operators requesting day rate reductions and a wave of rig owners going into bankruptcy proceedings.
Bassoe Offshore highlighted that the energy transition has also taken off much quicker than most had planned, resulting in many energy companies pledging heavy investment in alternative energy sources. The company pointed out that this means less investment left for oil and gas projects as companies begin their move away from fossil fuels, which is affecting future rig demand.
Bassoe Offshore did note, however, that there has been some improvement in market fundamentals lately, with Brent crude oil reaching $50 per barrel and rig tendering and award activity on the rise. Subsequently, the company said it believes that the current improved environment has prevented values from falling further of late.
“In the past, appreciation would have been expected at this stage, but at present there is not enough momentum to drive values upward,” Bassoe Offshore said in a statement posted on its website.
“To rebalance the market there will need to be a more significant rise in rig demand as well as a substantial reduction in supply, and until the market rebalances, competition for contracts will remain high, prolonging pressure on utilization, day rates and earnings,” Bassoe Offshore added.
Bassoe Offshore describes itself as a leading offshore rig brokerage, advisory and project development company. The business is based in Oslo, Norway, and has offices in London, Houston and Aberdeen.
