Source: RADAR | Day Rate Report | May 11, 2017
When will the market see a resumption of the top-tier rig newbuild programs that flooded the market in 2012–2014—what price point on day rates would trigger same? Platts RigData RADAR notes that day rates have indeed rebounded nicely, and especially for AC rigs.
Its sister publication, the Day Rate Report, noted the average day rate for 1500 hp rigs led the way up for all rig classes in Q1 of this year with a cumulative net day rate gain of +7% to $16,718. The average day rate for a 1,500 hp rig in 2014 was $22,564, and the top rate at peak in October 2014 was $26,000. The larger issue is that too many top tier rigs are still sidelined.
Even with recovery, the active rig count is less than half the average of 2010–2014. There were a little over 1,000 AC rigs of all sizes in the total fleet a year ago. In that year-ago snapshot, about 400 AC Class D rigs of recent vintage were cold-stacked; in the latest snapshot, that group has dwindled to 144. The ratio of all working rigs to stacked rigs has fallen from 5:1, but it remains as high as 2:1. Platts RigData estimates that the overall rig count, still dominated by Class D rigs, will need to reach about 1,200 before demand—and day rates—warrant another robust newbuild program.
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