Inside Atwood Oceanics’ Outlook: Can Offshore Drilling Make a Comeback in 2018?
In its fiscal 2Q17 conference call, Atwood Oceanics (ATW) gave its outlook on the offshore drilling market. The company pointed out some key positives and gave a timeline for the industry’s recovery.
ATW’s view of the industry should also help us analyze ATW’s outlook as well as the outlooks of offshore drilling (OIH) peers Seadrill (SDRL), Transocean (RIG), Rowan Companies (RDC), Noble (NE), Diamond Offshore (DO), and Ocean Rig (ORIG).
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From the start of the year up to April 2017, the number of inquiries was almost double what it was during the same period last year. Around 40% of these inquiries are for jobs starting in 2017, while 50% of inquiries are for 2018, and 10% are for 2019 and later. ATW also noted that more than half of the inquiries were for floaters.
Due to the recent trend in demand for jack-ups and floaters, Atwood Oceanics feels that the downturn is near its bottom. Since February 2017, only one less floater has been working. This is the lowest quarter-over-quarter decrease in the working floater count since the downturn, which started almost two and half years ago.
Additional outlook takeaways
Below are a few other outlook highlights:
- The market utilization for floaters has slightly increased.
- The jack-up market is far better than the floater market. Since February 2017, the contracted rig count has risen by seven rigs.
- ATW suggests that the recent flurry of jack-up acquisitions in the market shows growing confidence in the sector, and this could lead to consolidation among jack-up players.
Atwood Oceanics expects offshore drilling business conditions to remain challenging for at least the next year. However, the company is more optimistic than ever that the industry will be poised for a comeback starting in 2018.
Continue to the next part of this series for a look at Atwood’s revenue in fiscal 2Q17.