Brazil’s utilization rate
According to Rigzone, as of October 23, 2015, there were 55 rigs in Brazil’s offshore basin. Out of these, 46 are currently working, yielding a utilization rate of 83.6%. Brazil’s rig utilization rate fell from 93% a year ago and 85.5% in September. Brazil has one of the highest utilization rates globally. Utilization rate is calculated as the number of active rigs to total rigs.
Brazil’s oil licensing round
According to a Bloomberg report, Brazil was able to sell only 37 of the 266 onshore and offshore blocks it offered on October 7, 2015. There was only one bidder—QGEP Participacoes SA—for offshore areas. This was the worst turnout in more than a decade. International companies operating in Brazil, such as Statoil ASA, Royal Dutch Shell Plc, and Total SA, didn’t submit any bids.
The major upset came when Brazil’s state-run oil major Petrobras didn’t participate in the auction for the first time ever. This shows that although Brazil has a higher utilization rate, this offshore basin is also having a hard time.
Once the existing contracts roll off, drilling companies will find it difficult to find new work in this area. Companies such as Seadrill (SDRL), Ensco (ESV), and Diamond Offshore (DO) have operations in Brazil.
Other offshore basins
Africa has a utilization rate of 56% as of October 23, 2015, which has remained constant from September. This is one of the least affected regions, as its utilization rate of 62% from a year ago has fallen less severely. Seadrill (SDRL), Diamond Offshore (DO) Ensco (ESV), and Rowan Companies (RDC) have operations in Africa.
Utilization rates in the Mediterranean Sea region, where Diamond Offshore has its operations, stands at 44%. This is almost similar to a month ago but has slipped from 65% recorded a year ago.
Overall, falling and low utilization rates give a bleak outlook for the offshore drilling (OIH) industry.