In its 1Q17 conference call, Rowan Companies (RDC) shared its outlook on the offshore drilling market. The company’s view of the industry could also shed some light on the outlook for offshore peers (OIH) Seadrill (SDRL), Diamond Offshore (DO), Ensco (ESV), Noble (NE), and Atwood Oceanics (ATW).
Below are a few key points in Rowan’s outlook:
- Rowan continues to believe that customer spending will be limited and will be focused on activities requiring lower capital commitments like unconventional land drilling and shallow water projects.
- Capital spending for larger capital-intensive activities like the ultra-deepwater drilling will likely be muted.
- The tendering activity for jack-up fleets has improved. Rowan believes the demand for jack-ups is likely to inch higher as the year progresses.
- At a gradual pace, the number of rigs working has increased from last October.
Rowan also highlighted the following:
- If commodity prices stay supportive, Rowan is optimistic that the jack-up market will end higher this year as compared to the start of the year.
- Deepwater demand has pushed into 2018 and 2019
- Mexico and Brazil are expected to re-emerge as stronger regions.
- The floating market is on its way toward bottoming out.
Rowan’s management also stated: “We continue to be encouraged by the strong tendering activity, but remain mindful of the long road to recovery that lies ahead of our industry.”
In the next part of this series, we’ll take a closer look at the jack-up and deepwater market.