53 / 84
53
1
2
3
4
5
6
7
8
9
10
11
Furthermore, the global oversupply of assets is reflected in recent rig sales at significant discounts to build cost,
including Ocean Rig’s purchase of the UDW Drillship Cerrado for $65 million compared with an estimated outlay
for the rig originally in the region of $300 million.
Ultimately, as rigs are stacked and the active worldwide rig count declines, it will make it even harder for the UK to
secure rigs in the future in comparison to other basins that may be able to commit to longer contracts.
Figure 38: Monthly Global Rig Count
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Rig Count
Source: Baker Hughes
Unsurprisingly, some companies in the sector have ceased operations, mostly in the asset heavy drilling side of
the wells market, although business failures have been limited in the UK. The bankruptcies of Hercules Offshore,
Vantage Drilling and C&J Energy Services represent some of the more notable international cases.
The performance of companies manufacturing products within this segment differs significantly depending on
their geographical focus. Organisations heavily exposed to the UK or other markets, such as onshore US, where
drilling activity has been particularly affected, have typically been hit harder than those well placed in more robust
markets such as the Middle East.
However, there may be cause for cautious optimism. The world’s two largest providers of oilfield drilling services
are suggesting that the North American market may have reached its lowest point in the second quarter of 2016
and is now poised for a return to modest growth
28
.
28
See
http://bloom.bg/2cFoSgp