Deepwater drilling activity in the US GOM is a topic I tend to cover frequently and, more often than not, it is the total number of active rigs that guides my industry position. The count is very much still a focus and currently remains steady with 14 active deepwater rigs in the GOM. However, another interesting trend is emerging and could point to an increase in offshore drilling activity in the near future.
Among those 14 active rigs, a few are on long-term contracts but nearly half are working on short-term contracts of 60 to 120 days. Recent contracting activity indicates that new contract terms are being extended into longer term commitments. As a result, the backlog of contracted days has grown just as much in the first half of 2021 than it did during all of 2020. Additionally, the increased backlog has also occurred all while rig day rates are trending up. Oil companies are increasingly looking to the US GOM as a reliable market to commit capital dollars as oil prices stabilize solidly over the mid-$60/bbl range. It is also likely that they’ll begin to seek additional rigs from other regions as the available market in the US GOM grows increasingly tighter.
The great news for our industry is that even a modest increase in active rigs will result in a tightening market for deepwater offshore vessels. With over 10 years of excellence, we’ve positioned Jackson Offshore to be one of the best (if not the best) positioned companies to take advantage improving markets. Stay tuned for more updates as the US GOM market grows and what that could mean in the short and long terms.