One year ago today, I was very optimistic about the direction and momentum of the offshore oil and gas industry. The deepwater rig count had increased to 22 and there were fewer than four additional rigs expected to begin drilling before the year was out. Vessel day rates were trending up and by the end of February were eclipsing $20,000 per day. There were plenty of reasons to be optimistic but that was before COVID-19 shut down the world. By mid-March the United States was in lockdown and oil prices had plunged to below zero! Not only was optimism for additional deepwater activity destroyed but current levels of activity fell almost overnight. The deepwater rig count plunged to 13 and even production faculties were shut down for extended periods.
Today, I am happy to report having regained the optimism I shared this time last year. Not only has the price of oil recovered and stabilized but there is positive sentiment that oil demand will continue to recover faster than anticipated. This has resulted in an uptick in the active deepwater rig count bringing the total to 16 rigs. The additional rigs that had been anticipated a year ago are likely to become active, though it may likely be in 2022. All of the current trends in the deepwater oil and gas market are positive and there is plenty of evidence to suggest that increasing optimism is warranted.