Day rates were strong in January, and several operators say market fundamentals in the Gulf are the best they have seen in a long time.
Hercules Offshore, which owns the largest shallow-water jackup rig drilling fleet in the U.S. Gulf, has even begun its first jackup reactivation and more unstackings may follow. John T. Rynd, president and CEO of the Houston-based company, said in its recent earnings release: “Market fundamentals in the U.S. Gulf of Mexico strengthened throughout 2012, to levels that, in many respects, are the best they have been in the long history of drilling in the region. This momentum continues through to today.”
Since late 2011, Hercules’ marketed jackup utilization rate has averaged over 90 percent.
As we have reported, a big driver on the shelf has been liquids. It accounts for a growing percentage of U.S. Gulf shelf production. According to Hercules, liquids made up about 27 percent of shelf volume from 2000-2006. From 2007 to 2011, it was 33 percent and could now be as high as 40 percent. Almost 80 percent of Hercules’ drilling contracts are related to liquids-rich activity.
Hornbeck Offshore Services also had a strong fourth quarter and said that December was one of the best months ever in terms of customer inquiries and tender activity for upcoming drilling programs. Revenue growth came from strong high-specification OSV day rates in the Gulf of Mexico.
Hornbeck was able to increase day rates for its large DP-2 high-spec OSVs from an average $29,500 in the third quarter to $31,000 in the fourth quarter. Utilization for its high-spec fleet was at 99 percent.
Ed. note: For 2013 day rates, we now have new vessel size break points that better reflect the U.S. Gulf fleet: For supply boats, we increased it from 200′ to 250′; for crewboats the new break point is 170′ as opposed to 125′.