Diamond Offshore shifting fleet to meet deepwater, ultra-deepwater demands

Michael Acuff, senior vice president, contracts and marketing, Diamond Offshore Drilling, expressed a positive outlook for the offshore market as the company shifts its focus to deepwater and ultra-deepwater markets.

Supported by dayrates hovering around $600,000 and increasing rig demand from frontier areas, the ultra-deepwater market continues to push contractors, such as Diamond Offshore Drilling, to reposition its fleet to capitalize on this healthy market. The deepwater basins of the US Gulf of Mexico (GOM), Brazil and West Africa have traditionally driven offshore rig demand; however, over the past four years, emerging markets, including Mexico, East Africa and Australia, have added to the demand with a wealth of successful exploration activity, Michael Acuff, senior vice president, contracts and marketing, Diamond Offshore Drilling, said at the 2012 IADC Annual General Meeting in Scottsdale, Ariz., on 8 November.

Diamond Offshore, which has divested six jackups over the past eight months, has been moving to focus its fleet on deeper waters. In the last four years, the company has invested approximately $4.2 billion in new rig capacity, which includes four ultra-deepwater drillships expected to enter the market in 2013 and 2014. All four drillships are of the Hyundai P10000 design, capable of drilling in up to 12,000-ft of water and drilling down to 40,000-ft, with dual activity capabilities and dual seven-ram BOPs.

In addition, Mr Acuff noted that attractive shipyard pricing in South Korea and Singapore is driving contractors to bring additional capacity to market, particularly in view of positive dayrate trends and contract terms, which are running from three to 10 years for ultra-deepwater units. In the near term, Mr Acuff believes ultra-deepwater rigs will remain in shortage; by 2014, however, a significant number of rigs are expected to enter the market, which could put it back in more balance.

For the more conventional deepwater market, where dayrates have jumped from approximately $300,000 to $500,000 over the past 12 months, Diamond Offshore also is building two 6,000-ft capable semisubmersibles featuring Victory-class hulls. The Ocean Onyx, scheduled for delivery in Q3 2013, is already contracted to Apache in the GOM, and the Ocean Apex is scheduled for delivery in Q2 2014.

The mid-water market remains attractive, too, particularly in the UK and North Sea, Mr Acuff said. In most of the rest of the world, this market segment is moving at a stable pace, but the UK and North Sea mid-water market is experiencing an increase in demand similar to the ultra-deepwater markets.

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