The Rising Tide
May 2019
1
Contact Details
Agenda
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3
Gregory Brown7Echoes from the Past
12The Shape of Things to Come
16Where Could it All Go Wrong
Underlying Drivers
Associate Director - Offshore
+44 (0) 20 7940 7190
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Underlying Drivers
Moving in the right direction
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US Gulf of Mexico OSV Fleet
State of the Nation
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US Gulf of Mexico Drilling Fleet
US Gulf of Mexico OSV FleetUS Gulf of Mexico Drilling Fleet
0
5
10
15
20
25
30
Dri
lls
hip
Ja
ck-u
p
Se
mi-
su
b
# of Rigs
In Service Laid-up
0
2
4
6
8
10
12
14
16
18
AD
ES
Atl
an
tic
Dri
llin
g
Dia
mo
nd
En
sc
o
En
terp
ris
e
Ma
ers
k
No
ble
Pa
cif
ic D
rillin
g
Ro
wa
n
Se
ad
rill
Sp
art
an
Tra
ns
oc
ean
# of Rigs
Semi-sub Jackup Drillship
0
10
20
30
40
50
60
70
80
90
100
Ed
iso
n C
ho
ue
st
Ha
rve
y G
ulf
Ho
rnb
eck
Tid
ew
ate
r
Ad
ria
tic
Ma
rin
e
SE
AC
OR
Cro
sb
y T
ug
s
GIS
Mari
ne
Ott
o C
an
die
s
# of Vessels
PSV AHT(S)
0
50
100
150
200
250
300
AH
T(S
)
PS
V
# of Vessels
In Service Laid-up
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Offshore Contract Awards
5
Offshore awards increased by
around 5% in 2018
Awards to market tracking more
than 30% higher y-o-y after robust
Q1 for subsea and LNG
Gulf of Mexico accounted for around
10% of incremental investment in
2018 – 15% y-t-d
If you’ve made it this far…
Offshore Project Awards
0
5
10
15
20
25
30
35
40
45
50
2014
2015
2016
2017
2018
2019
$ Bn
Middle East Europe Asia Pacific Americas Africa
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Global Benchmarks
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
Employment Rate
PSV AHTS Jack-Up Floater
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Echoes from the past
The 1980s reborn?
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A Throwback to the 80s
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Jack-Up Employment Floater Employment
35%
45%
55%
65%
75%
85%
95%
1 2 3 4 5 6 7 8
Employment Rate
Year
Jack-Up Employment 81-88
Jack-Up Employment 12-19
35%
45%
55%
65%
75%
85%
95%
1 2 3 4 5 6 7 8
Employment Rate
Year
Floater Employment 81-88
Floater Employment 12-19
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A Throwback to the 80s
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1981-1988 2012-2019
0
100
200
300
400
500
600
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
# Active Rigs
Floater Demand
Jack-Up Demand
0
100
200
300
400
500
600
700
800
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
# Active Rigs
Floater Demand
Jack-Up Demand
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After the Goldrush
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After the 1980s boom in drilling newbuilds,
the market entered a twenty year downturn
Rates were more solid…
A steady stream of retirements, and lower oil
volatility propped the market up, but there
was little to excite the market until…
Rig Fleet 1980-2008
0
20
40
60
80
100
120
0
100
200
300
400
500
600
700
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
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88
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89
19
90
19
91
19
92
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93
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94
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95
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96
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97
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98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
# of Rigs
Floater FleetJack-Up FleetDeliveries (RHA)Retirements (RHA)
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After the Goldrush… The Harvest?
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We think it’s different this time round
Scrapping at record levels
Tomorrow’s drilling requires different rigs –
automation, high pressure drilling, winterised
etc
Increasing environmental pressure
But – recovery is bifurcated – Floaters far
more robust relative to Jack-Ups
Rig Fleet 2008-2030E
0
10
20
30
40
50
60
0
100
200
300
400
500
600
700
800
900
1000
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
# of Rigs
Floater FleetJack-Up FleetDeliveries (RHA)Retirements (RHA)
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The Shape of Things to Come
The rising tide will not lift all boats
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How to make offshore competitive
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The downturn has been sufficient in length to enact
real structural change
Technological innovations are changing the way
fields are developed
Next generation equipment is smaller, lighter and
features fewer component pieces
Fixed infrastructure moving towards unmanned
facilities
Floating platforms formed of modular equipment
from product catalogues – replica FPSOs to be
increasingly common
Drilling has a part to play – integrated drilling
contracts increasingly prominent
OSVs – difficult to integrate services on vessel,
but still supply chain integration
An Engineers Influence
Influ
ence
Exp
end
iture
Plan Select Define Engineer Procure Construct Commissioning
Major Influence Decreasing Influence Low Influence
Conceptual and FEED
Detailed
Engineering
Construction
Management
Project
Management
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Implications for the Supply Chain
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0
20
40
60
80
100
120
20
08
20
09
20
10
20
11
20
12
20
13
20
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20
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16
20
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18
20
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20
20
20
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20
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20
23
20
24
Contracted Units Indexed at 2014 = 100
Jack-up
Floater
PSV
AHTS
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Implications for the Supply Chain
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
23
20
24
Employment Rate
Jack-Up Floater PSV AHTS
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Closer to home
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In the Gulf of Mexico – expect more
consolidation
Energy transition – IOCs to focus on
greenfield investment, plenty of room
for independents
Supply chain has a role to play – but
volumes will not match prior cycles
End market evolution – growth of
renewables
Active Units – US & Canada
0
50
100
150
200
250
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
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20
20
20
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20
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20
23
20
24
2014=100
Jack-up Floater PSV AHTS
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Where could it all go wrong?
Earnings, prices and positioning
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Jack-Up Drilling Rig Earnings
Earnings and Prices
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Floating Drilling Rig Earnings
OSV EarningsMSI View
If you’ve made it this far….
Recovery is underway
Slow pace relative to history and unlikely to reach
peaks of last cycle
0
100
200
300
400
500
600
700
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
202
2
202
3
k $/Day
UDW Drillship Dayrate Semi-Sub Dayrate
0
50
100
150
200
250
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
202
2
202
3
k $/Day
Standard Jack-Up Dayrate
High-Spec Jack-Up Dayrate
0
5
10
15
20
25
30
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
202
1
202
2
202
3
k $/Day
12-16 k BHP AHTS 3-4 k dwt PSV
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Drillship Scenarios
Where could it all go wrong?
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MSI Oil Price Scenarios
Jack-Up ScenariosAHTS Scenarios
0
20
40
60
80
100
120
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$/bbl
Oil ($/bbl)Base Case ScenarioHigh Case ScenarioLow Case Scenario
209.9
68.9
0
50
100
150
200
250
300
350
400
450
500
0
20
40
60
80
100
120
140
160
180
200
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20
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20
23
k $/Day$/bblOil Price HCOil Price LCHigh-Spec Jack-Up Dayrate HC (RHA)High-Spec Jack-Up Dayrate LC (RHA)
617.5
187.6
0
100
200
300
400
500
600
700
800
900
1000
0
20
40
60
80
100
120
140
160
180
200
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
k $/Day$/bbl
Oil Price HC
Oil Price LC
Ultra Deepwater Drillship Dayrate HC (RHA)
Ultra Deepwater Drillship Dayrate LC (RHA)
44.6
16.5
0
10
20
30
40
50
60
0
20
40
60
80
100
120
140
160
180
200
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k $/Day$/bbl
Oil Price HCOil Price LCDayrate - 9-11 k BHP AHTS - SE Asia - HC (RHA)Dayrate - 9-11 k BHP AHTS - SE Asia - LC (RHA)
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MSI – FMV Online Service
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• MSI Forecast Marine eValuator (FMV) is the first web-based tool to provide forecast and historical price
data covering virtually all of the deepsea shipping fleet.
• Data includes forecasts of newbuilding, second-hand prices, 1 year timecharter rates and operating costs
for specific vessels.
• MSI FMV draws on MSI’s proven, proprietary models and a consistent cross-sectional view across all
principal shipping sectors. It puts asset values in the context of the near term market to enable reliable
benchmarking with outputs based on annual averages.
Crude Oil Tanker
Product Oil Tanker
Dry Bulk Carrier
Chemical Tanker
LPG Carrier
LNG Carrier
Multi Purpose
Containership
PCC/PCTC
AHTS PSVJack-Up - NEW
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Thank you
The Rising Tide
21
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MSI Offshore Team
James Frew
Director of Consultancy
+44 (207) 940 7194
James has more than ten years experience
of analysing maritime markets, and takes
overall responsibility for MSI’s analysis of
the container shipping and offshore oil and
gas markets. In addition, James takes a
lead role in larger bespoke consultancy and
research projects across shipping sectors.
James holds an M.Sc. in International
Trade, Finance and Development from the
Barcelona Graduate School of Economics, a
Graduate Diploma in Economics from
Birkbeck College, London and an M.A. in
Modern History from the University of
Oxford. He is a member of the Baltic
Exchange.
Gregory Brown
Associate Director - Offshore
+44 (207) 940 7190
Gregory leads the development of MSI’s Oil
and Gas Project Tracker, as well as
delivering market consultancy, analysis and
commercial modelling to MSI’s offshore
client base of contractors, operators and the
financial community.
Gregory received his degree in 2008 from
the University of Surrey’s School of
Management where he read Business
Management. Gregory is also an Authorised
Person with Part 4A permission under
section 31 of the FSMA, 2000 and was
admitted to the Association of Surrey with
Distinction. He is a member of the Society of
Petroleum Engineers.
Dr. Ferenc Pasztor
Senior Offshore Analyst
+44 (207) 940 7196
Ferenc is responsible for analysing the
offshore oil & gas industry and related
vessel markets as well as developing MSI's
offshore support vessel and drilling rig
market forecast models. He is involved in
bespoke research and consultancy projects
and provides valuations for specialised
offshore vessels.
Before taking this role at MSI, Ferenc
worked as a post-doctoral researcher at the
Commission of Atomic and Alternative
Energy (CEA) in France. He has a Ph.D. in
Natural Resources from BOKU, Vienna.
22
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