5 reasons why drillships is top choice over semi-subs

Drillers seem to prefer drillships over semi-subs as evident from recent order activities.

Nomura investigated the seeming preference drillers have shown for drillships over semi-subs as evident from the vigorous order activity for drillships over semis.

Steep cost decline stimulating drillship orders

Drillship cost down from the peak of 2007 while semi-sub costs are up Given the slump in shipbuilding and excess capacity at most yards, the cost for drillships has witnessed a deterioration. For drillships ordered in 2012, the cost averaged USD 642mn, down 12% from the peaks of USD731mn in 2007. In contrast, semi-submersible build cost for units ordered in 2012 averaged USD726mn (including higher priced order for five semi-subs by Sete Brasil to Keppel), up 25% over USD580mn in 2007. Even excluding the higher priced semi-sub order from Sete Brasil, the cost is up 8.5% over 2007 levels.

2011 drillship orders largely speculative

The surge in semi-sub orders in 1H12 vs. 2011 Though new drillship orders far exceeded semi-subs ordered in 2011, 2012 YTD has been comparably better for semi-subs with 11 new orders (including Keppel’s five rig
order from Sete Brasil) against 13 drillship orders. The drillship to semi-subs ordered ratio for 2012 ytd stands at 1.2x, closer to our estimated mean of 1.3x.

Lower cost, rising dayrates = better economics for drillships

Besides lower costs, we believe that the surge in drillship new orders in 2011 was also driven by improving overall economics. According to data from ODS-Petrodata, drillship dayrates exceeded semi-sub dayrates by an average of 13.7% in 2009-11. Coupled with falling vessel prices, this translates to improving economics for drillship operators.

Robust demand for new advanced semi-subs

The utilisation for new advanced semi-subs built in 2006 or later has been close to 100% since Jan-11, thus further boosting our confidence that the semi-sub still remains the preferred platform when it comes to stability and harsh weather operations. Overall, semi-sub fleet utilisation, too, remains high at 88% for July 2012, while dayrates have
witnessed a sequential improvement since March 2011.

Semi-sub fleet age to drive demand

Replacement demand for semi-subs remains strong Given rising demand for semi-subs and tight demand-supply situation for new rigs, we believe that the replacement of older semi-subs with newbuilds will be a key factor
driving new order flows. Unlike drillships which have a predominantly young fleet, the fleet for semi-subs is significantly older with 120 out of currently operating 218 semi-subs being above 25 years of age.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia