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‘Cost to rent one drill rig could reach US$600K per day’ – Exxon contractor says citing increasing demand
One of the Noble Drill Ships working for Exxon offshore Guyana
Kaieteur News – Chief Executive Officer (CEO) of American offshore drilling company Noble Corporation, Robert Eifler has said that the day rate for a drill rig could climb to US$600,000 in the coming years, as demand increases.
He made the comments during an interview with Bloomberg last Friday. Eifler said that he is planning for relatively flat demand growth industry-wide for floating drilling rigs next year followed by expansion starting in 2026 that could add about 10 rigs to the roughly 150 working around the world. If it happens, from that point forward, “it’s possible” rates could climb to US$600,000 a day, he said.
“We think day rates will trend upwards,” Eifler said. “We’re signing one- to three-year contracts right now at around US$500,000 a day.” Global deepwater spending by oil producers is forecast to grow to an average of US$79 billion in 2026 and 2027, according to Noble, citing research from Rystad. That would be a 20% hike from the average annual amount between 2023 and 2025. “It would be another few years and a continuously improving market that would actually drive true supply scarcity in our business,” Eifler said. “I don’t think we’re on the brink of that right now.”
Recently, this publication reported that ExxonMobil Guyana Limited (EMGL) extended its contract with Noble Corporation for four of its drill ships to work in the Stabroek Block. The contract EMGL has with Noble is based on the market price. Noble had explained that market-based day rates are reset twice per year (March 1, and September 1) to the projected market rate at that time. As such, if the day rate to rent one drill rig increases to US$600,000, Guyana will have to pay US$2.4 million daily for Noble’s four drill rigs working for Exxon.
The company announced that ExxonMobil has awarded 4.8 additional rig years of backlog under the Commercial Enabling Agreement (CEA) which has been assigned evenly across the four drillships: Noble Tom Madden, Noble Sam Croft, Noble Don Taylor and Noble Bob Douglas, extending each rig’s contract duration from June 2027 to August 2028.
In May 2023, Noble announced that ExxonMobil Guyana had extended their contract for the rental of the four ultra-deep-water drill ships to work in Guyana until the second quarter of 2027.
This publication had previously reported that Exxon is utilising six drillships for its Stabroek Block project – four vessels from A Noble and two from Stena Drilling. Earlier this year, Liam Mallon, ExxonMobil Upstream President disclosed that EMGL is operating six drill rigs in the Stabroek Block daily costing an average of US$420,000 (GYD$84 million) to US$500,000 (GYD$100M) per day for each ship, based on current market-rate. It was during his address at the opening of the 2024 Guyana Energy Conference and Supply Chain Expo when Mallon made the disclosure. “Meanwhile, we talked a lot about the source of the revenue, six drilling rigs and their crews are at work every single day 24/7 throughout the block, drilling and exploring, preparing yellowtail and Uaru for startup tirelessly developing the existing resource base and seeking to find even new discoveries,” Mallon told the conference.
Moreover, a 2023 report by Wood Mackenzie, a global research and consultancy group, had shown that rig utilisation returned to pre-COVID levels, driving rates up. Wood Mackenzie had reported that by the end of 2023 rates were expected to be at US$500,000/day or above for highly-prized, advantaged ultra-deep-water rigs. EMGL is producing a daily average of 645,000 barrels of oil per day (bpd) and has plans to hit a target of 1.2 million bdp by 2027. Since 2015 the company has made over 30 discoveries from its drilling campaign in the Stabroek Block which is estimated to hold 11.6 billion barrels of recoverable oil.
It should be noted that for every day that the drill ships work, Guyana will have to foot the bill. Owing to the 2016 Production Sharing Agreement (PSA), Guyana signed with Exxon – all of the company’s expenses will be recovered. Under the deal, Exxon receives profits after 75 percent is withdrawn to cover operational expenses.
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