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The offshore drilling market is seeing longer contract durations, rising dayrates and upstream customers asking to secure rigs years in advance, the CEOs of Valaris (NYSE:VAL) and Diamond Offshore Drilling (NYSE:DO) said in their respective post-earnings calls Tuesday, S&P Global Platts reported.
Valaris (VAL) President and CEO Anton Dibowitz said he sees rising demand and “constrained” supply tightening the market, according to the report.
“Supportive commodity prices and attractive breakevens for most offshore projects provide customers with the confidence to invest in long-cycle offshore projects,” Dibowitz said on the earnings call, as reported by S&P Global.
Valaris (VAL) Chief Commercial Officer Matt Lyne reportedly said his company expects 25-30 near-term contract opportunities for all deepwater floaters with expected duration of greater than one year.
Valaris (VAL) has won new contracts and contract extensions since the start of Q3 with $800M in associated contract backlog, raising its total backlog to ~$3.2B, up 40% Y/Y.
Lead times between contract signing and start dates are increasing, while contract time frames are widening, Diamond Offshore (DO) CEO Bernie Wolford said, according to S&P Global.
“Our average contract durations of 360 days are at their highest point in five years,” Wolford reportedly said on the earnings call.