A few years ago, on the drilling coast, the industry seemed to be at the height of a significant recovery. Stocks of large drilling performers reached post-cosid peaks as daily prices for high specifications, drills of the 7th CRESTED 450K generation. A positive cash flow began to accumulate, and EPS forecasts increased, pushing shares for these companies higher. It was as if the industry had turned angle, and the prospect of a long-term investment cycle at offshore was only ahead. It turned out that the radius of the corners is a little more vague than originally foreseen, and the shares of OSD were covered because the investment cycle was delayed.
I talked about the thesis behind the need to replace the reserves that faced big, international oil companies or IOC, which would launch this cycle in Article on oils in July last year. She focused on the dance (nyse: no) the acquisition of diamond offshore (old symbol), but detailed the explanation for Capex returning to the drilling of deep water. You could give it a reading for a deeper treatment of this scenario.
In this article, we will discuss the factors that have pushed the attack of expected capital costs to develop deep water on the right. According to most players in the industry, this move to the right could take us to 2026 or later, before we finally go out in the corner. Anton Dibowitz, Executive Director Valaris Corp, (Nyse: Val), commented their Q-3, 2024 call In their view according to the long-awaited increase in industry activities-
“We maintain our belief in the power and duration of this upcrew and believe that Valaris is in a good position to encourage the long -term creation of values. Although we have seen delayed customer demand, the pipeline of future opportunities in 2026 and beyond remains robust. “
It would probably help to realize that Deepwater projects are working in stages. The submarine infrastructure that usually follows the design of project support projects is an increasingly long -term hardware with sophisticated production specifications and the accompanying consequences of the supply chain. There are only a few donors of this equipment, and this may result in a muffler because books on the order are filled.
One of the big obstacles to the big drill is the first time for the new FPSO main methods of offtake for submarines. AND the storm of new commands He brought to the shipyard that built them for several years. FPSOS usually enters the field when enough wells are completed for effectively launching production. This is the case that the drills used to build wells are timed to achieve cost optimization.
This last point was discussed in the invitation in the third quarter of Valaris Ltd. Anton Dibowitz, Executive Director, commented on the question of analysts-
“This year, we recorded a decline in compared to one year in accordance with contracting, and a significant amount of customer demand delayed in 2026. The primary drivers of these delay are the availability of production equipment, delayed FPS, long-term regulatory authorizations and capital customers. “
The case of aversion in deep water, which begins in the near future, rests not only on the time of launching a development project, but also to return to research. Chart below from a Forecast Wood MackenzieThe leading company for a consulting company is emphasized by companies and countries where capital is likely to be deployed in search of new oil and gas reserves in the coming years.
In his report, Wood Mac noted that some had previously held geological concepts of “thermal cuisine” to convert oil precursors, Kerogen into useful oil and gas, and missing it in the distant coast, deep waters were revised after recent discoveries in Guyana and Western Africa .
We consider it the last point in support of rejecting drilling activities in deep water pools, the lack of replacement of reserves in the last decade by the survivors of Super Major IOC will also appear in that time frame. Rystad noted in a blog post that 2024. The total reciprocal global reserves of 1.5 trillion barrels reduced barrels of 52 billion from 2023.
The drilling on the coast and offshore has been caused in the last decade. In addition to improvements to the teaching activities from slate, which was previously discussed, drills needed to maintain production were reduced by about 30% In the last few years. It is controversial if a significant recovery in the sector is likely to happen in a foreseeable time frame.
Offshore, and in particular, deep waters projects have been delayed for many reasons. Among the reasons, whether the capital cost is required for their networking on the network, and the fear of reserves stranded in the event of a true energy transition that would make them unnecessary. Rystad noticed that In their blog post-
“Our total resources assessments that can be reimbursed by oil have reduced 700 billion barrels since 2019 due to reduced research activities. The survey declined because investors are afraid that new discoveries will remain stranded due to the current electrification of the vehicle and the expected fall on oil and the raw oil prices. “
What we are learning now is that the energy transition was a narrative that was adopted as a fact and is now begins to completely resolve. Oil companies are recommended for an increased survey to replace reduced reserves that are now considered to be absolutely critical for global energy security.
But the issue of time still remains for drills.
Your subtraction
I think we now understand that the muffling points have caused some of the delay in the picap in the deep drilling of water, which was foreseen by 2024/5. Capital restriction in an insecure investment environment also played a role and could continue until 2025. With the trends we see now, and the recent commentary in noble corporations, NYSE: No) a report from the fourth quarter, that the bounce for 2026 can be expanded onwards, and investors should probably take into account the input points in OSD for OSD any jump. Robert Eifler, Executive Director of Noble, commented their Q-4 report about their medium-term prospects for industry-
“The basic drivers for our business are durable in nature, so this is a recent contractual sleep that has pushed things to the right for a year or two, it is very likely that they will only be corrected for a long time. And just to mention it, nothing has changed in our medium -sized and long -term opinion on this demand for our services. “
We hope that the case we have made for a deep water drilling recovery before later than later. In this scenario, we think that the entry points that now represent the test of time will. We especially like this case for Noble Corp, the leading supplier of the 7th generation in the industry. Daily prices for these app
