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Offshore drilling market encompasses contracting of offshore rigs for exploration and production of oil and gas on a day rate basis driven by Stable crude oil prices, followed by enhanced project economics and increasing production from existing fields will drive the future demand.

Improving project economics for offshore projects, Increasing deepwater activities in emerging regions such as Asia-Pacific and Africa, New technologies have been increasing drilling efficiency and lowering operating costs.

Oil and Gas companies have projects lined up in their project portfolio. Under the stable and growing crude oil price environment, companies will carry on these projects as per the scheduled plan. This scenario will augur well for the drilling rig industry.

The tendering activity has increased during 2018 and continuing in 2019, there has been an increase in contract tenders for late 2019 and 2020 project commencements, primarily for work in the North Sea and Australia floater markets. Reflective of the uncertainty in crude oil prices, many of these tenders have been limited to single-well jobs, with options for future wells. Despite the increase in customer activity, contract awards remain subject to an extremely competitive bidding process, and the corresponding pressure on operating day rates in recent periods has resulted in low margin contracts, particularly for floaters.

Lower crude oil prices impacts directly offshore and hence floating production system projects directly. Therefore volatility in the prices, will likely to act as restraint to this market.

The global offshore drilling market is segmented based on rig type. By type, market is divided into jack-up rigs, semisubmersibles, and drillships. Furthermore, the market is segmented by geography into North America, Europe, Asia Pacific, South America, and Middle-East & Africa.

Australia remains one of the strongest markets in the Asia-Pacific region for drilling rigs. Currently, Australia has a number of ongoing large-scale LNG projects operating across the nations gas basins.

In 2019, the oil and gas exploration and production industry has witnessed positive momentum with petroleum and gas production both rose by 16% compared to previous years to achieve record numbers, with petroleum hitting 1,010 MMboe and gas reaching 5,082 petajoules. Compared to last year, LNG production also rose by 22% to a record 75 Mmtons.

Recently, the Australian government has released 64 areas as part of its 2019 offshore petroleum acreage release program. Which is is the largest release since 2000 and involves more than 120,000 sq km of acreage to be offered in a single round of bidding.

Therefore the E&P activity is encouraging drilling project awards continue to support day rates solidly in the mid to high range, averaging at USD 200,000 per day range. Moving forward, in high demand scenario day rates are anticipated to reach the USD 300,000