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The cyclical downturn in the offshore drilling industry could see drilling contractors buy up competitiors at favourable prices, according to Fitch Ratings.
The research note said that near-term offshore demand had moderated, and that new builds to be delivered by the end of 2018 will make up a third of the world’s rig fleet.
“This has led to contracting delays, and it will also probably result in shorter-contract terms and lower dayrates over the near-term,” it added.
“These factors may lead drillers to favour buying rather than building as a means to improve asset quality and gain market share.”
Fitch said that it would be high-yield offshore drillers that would prove particularly attractive targets, as some if the newer smaller drillers have higher quality fleets and limited financial flexibility during a downturn.
“Those high-yield drillers with a large share of contracts rolling off during this time are likely to come under pressure,” said the research.
