Global Offshore Drilling Fleet Shrinks, Day-Rate Pressure Remains
Esgian analyst doesn’t expect tightening rig supply to drive a recovery until 2027.
The seventh-generation West Auriga drillship is under contract offshore Brazil.
Source: Seadrill
Although the global total drilling rig supply is tightening as contractors sell off modern units for non-drilling purposes, day rates are expected to remain flat or dip in the near term.
Benign and harsh-environment drilling semisubmersible utilization has increased slightly since the beginning of 2025, while benign and harsh-environment jackup utilization has remained fairly steady since January 2025. Drillship utilization, however, has declined in the second half of 2025 as rigs roll off contract, Sofia Forestieri, Esgian senior analyst, said during the firm’s 14 October “Rig Market Valuations: Short-term Pressures, Long-Term Opportunities” webinar.
Forestieri highlighted the following:
Norway is a region where the largest operators are expected to sustain elevated activity levels. Mergers and acquisitions are reshaping the competitive landscape there as operators seek scale.
In the Middle East, uncertainty around Aramco’s level of activity persists, although regional demand outside Saudi Arabia is expected to remain steady.
In the Gulf of Mexico (now officially renamed the Gulf of America), demand has dropped as rigs roll off long-term contracts. Those rigs are shifting to other markets to help balance supply.
South America is a floater hot spot, driven by demand in Brazil and Guyana along with growing activity offshore Suriname.
Demand for jackups offshore West Africa is rising amidst increasing global availability of jackups. Nigeria, particularly, is home to increased push for offshore development.
Against this backdrop, drilling contractors are working to optimize their fleets. Seventh-generation floaters and harsh-environment semisubmersibles are the most valuable assets across the offshore fleet, she said.
“Strategic fleet optimization is a priority for rig owners.”
Sofia Forestieri, Esgian senior analyst
Source: Esgian Rig Market Valuations webinar
During the COVID-19 era (2020 to 2022), around 60 to 80 rigs were sold annually, but that number fell below 40 in 2023 and has remained there since.
Most of the 2025 rig sales to date have been for conversions or recycling of modern rigs, she said. This year alone, Transocean has divested six drillships and two semisubmersibles, while Valaris has divested three semisubmersibles and one jackup. Noble has sold three floaters. Eldorado Drilling sold the Dorado and Draco newbuild seventh generation drillships to TPAO.
Fleet Outlook
The ADES purchase of Shelf Drilling, proposed in August and expected to close by the end of the year, would create the world’s largest jackup fleet.
Currently, the top 5 jackup drilling contractors, based on competitive jackup fleet size, are ADES with 44, ADNOC with 34, COSL with 33, Shelf Drilling with 32, and Valaris with 25. The ADES-Shelf combination would make room for Borr Drilling, with its 24 jackups, to join the top 5.
Among the top 5 floaters, Transocean and Noble tie for first, each with 24 units, but Transocean's fleet is more weighted toward harsh-environment and seventh-generation units than Noble’s. Valaris comes in third with 12 units, followed by Seadrill with 11 and COSL with 10.
Forestieri said she believes Noble and Valaris could divest units to focus their fleets on floaters. The state-owned COSL is an unlikely consolidator, but COSL Europe could be a candidate for a takeover or a spinoff given its Norwegian focus.
Finally, she said, there’s the possibility that ADES or ADNOC could absorb Gulf Drilling International or ARO Drilling if Valaris opts to exit the jackup business.
Softening Day Rates
Forestieri said year-over-year declining average day rates for rigs indicate short-term market softening. The decline was highest, at 12%, for harsh-environment semisubmersibles.
“There is a reduced white space, and we’re seeing a stronger contract visibility but not higher pricing right now in the short term,” she said.
Rates show continued confidence in the Norwegian Continental Shelf, in contrast with the softer global floater market, she said.
The expected trend for rig values in 2025 and most of 2026 is flat to slightly negative followed by demand recovery in early 2027, she said.
“We expect values to remain in higher numbers through 2027 and most of ‘28, with a slow decline anticipated toward the end of the decade,” she said.
