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Why Ensco Chooses Newbuild Jackups over Newbuild Floaters

Ensco's 2Q15 Earnings: Key Highlights from a Tough Industry

(Continued from Prior Part)

Newbuild rigs

Due to falling oil prices, demand for offshore drilling (XLE)(OIH) has dropped. The market has an excess supply of rigs compared to rig demand. In its Q2 earnings presentation, Ensco (ESV) provided market updates on newbuilds and contracts. Among the active rigs in the market, only around 84% of floaters and 81% of jackups are contracted.

To add to the already oversupplied rig market, there’s going to be a flood of new vessels. There are around 72 newbuild floaters, out of which only 54% are contracted. Similarly, there are around 117 newbuild jackups and only 7% are contracted. Taking a call of the situation, many offshore drillers are delaying or canceling orders for newbuild rigs. Only ten floaters and 45 jackups are expected to be...