AWO Prospectus - COSL Drilling Europe AS

Awilco Offshore ASA
As illustrated above the offshore rig market has experienced both booming periods (1995-97) and soft
markets (1998-2000). However, since bottoming out late 2001, demand for jack-ups has increased
steadily and current status is characterized by firm markets in all key regions and segments.
Supply
The current fleet of jack-ups comprises 387 units, including 70 non-competitive units (typically owned
and operated by national oil companies and not actively marketed to others). For the purpose of this
document, the total fleet is referenced if not otherwise noted.
There are currently 28 rigs on order representing 7% of the total fleet. 5 of the new buildings are for
delivery in 2005, while 10 are scheduled for 2006. The current lead time for new buildings is about 26-
30 months, and potential additions of new buildings will not enter the market before 2007. Awilco
Offshore owns three of the new buildings currently in order.
Aging world fleet
The majority of the current operating rigs were constructed in the late 1970’s and early 1980’s, and the
average age of the fleet is 23 years today. Roughly 75% of the current fleet is between 20 and 27 years
old, and only 4% of the current fleet is less than 6 years old. Although the useful lifetime of rigs is
difficult to predict, it is expected that new requirements for drilling deeper and more complex wells will
require replacement of older assets over time. In addition attrition of units due to accidents, conversions
and retirement has been in the range of 2-6 units annually over the last 5 years. The charts below
illustrate the age profile and impact of newbuildings.
No of rigs in world fleet
450
400
350
300
250
200
150
100
50
Cumulative number of rigs in operation today
0
1970 1974 1978 1982 1986 1990 1995 2002
Delivery year
Source: Petrodata / Fearnley Fonds
Number of units
32
12
10
8
6
4
2
0
-2
-4
-6
-8
New building additions
Attrition (actual/5 y
average)
Net supply growth [%]
2004 2005e 2006e 2007e
Current market balance
Total utilization of the worldwide jack-up fleet is around 89 percent today, with most of the individual
drilling markets stable or improving and varying little from that number. Excluding cold stacked rigs
(not actively marketed), the effective utilization is 94%, a level that, in historical context, is very high.
Thus, all worldwide markets are virtually in balance today, with little room for mobilization of units
between regions as no region seems to have available capacity to spare.
Region Demand Total supply Utilisation Cold stacked Eff. utilisation
US GoM 92 114 81% 16 94%
Central America 34 36 94% 0 94%
South America 7 10 70% 2 90%
West Africa 19 19 100% 0 100%
North Sea 30 31 97% 0 97%
Middle East 65 71 92% 1 93%
South East Asia 27 29 91% 1 95%
Other 69 75 91% 3 95%
Sum 342 385 89% 3 94%
Source: Petrodata / Fearnley Fonds
4.5 %
3.5 %
2.5 %
1.5 %
0.5 %
-0.5 %
-1.5 %
-2.5 %
-3.5 %
Fleet growth (%)