More MODU attrition key to better rigs and contractor profits

For the offshore drilling industry to remain profitable, the attrition rate of aging mobile offshore drilling units (MODUs) needs to increase. These aging rigs should be removed and possibly replaced with new or upgraded rigs so contractors can deliver more reliable equipment and service to the operators. Unfortunately, only moderate attrition of the worldwide fleet appears likely. An increase in rig day rates is necessary to increase cash flow to levels that can support new rig construction. The long-term challenge for the contract drilling industry is to develop enough cash flow to allow for rig fleet replacement during the late 1990s and early 2000s. The paper discusses rig attrition, the MODU supply, day rates, and consolidation of contractors