In the Christmas comedy “Elf”, Buddy realizes that he is not cut out for making toys and expresses his shame by proclaiming, “Face it, I am cotton-headed ninny muggins!” Upon hearing, the other elves gasp at his harsh pejorative. Subsequently, Buddy is relegated to toy testing; getting him out of the way and thus improving assembly-line productivity. It is his time as a toy tester that we believe parallels today’s environment for the global and regional rig counts.
So, Buddy is testing jack-in-the-box toys and knows that after repeatedly turning the crank and hearing the song, “Pop Goes the Weasel” what is going to happen. The clown is going to spring out of the box. The comedy of the situation is that even though he knows, he is also checking for defective boxes. So, in looking for defects he is still surprised and frightened when the little clown inside the box is eventually triggered.
Given that energy markets are cyclical, the parallel is a defective logic taking the form that rig counts will behave linearly and continue indefinitely upward. We all know that this is not going to be the case, right? But some doubt creeps in as an upward trend extends long past when we thought it would. And then after complacency sets in; we are suddenly surprised by a drop we should have foreseen.
Rigzone’s RigLogix Database offers extensive multi-year forecasts for both the land and offshore rig counts on a quarterly basis. We recently published our fourth quarter reports which include projections for every major region by rig type. Our reports currently provide forecasts through 2014.
Here’s a peek at what we are seeing. Our forecasts are compelling because of their accuracy. We are proud to report that for the full year 2011 our floater projections were just 2 rigs, or 1 percent, off the actual annual average.
According to Rigzone’s proprietary forecasting model, we anticipate that rig demand growth will continue to flourish for much of 2012– be it drilling on land or offshore. On a global basis, we are projecting average annual land count to increase 3 percent to 2,780 rigs versus 2011 levels. Offshore, we are anticipating stronger growth of approximately 10 percent, or an average of 589, for all jackups, drillships, and semisubs contracted around the world annually during 2012.
On a sequential global basis, the fourth quarter’s results were up for both forms of drilling. The global land rig count (excluding Canada) gained three percent versus the third quarter to average 2,856 rigs in operation during 4Q 2011. The global offshore rig count also saw its demand increase by three percent to 560 rigs under contract on average during the fourth quarter.
While our 2012 projections are calling for growth during the year, we do see a slowing pattern forming for both land and offshore, which eventually leads to rig declines. Our projections on the timing are included in our forecasts which are available for purchase.
For more information on how to acquire your copy, please contact [email protected]