Challenging 2025 Fades as Offshore Rig Outlook Brightens

Main Events of 2025

One of the biggest talking points of 2024 and 2025 was Saudi Aramco’s suspension of 36 jackups from April 2024, but by 3Q 2025 21 units had been re-deployed into other regions of the world. Fast forward to today, the national oil company (NOC) has confirmed it will restart work with eight of the remaining suspended rigs in early 2026. It has also approached the market with two solicitations of interest for nine jackups to begin working later in 2026 meaning a brighter outlook for the Middle East market next year.

Mexico also had its challenges, with the NOC Pemex placing rigs under suspension, while trying to catch up with late payments. Furthermore, Borr Drilling terminated two jackup contracts in Mexico following international sanctions against Lukoil – Russia’s largest privately-owned, publicly-traded company.

Another casualty of these sanctions was Vantage Drilling’s drillship Platinum Explorer, which was due to start a Black Sea campaign for Lukoil in 1Q 2026. The charter was cancelled before mobilisation to the region began.

In the UK North Sea, the Energy Profits Levy (EPL) continued to erode offshore rig demand as the overall tax rate of 78% provided little incentive for investment in new campaigns. No new exploration wells were spudded in UK waters during 2025 (a phenomenon not witnessed since 1964) and considering the UK Autumn Budget announcement to keep the EPL until March 2030, future demand looks set to be driven by decommissioning (plug and abandonment) operations.

Petrobras’ Brazilian rig charter awards for drillships in 2025 has been near non-existent with less than one year of work being awarded in total – a decline of 96% and circa 93% in comparison to 2023 and 2024, respectively – mainly due to open tenders not yet being awarded and potentially rolling into next year. The NOC also recently announced a revised five-year strategy due to a lower oil price forecast with an expected reduced floating rig count for the next few years.

Meanwhile, a major M&A transaction involved ADES International completing its cash merger with Shelf Drilling Ltd, valued at approximately $400 million, in late November. The acquisition boosts ADES’ fleet to 83 offshore units and 40 onshore rigs spread across 19 countries.

As of early December 2025, award activity for offshore rigs is sitting at around 295.9 years, which is a 6% decrease versus the full year figure for 2024. Jackup awards are up 7.3% but semisub awards are down 6.9%, while drillships are down a whopping 44.2% – though this may be remedied somewhat in December if Petrobras awards some highly anticipated drillship contracts. However, Westwood still anticipates awarded days for 2025 will finish in line or slightly higher than last year due to several evergreen contracts in markets such as Mainland China and India, where extensions are typically firmed up at year-end.

Global marketed supply of jackups, drillships and semisubs stands at around 439, 89 and 73 units, which is down by five, seven and two units respectively, when compared to the end of 2024. Due to the noticeable slowdown in demand since peaks in 2022 and 2023, an uptick in rig attrition has been recorded. For 2025 so far, 22 units have been retired from the fleet consisting of eight drillships, eight jackups and six semisubs – the most recorded since 2021.

What’s to Come in 2026?

Traditionally, and as is the case for 2025, when the rig market is experiencing lower utilisation, attrition and cold stacking rises while deliveries from shipyards tend to decline.

Of the 172 idle units tracked by Westwood’s RigLogix, 28 units have future commitments – 14 jackups, six semisubs and eight drillships. Currently, 50 jackups, eight semisubs and six drillships have been stacked for five years or more, making it extremely challenging to re-enter the market, if at all.

The recent acquisition of Shelf Drilling by ADES could lead to further streamlining of the combined fleet, with the retirement of lower specification jackups – without future work in place – likely to be potential candidates. Furthermore, with 74 jackups idle for one year or more, it is possible that we will see some more retirements and sales in this segment during 2026.

Some Utilization Recovery Expected

Westwood records 355 rig years in awarded demand for 2026 starts. A total of 42 unawarded tenders starting in 2026 have a combined duration verging on 67 years across all three main rig types – drillships (~9.2 years), semisubs (~14.6 years) and jackups (~42.8 years) – and this does not yet take into consideration direct negotiations, pre-tenders, potential extensions and exercising of contract options that may also occur.

The outstanding demand for drillships is mainly centred in South America, Africa, India and Southeast Asia, whereas new semisub demand is being driven by Northwest Europe, the Mediterranean, Australia, Canada and South America, with jackups having highest number of requirements in the Middle East, India, Asia Pacific and Northwest Europe.

For the full year of 2025, global marketed committed utilisation is expected to reach 89%. This considers actively marketed rigs with ongoing contracts or those already booked with future commencement dates. If all planned 2026 demand comes to fruition, alongside anticipated attrition and likely further cold stacking of unnecessary supply, forecast global marketed committed utilisation could rise to between 91% and 92%. Committed jackup utilisation is expected to reach 91.8%, semisubs to 92.5% (mainly driven by falling supply and a slight uptick in demand), with drillships marginally higher at 92.6%.

Leading-Edge Dayrates Could Fall Further in First Half Of 2026

Due to market softness during 2025, jackup and drillship dayrates fell below that of 2024 by 20.6% and 8.2%, respectively. Semisubs on the other hand appeared to buck the trend with dayrates increasing by just over 8%, however, this stems from the lack of many benign semisub dayrates being revealed, while those that were divulged tended to be for awards for 6th generation, harsh-environment units in Norway, which command some of the highest dayrates for rigs globally.

Further dayrate decreases are expected due to continued high competition, especially for jackup and semisub campaigns outside of Norway, and for drillships with a 1H 2026 start date, particularly for those units with scheduled whitespace during this period. For campaigns starting later in 2026 and 2027, Westwood anticipates dayrates will begin to stabilise, with modest improvements as demand and utilisation strengthen.

To sum up, although the first half of 2026 may continue to be a highly competitive market for offshore drillers, Westwood expects to see some market recovery next year, with noticeable improvements in demand and utilization emerging in the second half of 2026 into 2027.