UBS: China Oil & Gas - Oilfield Services: Some Middle East Drilling Activity Temporarily Affected; Strong Floater Orders
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UBS reports that certain oilfield services activity in the Middle East has been disrupted. Masirah Oil delayed offshore Oman drilling from Q1 2026 to May 2026, Arabian Drilling suspended some offshore rigs, and all Qatar offshore rigs were evacuated in early March. COSL's five jack-up platforms in the region remain unaffected, though some oilfield technical services in Iraq have been suspended. Adnoc Drilling currently sees no major impact, as its long-term contract with ADNOC allows for a 90% day rate during standby; however, its oilfield services business (approximately 10% of group net profit) remains the primary risk exposure if regional tensions persist.
Offshore rig day rates rose 2% month-over-month in March to an average of $170,000. Jack-up day rates averaged $99,700, semi-submersibles reached $349,700, and drillships hit $418,000. Global offshore rig utilization averaged 73.1% in March, edging up 0.1 percentage point from the previous month.
Floater orders remain robust. As of late January, contracted floater rig days for 2026 grew 4% compared to the full year of 2025, with South America, the North Sea, and North America accounting for 33%, 17%, and 14%, respectively. For 2027, 8,300 contract days are already booked, representing 62% of 2026 orders, while an additional 12,600 order days for 2027 and beyond are actively seeking contracts.