It hurts the drilling industry when oil companies do not want to invest in new drilling projects.

Since the corona crisis and the price war between Saudi Arabia and Russia broke out, drilling companies have seen oil prices plummet and 33 contracts worth USD 1 billion in total annulled.

All rig companies are feeling the effects of the crisis to some extent, assesses Kepler Cheuvreux analyst Magnus Olsvik speaking to Norwegian media Finansavisen.

According to the analyst, the contracts have either been terminated ahead of schedule or have not even begun because the oil companies no longer saw a need to drill.

"We see this happening all around the world, and all oil companies are saving where possible. All rig companies are affected to some extent," Olsvik tells the newspaper, adding that Maersk Drilling and Valaris are some of the players that have been hit the hardest by cancellations in the North Sea.

According to the analyst, more contracts are likely to be canceled, although to a lesser extent than previously.

The canceled rig contracts have already had dire consequences for the rig industry. Recently, Maersk Drilling announced new layoffs and a downward adjustment of its 2020 outlook as a result.

Last week, it was announced that rig company Seadrill and shipowner SFL, which both have John Fredriksen in their ownership circles, have begun negotiations to lower rates of three drilling rigs.

(This article was provided by our sister media, ShippingWatch)

English Edit: Ida Jacobsen

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