Forgive me for failing to pick up this thread until now, my fellow Fools. The latest word out of the Singaporean shipyards is simply one of the most important developing stories in the entire energy sector.
The Friday before last, No. 1 rig builder Keppel announced that it's in talks with three different clients about renegotiating contracts on some orders placed earlier this year. Scorpion Offshore and Lewek Shipping probably aren't familiar names, but Seadrill is a Nordic newcomer that has been featured in these pages on several occasions.
You may remember the tie-up rumors with contractor Noble
Unless Saudi Arabia decides to save the day via some heroic output reductions -- and I don't really see the motivation for such a move -- I'm afraid collapsing rig rates are a very strong possibility. Seadrill has cited more than 50 jackups hitting the water by the end of 2009. That is a lot of capacity to absorb, given the implosion of drilling budgets by smaller offshore players around the world.
That leaves us with two general scenarios. Either cancellations begin to pile up, dinging the backlogs of folks like Keppel and National Oilwell Varco
I think that while lower-quality drillers are in for a drubbing, premier operators like Transocean
In Motley Fool CAPS, Fools don't appear to be fretting about National Oilwell's future, given the firm's five-star rating. I'd be interested in hearing more opinions, which you can post along with your own underperform or outperform call right here.