Saudi- Rig rates could fall further: Seadrill

(MENAFN- Arab News) OSLO: Rates for vessels that drill for oil on behalf of energy firms may fall further before bottoming out later this year due to the weak oil price and overcapacity a top executive at Seadrill the world's third-largest offshore driller said.

The market is oversupplied oil companies are cutting capital spending due to the weak oil price and visibility in the market is limited Seadrill Chief Financial Officer Rune Magnus Lundetrae said.

Rates for ultra-deepwater rigs are in a range of $350000 to $425000 per day from a peak of around $700000 per day just over a year ago as energy companies scale back spending plans. Brent crude oil has fallen around 60 percent since June.

'We think the market will hit the bottom this year but it's very hard to say' Lundetrae said.

'We need to see scrapping and cold stacking ... and oil prices above where they currently are' he added referring to operations closing down or mothballing rigs until the market picks up again.

Rigs on order equal more than a third of the global fleet and utilization rates have already fallen below 90 percent from more than 95 percent a year ago analysts have said.

Global oil companies from Total and Shell to Petrobras have all announced spending cuts including exploration budgets as producers focus on existing assets.

Rig operators' shares have been hard hit. Seadrill is down 65 percent over the past year Transocean down 64 percent and Nobel off 42 percent.

At the end of the third quarter Seadrill had 16 rigs on order with 12 units due for delivery this year.