Feb 27 Transocean Ltd, owner of the world's largest offshore drilling fleet, said it could take up to 18 to 24 months for demand to recover as customers delay drilling programs.
Demand for offshore rigs is tapering as major oil companies trim exploration and production budgets in the face of investor demands for higher returns.
Transocean, whose deepwater fleet is relatively older than that of its competitors, said about 19 of its deepwater and ultra deepwater rigs will be up for contracts in 2014.
In comparison, rival Ensco Plc will have eight rigs available for contract, while Seadrill Ltd will have five in 2014. A lease normally runs for five years or more.
Transocean's customers are delaying drilling programs and increasingly sub-letting rigs, Terry Bonno, senior vice president of marketing, said on a conference call on Thursday, a day after the company reported a near 50 percent drop in profit due to weak rig utilization.
The company's stock fell nearly 4 percent to $41.44, its lowest in more than 18 months, on the New York Stock Exchange.
Transocean is aiming at lowering the age of its fleet, and said on Wednesday that it had placed orders for 2 new build ultra deepwater drillships for $1.24 billion.
However, analysts cast doubt on the timing of the new orders.
"Given current market sentiment the announcement of the company adding new capacity may be poorly received," Wunderlich Securities analyst Todd Scholl wrote in a note.
Transocean is planning to create and take public a unit that will hold three or four of its rigs, while also looking at divesting some of its rigs.
Chief Executive Steven Newman on Thursday identified the company's North Sea mid-water rigs a potential target for separation.
"We continue to pursue a variety of options for divestiture of non-core rigs to improve the overall age and capability profile of our fleet and to fund high return reinvestment."
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