ZUG, Switzerland, March 18 (UPI) -- Rig company Transocean in a letter to shareholders said it was working to maintain its sector position in what's expected to be a challenging market in 2016.
The company said results from 2015 were better than it expected, but moving through the weakened oil market landscape presents significant challenges for the year ahead.
"Oil prices have fallen to levels not seen in more than a decade, driven primarily by global concerns around supply and demand imbalances," a letter signed by Board Chairman Pete Miller and CEO Jeremy Thigpen read. "As a result, our customers continue to significantly curtail both their exploration and development activities, resulting in a limited number of near-term offshore drilling prospects."
The company in February had two rig contracts canceled early. Since 2015, it had a total of 11 contracts pulled prematurely as energy companies spend less on exploration and production during the market downturn.
In a recent filing with the Securities and Exchange Commission, the company said it expected "very few" new drilling contracts for 2016.
The letter to shareholders touted a strong portfolio of drilling rigs, with two new ultra-deepwater rigs added to its asset base. Both rigs are under a 10-year contract for Shell. A third, tapped for Chevron, is slated for later this year.
Moving forward, however, the company said it would routinely monitor the profitability of its existing fleet.
"For those assets that do not support our objective of operating the most competitive assets in the industry, we will remove them from the fleet, and recycle them in accordance with existing regulations and Transocean's best practices," the letter read.
The company earlier this month deferred the build of five new rigs until the first quarter of 2020 following a mutual agreement with rig builder Keppel Offshore & Marine, which secured a $1.1 billion contract from Transocean in 2013.
The rigs were originally scheduled for delivery starting progressively from the first quarter of this year.