LONDON, Aug. 26 (UPI) -- There are signs of stability in offshore exploration and production, but it may be next year before any real indications surface, a London-managed driller said.
Seadrill Ltd., a deep-water driller with offices in London, reported a $260 million decline in net profits for the second quarter and a 24 percent decline in revenue to $868 million year-on-year. The company attributed the loss to the expiration of rig contracts and reduced day rates paid for its drillers.
Offshore drillers have taken a hit in the era of lower crude oil prices, which are about 50 percent below levels common two years ago. Rig company Transocean, one of the largest companies in the field, said it expected few contracts to emerge in 2016 and smaller industry rival Hercules Offshore in June said it was returning to Chapter 11 bankruptcy with a plan to sell off all of its assets.
Seadrill said in a statement accompanying its earnings report that the cuts in spending over the last year or so aren't sustainable for business and a return to work was inevitable.
"Oil prices stabilized in the $40-50 range during the quarter and there is a growing belief that we are at or near the bottom of this downcycle," the company said.
In their quarterly reports, several energy production companies have indicated they may be spending more as prices for oil stabilize in the range indicated by Seadrill. The company, however, said there's a lag between market recovery and industry recovery and the situation for offshore drillers remains highly challenging.
"There are some signs of increases in tendering activity, albeit from an extremely low base and generally for short-term work," the company said. "A better indication of demand in 2017 may emerge from release of annual budgets later in the year."