Thanks for the detailed thread @nirvana_laha .

I have done some work on the largest offshore drilling operator (Transocean) which operates Ultra Deepwater floaters (UDW) and semi-subs. I agree the supply side of the market in offshore drilling has tightened with almost no new drillships being ordered in last 8 years.

1. Do you have a view on longevity of the cycle for jackups? In UDWs, the last cycle lasted for almost 10 years with utilization being above 90% which peaked in 2014 for reasons you have already mentioned above. It is important to see how long can these elevated earnings last.
   

2. Do you know how the current day-rates stack up vs the last upcycle? In UDWs, day-rates had touched $600k/day for high spec rigs in 2014. However, in the current cycle, we are seeing day-rates just levelling at those levels and no higher for contracts which are being signed for 2026-27. I would have expected day rates to be at-least 20-30% higher if we just adjust for inflation and also keeping in mind that the current fleet of rigs is much higher spec (8th gen now vs 6/7th gen in last cycle). Do you see significant upside in day-rates in jackups from where they currently stand because the cash flows will look very different then.

3. How does the current orderbook in jackups look like and where do day-rates have to be to incentivize new-builds? I’m looking at the current day-rates of average 80k and if I assume 40% EBITDA margin, that would be (80k * 365 *0.4) $13mm of annual EBITDA for a jackup which costs $200mm, i.e. 6.5% annualized returns which are below cost of capital. So my preliminary understanding is for rates to be much higher with a higher visibility on contract duration to incentivize any newbuilds. So either supply will remain constrained or day-rates increase materially which should both be positive for Jindal Drilling.

I also see that the operating margins have gotten materially impacted year on year despite increase in revenue which seems odd given the operating leverage.