Earnings Call transcript: Also Benchmark Co. issued a "Buy" target $12
"Contract with Petrobras was particularly important as it facilitated the acquisition of the outstanding interest in our joint venture Liquila Ventures Limited through which we assumed full ownership of the Deepwater Aquila. Transocean now owns and with the commencement of the Achilles, contract will operate eight of the 12 globally competitive 1400 short ton hook load dual activity, ultra-deepwater drillships in the world. The acquisition of the Achilles is consistent with our strategy of continuously hydrating our fleet. A strategy which has proven very effective, particularly over the last 18 to 24 months as we have secured market leading day rates with these high-specification assets.
As an example, since the fourth quarter of 2022, our ultra-deepwater fleet average day rate has increased by approximately 33% to $416,000 per day. By the third quarter of 2024. Based upon current firm backlog, we expect this average rate to increase to $437,000 per day. Based upon the status of discussions with customers, we expect that the Transocean bearings will be contracted for new work starting in mid to late 2024 until initially late 2026 and the Deepwater Skyros will be similarly committed until early to mid 2025.
Details of these prospects will be forthcoming assuming execution of fully binding customer commitments. Not only did we have significant backlog over the past several quarters, but we also substantially lengthened contracting term during this period. In April of 2022, 12 of our rigs were contracted for durations greater than 12 months. Six were contracted for greater than 24 months and only five were contracted for more than 36 months.
By comparison, today, 17 of our rigs are contracted for durations greater than 12 months, a 42% increase, 15 are contracted for greater than 24 months, a 150% increase, and 13 are contracted for more than 36 months, a 160% increase of our 2023 contracted backlog. Just over 80% now consists of programs of more than one year in duration. Another clear indication that our customers believe in the longevity of this upcycle and in the capability of Transocean. The significant increase in contract commitments is reflected in the size of our industry leading backlog from the beginning of 2022 to the present, we have added approximately $6.8 billion in backlog.
When building our backlog, maximizing EBITDA and associated margins remains our goal and these data points clearly demonstrate the effectiveness of our long-standing asset strategy and portfolio management approach to placing our assets on contracts of appropriate and meaningful value. We take decisions that make the most economic sense for the company and our shareholders. It means that at times we may seek the highest day rate possible for a specific asset or job, a consequence of which may be that we accept short periods of idle time on individual assets. In other instances, we may determine that maintaining high utilization has the optimal long term financial impact, meaning that we fix an asset at prevailing or otherwise acceptable market rates for a longer duration.
Securing high-quality backlog, meaningful EBITDA generation and longer-term visibility to future cash flows as reflected in their budget processes. Our customers continue to be disciplined in their allocation of capital. The result of this behavior is exhibited in the lumpiness of the timing of contract awards. We have observed over the last couple of years.
We expect this trend to continue. Our sizable backlog in portfolio approach to fixing our assets minimizes our exposure to this natural ebb and flow of customer activity while best ensuring we achieve the best margin possible. Notwithstanding the timing of announced contracting activity, our customers are securing rigs for longer and longer duration and for programs expected to commence well into the future. This is evidenced by the increase in average contract award lead times, which have increased significantly since 2021.
Drillship contracting lead times have increased by approximately 53% to 319 days and semi-submersible contracting lead times have increased approximately 38% to 284 days. The number of global floater opportunities continues to expand reflecting very strong demand and further encouraging our view of the longer-term sustainability of this cycle. Indeed, overall demand remains on the rise with 84 years of activity expected to be awarded for 77 discrete programs starting in 18 months. Looking closer at each region, the U.S.
Gulf of Mexico continues to be defined by direct negotiations with our customers with operators engaging contractors of choice for specific opportunities. We see a steady stream of demand for short-term programs with independent operators amid a solid market with a limited supply of high-specification and ultra-deepwater assets. Notably, we are engaged in discussions for follow on work for the Deepwater Atlas upon completion of its current contract and are already having conversations with numerous customers regarding additional 20 programs, many of which are not expected to start for up to three years. Once again, demonstrating our customers belief in a prolonged upcycle.
The Invictus is currently competing for multiple local campaigns, including one which we believe will require a high hook load, seventh-generation Drillship, the available supply of which is very limited. We are also actively marketing the inspiration in various jurisdictions around the world. As you well know, Brazil continues to be a source of strong demand and based upon open tenders, we expect the active rig count to continue to decline over the next 12 months from the 29 rigs operating today. Over the past year, there have been 27 awards made in Brazil, 18 rigs already in country, and nine that brought new rigs into the country.
Between the open tenders including [Inaudible], [Inaudible], and BM-C-33, They're expected to be another eight rig awards which should require two incremental rigs from outside of Brazil. This brings the addition of non-Brazilian rigs to 11 since the cycle began. Furthermore, it's widely expected that more tenders in 2024 will keep all of the incumbent rigs busy, and pending exploration success could demand a further call on the global market to add yet more rigs to Brazil. Clearly, Brazil is set to remain a pivotal long-term consumer of ultra-deepwater rigs with active rig count expected to reach at least 36 in, 2024, 2025.
Just by fulfilling today's known tenders across the Atlantic, we see an excess of 20 opportunities scattered throughout Africa and the Mediterranean. Commencing in the next 18 months. For the first time in nearly a decade, Nigeria following its national election is showing significant signs of revival. We expect between two and four long-term programs to be tendered over the next six months including three from international oil companies in Angola, Chevron, Exxon, and other large operators have a mixture of short and multi-year opportunities currently expected to commence in 2024.
Additionally, Namibia may require more rigs as TotalEnergies has confirmed future development. While Chevron Shell have programs expected to be awarded in 2024, The Namibian Ministry of Mines and Energy recently confirmed that projects requiring as many as five rigs are set to commence in 2024. And finally, in Mozambique, we expect tenders for both TotalEnergies [Inaudible]in the coming months. In Australia, regulatory requirements continue to drive demand for plug-in abandonment work.
Additionally, several operators have indicated interest in securing rigs for additional multi-year programs. At this point, we anticipate formal tenders will be released in 2024 and expect our two rigs currently active in the region to be competitive for these tenders following their existing programs. As such, we expect both the Transocean Endurance and Transmission to remain in country for the foreseeable future. There have also been promising developments elsewhere in the Eastern Hemisphere.
We anticipate that will soon require a rig for follow on development for its recent discovery in the Thai basin. In Indonesia, I also has an open tender for approximately 18 months of work in multiple countries in the region and in Malaysia. We expect PTTEP and Petronas will come to market in the near future for an ultra-deepwater drillship with a commencement in 2024. Finally, we expect the high-specification harsh environment market to remain tight as active supply in Norway is now fully utilized in large part due to the departure of numerous rigs to other markets.
As witnessed recently in a couple of public announcements, many incremental programs will require operators in Norway to mobilize rigs from other regions. And since many, if not all, of the recently departed rigs, will likely continue their active utilization outside of the Norwegian market. We expect this region to remain tight for the foreseeable future. In addition to the fact that our customers are fixing contracts with start date two years in the future, the broader fundamentals also support our views of a sustained industry recovery beyond the 18-month time horizon.
Rystad recently reported that oil inventories in developed countries are approximately 115 million barrels below their five-year average, while the International Energy Agency reported global crude stocks have also fallen to their lowest level since 2017. Meanwhile, the IEA forecasts increasing oil demand through 2028, while OPEC projects a steady increase through at least 2045. These predictions are supported by population and GDP growth projections, particularly for developing nations where renewable infrastructure is in its infancy. We continue to believe that much of new hydrocarbon development will come from deep water basins as these have consistently shown to yield superior investment returns and produce some of the lowest carbon intensity barrels available today.
Reliable third-party analysis suggests upstream offshore capex will increase materially over the next several years, crossing $200 billion next year and reaching 234 billion by the end of 2027. In summary, our outlook for a prolonged offshore deepwater drilling recovery remains firm and we will continue to manage our rig portfolio to maximize value. As always, we will continue to place paramount importance on the safe and flawless execution of our operations to minimize the conversion to maximize the conversion. In this regard, our performance is truly a team effort and I extend a sincere thank you to the entire transition team for their commitment every day to provide safe, reliable, and efficient operations."
