ROV Operators Set To Earn $9B By 2012 - Report
by Douglas-Westwood Limited
October 10, 2008
Oil & gas industry expenditure on work-class ROV (remotely operated underwater vehicle) operations is likely to total $1.6 billion in 2008 and the market is set to reach $2.4 billion by 2012. This is one of the findings of a new market study, "The World ROV Report 2008-12," published recently by energy analysts Douglas-Westwood.
Announcing the launch of the report, Lucy Miller, lead analyst commented, "Both offshore utilization and ROV dayrates have increased dramatically over the past five years and stand at an all time high. "In the past year, ROV dayrates for Africa, Middle East and the Caspian have increased by 42%, overtaking Norway which was until recently the most expensive region. Also shortages of skilled operators have caused personnel dayrates to grow by 47-50% in those regions.
Deepwater
"The report is based on analyzing underlying demand drivers and ROV operator's dayrates. Although oil prices have fallen of late, this is likely to be a short-lived phenomena as oil companies take a much longer term view. High levels of drilling activity and increased installations of subsea wells, pipelines, control cables and other hardware are to continue apace as shallow water oil reserves deplete worldwide and deepwater increasingly becomes one of the few remaining the places where major oil finds can be made. The recent deepwater discoveries off Brazil announced by Petrobras are evidence of this -- and, in deepwater, ROVs are a key enabling technology for drilling and field development," said Miller. "In addition, increasing numbers of ROVs are required to service the thousands of underwater installations existing worldwide."
More ROVs needed
The analysts conclude that over the next five years a total of 655 new work class ROVs will need to be built to satisfy the dual demands of market growth and attrition of the existing fleet. This compares with 411 over the past five years. "Comparing the two five-year periods, we forecast total work-class ROV Capex will increase from $1 billion in 2003-7 to $2.1 billion in the years 2008-12.
Continued consolidation
This new report is built on DWL's unique knowledge of the offshore ROV business, a sector which has undergone an extensive period of consolidation in which Douglas-Westwood has been heavily involved. The firm was the first to publish independent analysis of the ROV sector. It has also acted as advisors to the major players and investors and has conducted commercial due diligence on many of the companies that have bought and sold since 1990. Most recently these include Perry Slingsby's acquisition by Triton Group, Rovtech's acquisition by Fugro and SMD's acquisition by Inflection Private Equity.
Douglas-Westwood Limited carries out commercial due diligence work for the financial community and business research, market analysis and strategy work for the international energy industry in both the upstream and downstream sectors. Douglas-Westwood has clients in 37 countries and to date over 530 projects have been completed. Clients range from the oil majors and contractors to equipment manufacturers, financial institutions and departments of government in several countries. Over the last year, Douglas-Westwood has provided commercial due diligence advice on 16 M&A deals and IPOs, including a number of assignments with ROV operating companies and manufacturers
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