OSLO, Feb 16 (Reuters) – Global offshore drilling rig charges will stay at loss-making ranges because the market continues to undergo from overcapacity, Norway’s Fred. Olsen Energy predicted on Tuesday after posting an even bigger than anticipated fourth-quarter deficit.

Oil companies have sharply minimize their investments within the wake of a 70 p.c drop within the value of crude since mid-2014, and solely six of Fred. Olsen’s 10 rigs and drillships presently have work, whereas three are mothballed and one is in search of employment.

The diminished demand has compelled some house owners to just accept loss-making contracts to keep away from having to scrap or idle them.

“I think there is a period now where you will see this types of contracts, just to get through. It’s a waiting game. We have seen it in the market for ultra deep-water rigs and in the mid-water segment,” Chief Executive Officer Ivar Brandvold advised Reuters on the sidelines of Fred. Olsen’s earnings presentation.

The feedback echoed latest experiences from opponents Seadrill and Maersk.

Brandvold stated he didn’t anticipate a rise in market exercise till oil firms had deliberate their budgets for 2018.

“I think you’ll see that budgets for 2018 will change so that there’s a gradual activity increase trough 2017. I think it’s fair to say that, but it will be cautious … I think the industry will make a gradual comeback in 2017 and 2018,” he added.

Fred. Olsen has solely signed one new contract prior to now three years, surviving as an alternative on contracts signed earlier.

“We are not alone on this. Our focus now is to compete for the jobs that exist,” Brandvold stated.

Shares in Fred. Olsen Energy, down 15 p.c for the day at 1157 GMT, have fallen by about 83 p.c over the previous two years, in comparison with a drop of two.5 p.c for the Oslo benchmark index.

The agency swung to an working loss within the fourth quarter attributable to an impairment of $158 million associated to a rig cancellations.

Its earnings earlier than curiosity and tax (EBIT) fell to a lack of $103 million within the fourth quarter, towards expectations for a revenue of $21 million seen in a Reuters ballot of analysts, down from a revenue of $70.5 million on the similar time a 12 months in the past. (Reporting by Henrik Stolen, enhancing by Terje Solsvik)

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