By David Wethe

(Bloomberg) — Leaders of the world’s largest suppliers of offshore drilling rigs and the providers that go along with them see the oil market restoration taking even longer than anticipated final 12 months.

Transocean Ltd. Chief Executive Officer Jeremy Thigpen expects it should wait at the very least one other three years earlier than his firm can start charging increased charges for offshore rigs. Schlumberger Ltd. chief Paal Kibsgaard sees the oil {industry}, caught within the deepest monetary disaster ever, in no rush to get rigs again on-line even after costs get well.

Before rig homeowners can cost extra, they need to first see a lift in exercise after the worst crude market crash in a era. Transocean doesn’t count on a rise in rig leases till late subsequent 12 months or someday in 2018, Thigpen mentioned Monday in an interview on the Scotia Howard Weil Energy Conference in New Orleans. Daily charges, which have fallen by greater than half over the previous two years, aren’t anticipated to climb till 2019 or 2020, he mentioned.

“I think ’16 and ’17 are going to be tough,” mentioned Thigpen, who joined the Vernier, Switzerland-based firm 11 months in the past. “We’re taking the necessary steps to navigate our way through the downturn, but we’re also preparing for that eventual recovery.”

Transocean shares sank as a lot as 5.7 p.c in New York buying and selling and had been 4.7 p.c decrease at $10.04 as of 10:22 a.m. Tuesday.

Fragile State

The fragile monetary state of oil explorers means there might be a noticeable lag from when oil costs climb and when exploration and manufacturing firms make investments once more, Kibsgaard mentioned in a presentation to traders on the convention.

Profitability and money movement are “at unsustainable levels for most oil and gas operators which in turn has created an equally dramatic situation for the service industry,” he mentioned. “Going forward, the industry is likely facing a ‘medium-for-longer’ oil-price scenario, subject to periods of volatility, as the national oil companies within OPEC can still generate significant returns for their owners in such an environment due to the low cost base of their conventional resources.”

Rig contractors have suffered by the double blow of declining buyer demand as a consequence of tumbling oil costs and a glut of vessels that proceed to be constructed to fulfill orders made earlier than the rout.

Transocean leads the {industry} in decreasing its fleet, with 24 rigs scrapped for the reason that downturn started and one other eight to 10 it may retire over the subsequent 12 months to 18 months, Thigpen mentioned. Transocean at present has 61 rigs in its fleet with one other 11 beneath development.

Financial Liquidity

The firm reported $2.3 billion in money on the finish of final 12 months. Thigpen mentioned he has “no real concerns” with Transocean’s monetary liquidity by the tip of 2018, and the corporate has plenty of levers it will possibly pull past that if wanted.

Schlumberger mentioned Monday it expects income within the first quarter to fall to $6.5 billion, a 16 p.c drop from the ultimate three months of final 12 months. That’s a bigger drop than the $7 billion common of 25 analyst estimates compiled by Bloomberg. The Houston- and Paris-based firm mentioned it’s not anticipating a significant restoration in its personal exercise till subsequent 12 months.

Other U.S. oil-industry executives echoed the cautious sentiment:

Anadarko Petroleum Corp.’s CEO Al Walker mentioned in a presentation growing demand will sign that increased costs are more likely to be sustained. Weatherford International Ltd. plans to cut back headcount by one other 6,500 after chopping 14,500 jobs in 2015. CEO Bernard Duroc-Danner mentioned he sees the North American market bottoming within the second quarter of the 12 months. Apache Corp. is unlikely to pursue acquisitions till extra firms within the {industry} have gone by restructuring, CEO John Christmann mentioned in an interview. Continental Resources Inc. will contemplate numerous actions each time oil costs achieve one other $5 per barrel and maintain there, its President Jack Stark mentioned Monday in an interview. Those actions embody paying down its debt, ending its stock of wells that had been drilled however not accomplished, after which lastly placing new drilling rigs on-line, he mentioned.

© 2016 Bloomberg L.P