Even before the price of oil crashed, energy pundits had warned that most of the world's "easy" offshore oil and gas had already been exploited. Tomorrow's seabed reserves, they said, would lie in deeper, more hostile and remote regions where breakeven costs would be significantly higher. So, when the Saudis won the day at OPEC's November meeting in Vienna, and U.S. energy imports continued to fall thanks to shale energy, rising domestic production, and lower gasoline consumption, the writing was on the wall for energy firms. Rating agencies downgraded major energy companies and placed others on credit watch. And sharp CAPEX cuts would soon filter through to the offshore sector's service providers. Analysts have now warned that the supply of drill rigs will exceed demand in many producing regions, leading to rig-stacking and reduced demand for offshore vessels of various types. Baker Hughes' worldwide rig count for February was 2,986, down 323 from the 3,309 counted in January, and 750 less than the 3,736 tally in February 2014. Transocean has plans to scrap a total of 18 floaters, including the GSF Aleutian Key and the Sedco 707. It will take a charge of $90 million to $110 million in the first quarter as a result of the scrapping of the GSF Aleutian and Sedco 707.
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