WORK-CLASS ROV OPERATIONS – A $1.46 BILLION MARKET BY 2011

Strong industry growth
Announcing the launch of the report, Rod Westwood, lead analyst commented: “Offshore utilisation and ROV dayrates have increased dramatically over the past five years and stand at an all time high. Between 2002 and 2006 alone, the work-class dayrate increase was around 30%”.
We estimate that, in 2006, some $827 million was spent on the operation of work-class ROV units worldwide – an increase of some 86% on the 2002 value. We forecast that this will increase by a further 76% to a 2011 value of $1,458 million – a more than a tripling of the market over the ten year period.
Regionally, we expect North America and Western Europe to account for the largest proportion of ROV activity – some 50% of the total units we expect to operate in 2007 are associated with these regions.

More ROVs needed
The report is based on analysing demand drivers: “The work-class ROV industry has seen strong growth driven by the high and sustained oil prices of recent years – and we expect this to continue. A result has been high levels of drilling activity and increased installations of subsea wells, pipelines, control cables and other hardware. In addition, increasing underwater resources are required to service the growing numbers of underwater installations. Moreover, this is increasingly happening in great water depths beyond the economic reach of manned intervention. This all manifests itself in the build of new drilling rigs and offshore construction vessels all of which use ROVs in subsea operations” said Westwood.
The report concludes that by the end of the period, over 120 new work class ROVs will needed to be built per annum to satisfy the dual demands of market growth and attrition of the existing fleet. “Based on an average cost-per-unit, we forecast work-class ROV Capex will increase from its 2006 level of $186 million to $247 million by 2011 – an increase of 33% over the period. Cumulative expenditure is expected to be a little over one billion dollars over the forecast period.”

Continued consolidation
This new report is built on DWL’s unique knowledge of the offshore ROV industry. Westwood commented: “The ROV industry has undergone an extensive period of consolidation in which Douglas-Westwood has been heavily involved. In 2006, we have conducted a number of studies for major operators and manufacturers of ROV systems and associated components including the commercial due diligence behind Fugro’s acquisition of Aberdeen-based operator Rovtech and Triton Systems’ acquisition of ROV manufacturer Perry Slingsby”.

Information for editors

“The World ROV Report 2007-2011” is the latest in an acclaimed series of business studies used by organisations in 37 countries worldwide. These include the oil majors, investment banks, offshore contractors, agencies and departments of governments.

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 460 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.