Global corporations specializing in offshore drilling are considering warm staking and withdrawing their rigs from the market. In such a way, the businessmen hope to offset production loss due to lower prices for oil. Being warm stacked, the drills keep their basic operations and can be used easily if needed. Experts believe that this fact flag that oil prices will not remain low for long. The next step will be cold stacking – in this case the drills are shut down at all. Over the last 6 months oil prices slumped almost 44%. Thus, the Brent benchmark went down to $66 per barrel causing threats to oil production under many offshore projects.
"Six months ago, no one talked about stacking rigs," said Thomas Tan, chief executive officer at Kim Heng Offshore & Marine Holdings Ltd. "In the last few weeks, things have become scarier and the talk of stacking started. A lot of people are looking at warm stack, as they hope that the market will turn around quickly. Cold stack is on their mind... but they haven't given up hope yet."
Several oil extracting companies have already reported about lower investments, like Malaysian Petroliam Nasional which is going to reduce capital expenses by 15-20% in 2015. Hence, Jason Waldie, an associate director for energy consultant Douglas Westwood thinks that companies opt for wait-and-see approach to improve the market dynamic prior to take any decisions.
