The offshore drilling industry will remain under severe distress through 2017, predicts Moody’s Investors Service . Most troubling for the industry is overcapacity, as the number of idle rigs climbs despite delivery deferrals and retirements and as newbuild deliveries loom over the market. “Drillers will increasingly contend with diminished backlogs, rig values, fleet sizes, and margins if oil prices do not bounce back to the $70-80/bbl range, which we believe could support an increase in shallow-water as well as deepwater and ultradeepwater drilling,” writes Moody’s in an industry report. The firm expects crude oil prices to remain volatile and to “rise minimally” through 2017. “Even if rig demand stabilizes, persistent excess capacity will likely keep day rates low for several more years.” Average day rates have fallen by more than 35% for new-generation floating rigs from a cyclical peak early in 2014 and by more than 25% for jack […]