Three essays on the cycles of the offshore oil and gas drilling industry 2003 to 2024 – comparative studies of boom and bust in the maritime and extractive industries

Thesis Defence
Three essays on the cycles of the offshore oil and gas drilling industry 2003 to 2024 – comparative studies of boom and bust in the maritime and extractive industries

George Horsington

Keywords: Offshore Drilling Rigs, Offshore Oil and Gas, Corporate Strategy, Shipping Cycles, Vessel Scrapping

March 20, 2026
14:00 CET
ESCP Paris Montparnasse campus, Auditorium 1026

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Abstract

This thesis asks how corporate strategies in offshore drilling companies both influenced and were shaped by market cycles of boom, bust, and recovery between 2003-24. These three papers offer both theoretical and practical contributions into how firms operate over the capital asset market cycle. They complete a longitudinal comparative study of corporate strategy in the offshore drilling industry from 2003-24. This research is company-focused, rather than asset-focused: it takes the company as the unit of analysis, since companies are the entities ordering or scrapping rigs.

The offshore drilling industry is capital‐intensive, and investment is highly pro-cyclical. This means that firms have a proclivity to over-invest when the market is strong, even though the cost of investment can be substantially higher then. During the oil price booms from 2003-08 and again from 2010-14, drilling rig owners ordered a record volume of new rigs. This coincided with the charter rates of these units reaching historic highs. The long build-time for rigs meant that their owners could not immediately benefit economically from their orders. This is the topic of Paper One.

Unfortunately, a significant downturn in demand followed from mid-2014 onwards, as the oil price collapsed. This resulted in a large oversupply of rigs of all categories and in every geographic region. Consequently, rig owners faced a sharp drop in utilisation, charter rates and profitability from 2015-22. Due to the specialised nature of offshore rigs, the high barriers to entry, and the long length of the market cycle, industry downturns typically see asset prices heavily depressed. Paper Two examines how scrapping and capacity reduction worked at firm level in the industry downturn, whilst Paper Three considers the impact of bankruptcy on rig owners.

This research assesses how firms manage uncertainty, and how industry players attempted to maximise profit both in up- and down-cycles. Together the three papers analyse how corporate strategy impacted on company performance over twenty years, including how widespread financial distress and bankruptcy affected both the industry and specific firms, whether going into Chapter 11 or not. The papers provide evidence of strategic herding in a boom period, of wider stakeholder involvement in scrapping decisions, and of market consequences of corporate bankruptcy.

Jury