By John Benny
(Reuters) - Battered oil and gas drilling companies are finally seeing piecemeal signs that the prices they charge for offshore rigs are bottoming out with Brent crude
At the depths of a global slide that took oil below $27 a barrel in early 2016, daily rates for leasing the most sophisticated floating drilling rigs had fallen to just $180,000 from $500,000 a day, as producer returns from North Sea, Latin America and Canadian drilling evaporated.
Drillers have been predicting an upturn for more than a year only to disappoint but debt ratings firm Moody's Investors Services said last month that it believed 2018 could mark the low point for industry earnings.
In addition to higher crude prices, analysts and industry players say a wave of consolidation is expected to help remove excess capacity from the market.
Transocean last year acquired rival Songa Offshore SE [SONG.UL] and recently agreed to buy deep water expert Ocean Rig UDW
London-based Ensco Plc
Tie-ups with state run giants like Aramco
"A significant number of units need to be re-activated to meet the growing demand and also an upwards pressure on utilization so ... we will see a substantial uptick in rig rates," he added.
North American oil producers are facing pipeline constraints in their onshore operations, particularly at the United States' largest oil field in the Permian basin of West Texas and New Mexico. The U.S. rig count, which hit 869 on Oct. 12, has largely been flat since June.
Recent auctions of offshore blocks in Brazil, Mexico and large discoveries off Guyana point to future demand for drill ships.
Royal Dutch Shell Plc
"We really see (the) ultra-deepwater drilling market turning up," Transocean CEO Jeremy Thigpen said during a conference call in Oslo last month.
In September, Transocean extended a crucial rig deal with Brazil's state-run oil company Petrobras
"I think the path to recovery is quite clear for us all now ... and, dare I say it, we are seeing the green shoots of a recovery," Diamond Offshore CEO Marc Gerard told a Barclays energy conference last month.
(Reporting by John Benny; editing by Patrick Graham)