Offshore: Capacity-Constrained Sector Finally Run by Its Owners
No new drillships ordered in a decade, consolidation toward three players, and management alignment for the first time in 25 years.
It was a pleasure to welcome Manpreet Singh of Sugatu Capital to The Zurich Project 2026, and we are grateful to him for sharing his wisdom and insights so openly with the group. Zurich Project proceedings are kept confidential by default. We are able to share this transcript only with Manpreet’s approval, for which we thank him.
Manpreet is a Portfolio Manager at Sugatu Capital, a London-based manager that runs a roughly $250 million fund anchored by a single family office. He brings more than fifteen years across global equity and credit markets, including distressed and high-yield credit at Nomura, and holds degrees from IIT Bombay and IIM Ahmedabad. His approach is to buy good businesses at low valuations in ignored, under-covered corners of the market, hold them for three to five years, and treat volatility as a source of alpha rather than a risk to be avoided.
He applied that lens to oil and gas services, and specifically to offshore drilling. The premise: global energy demand keeps compounding, fossil fuels still supply roughly 80% of it, and the most populous nations are only starting to consume. He also flagged a striking capital mismatch, noting that the world spent roughly $3.8 trillion on renewables over the past decade, yet the fossil fuel share of the energy mix moved only from 82% to 81%. Rather than forecast the oil price, which he regards as unknowable, Manpreet prefers to bet on oil volume, which is far more predictable. With conventional onshore output in structural decline and shale plateauing, he argues deepwater has to grow, and you cannot produce deepwater oil without the rigs that drill it.
That leads to the heart of the thesis: deepwater drillers. The last cycle gutted the sector. The global fleet fell from 300-350 vessels to about 200, roughly half of which are effectively dead. No new drillships have been ordered in a decade; at current day rates, newbuilds that cost $600 million to $1.2 billion and take five years make no economic sense. The survivors emerged from bankruptcy with clean balance sheets, consolidation would leave the top three players with about 80% of supply, and for the first time in 25 years, management or the board is the largest shareholder in each of the leaders. The stocks still trade at a deep discount to replacement value while paying dividends.
Manpreet was candid about the cost of admission. These are hypervolatile names and not for the fearful. He also worked through adjacent ideas across shallow-water drilling, seismic, floating LNG, and FPSOs.
The full transcript carries the argument in his own words: the supporting numbers, the company-by-company detail across the names he owns, and a candid Q&A on what he tracks and what could break the thesis. It rewards a careful read.