|
$1M a day for a drilling rig? Deepwater day rates expected to surge in 2006; Katrina kills four drilling rigs in U.S. Gulf Ray Tyson Petroleum News Correspondent
Day rates for fifth-generation, high-specification deepwater drilling rigs in the Gulf of Mexico are expected to surpass $400,000 next year, well above the current average, as exploration and production companies scramble to land rig contracts in an ever-tightening deepwater market supported by sky-high oil and gas prices.
Moreover, the apparent loss of four drilling rigs to Hurricane Katrina, along with six jack-ups expected to leave the Gulf for more lucrative markets abroad, likely will put more upward pressure on day rates in the Gulf, according to industry leaders presenting at the annual Lehman Brothers energy conference. Rigs leaving the Gulf “The Gulf of Mexico is in unprecedented territory right now,” James Swent, chief financial officer for contract driller Ensco International, said Sept. 6. “Oil and gas prices are at an all-time high. Day rates and utilization are at record levels. And at the same time rigs continue to leave the Gulf.”
However, increasing demand for high-specification rigs capable of drilling in waters depths up to 10,000 feet in the Gulf most likely will push rates for that rig classification to above $400,000 a day, Transocean chief executive Robert Long indicated.
“We haven’t contracted (or) announced anything over $400,000 a day,” he emphasized. “And there is no guarantee that those (kinds of) contracts will come to fruition. But right now all the discussions we’re having about fifth-generation rigs that become available in 2006 and 2007 are comfortably over $400,000 a day.”
In fact, some drilling analysts are modeling day rates up to $600,000 a day, Noble chief executive James Day said, noting he’s even heard of a rate forecast of $1 million a day for the so-called “ultra-deepwater” rigs.
“For those of you who are modeling $500,000, $600,000 day rates on the big semi-submersibles, while I think you’ll see some of that, you won’t see it on a protracted basis,” he said. “There will be (rate) push backs.” Most upper-end contracts for 2006, 2007 Currently, only seven of Transocean’s entire 32-rig deepwater fleet earn more than $200,000 a day, which “doesn’t sound very high in today’s rate environment,” Long said.
However, Long said that based just on contracts and letters of intent the company has in hand, 15 of Transocean’s deepwater rigs would be earning over $200,000 a day in six months. A year from now 19 company rigs would earn over $200,000 a day, he said, adding that six of those rigs would be earning $300,000 a day with “a number of them” earnings over $400,000 a day.
“I wouldn’t be surprised if we don’t have 25 or 26 rigs a year from now earning over $200,000 a day,” Long said. “But keep in mind that most of those contracts … don’t actually kick in until 2006 and sometimes even 2007.” Transocean has $6.5 billion in project backlog Transocean, the world’s largest offshore drilling company, now has $6.5 billion in project backlog, up from $5.8 billion in early August, Long said, noting that Transocean’s “floaters” account for 75 percent of the backlog, largely concentrated in the Gulf, Brazil and West Africa. However, “the Far East and India are growing deepwater provinces, and I think next year we’re going to be moving three or four of our fifth-generation rigs into the Far East,” Long added.
Ensco’s Swent said that he expects 76 percent of the company’s entire fleet to be “re-priced” over the next year. Sixty percent of Ensco’s fleet, consisting largely of premium jack-ups, is located in the Gulf of Mexico and North Sea.
“While the Gulf of Mexico and North Sea are very mature, we recently saw the largest day rate increases of anywhere in these markets,” Swent said. “And we believe there’s still room for growth as we go forward.”
|
