Diamond Offshore has signed a deal with ExxonMobil Corporation to take semi Ocean Victory for a four-well P&A program in the Zinc field in Mississippi Canyon Block 354. Work is expected to last for 105 days and will begin between January 1 and April 15, 2012, depending on when work with Walter Oil & Gas Corporation is completed. It is further understood ExxonMobil could have additional drilling work for the rig upon completion of the P&A program. The rig is currently working for ATP O&G in Green Canyon Block 299 and is next scheduled to go to the Walter work in Ewing Bank Block 834 in late November, with operations scheduled to last 45 days. Walter has also picked up previously idle semi Ocean Saratoga for a 21-day well in Viosca Knoll Block 821. The rig, which had been idle since late September, began mobilizing to location from Galveston, Texas, on November 13. Work will be completed in early December. Diamond also reports that jackup Ocean Titan has departed the AmFELS yard in Brownsville, Texas, for Mexico, where it has a 777-day contract with Pemex starting later this month. Semi Ocean Yorktown will depart the same yard in late November, ...

With the latest flurry of E&P deals (Statoil-Brigham, Kinder Morgan’s impending sale of El Paso E&P)—and still more to come—what might be the impacts of M&A action would be to unconventional drilling? The Unconventional Drilling Report compared rig counts pre- and post-deals for other recent E&P deals focused primarily on unconventional plays and concluded:  Not much. ExxonMobil’s U.S. land rig count has scarcely budged since it acquired XTO, averaging 68 vs. their pre-acquisition tallies of 7 and 64, respectively. Post-acquisition Chevron has averaged 20 rigs since closing on Atlas vs. their respective pre-deal averages of 8 and 7. BHP has averaged 25 after closing on Petrohawk vs. pre-deal average tallies of 2 and 18, respectively. The biggest post-deal traction for bolstering rig counts has come not from outright acquisitions but from joint venture deals, namely Chesapeake’s, whose rig count jumped from a pre-JV 120 to an average 140 since the last JV closed (and recently peaked at 154). It will climb still further after an imminent JV closes on Chesapeake’s Utica Shale acreage. 

Noble Corporation has exercised an option with Hyundai Heavy Industries for the construction of an ultra-deepwater drillship, the fourth ordered this year by the company. The rig, which has not yet been named, is based on the Hyundai Gusto P10000 hull design and will be outfitted to drill in up to 10,000 ft of water but will be capable of operating in up to 12,000-ft water depths. Construction cost, including turnkey construction contract, company-furnished equipment, project management and spares, is expected to be $630 million, and delivery is scheduled for the second half of 2014. The rig will be equipped with two complete BOP systems and a DP-3 stationkeeping system and will provide accommodations for 210 personnel. Noble does not currently have a contract in place for the rig.

 

ENSCO, PLC has received a short contract from Cimarex Energy Co. for idle jackup ENSCO 81. The rig is expected to move to location in South Timbalier Block 265 in about a week, with the 17-day P&A keeping the rig working through the end of the month. The rig has been idle in South Timbalier Block 28 since early August after completing a contract for Walter Oil & Gas Corporation....

Anadarko Petroleum Corporation has finalized a unitization agreement with ExxonMobil Corporation and co-owners to develop the Lucius field in the deepwater Gulf of Mexico. The unitization includes portions of Keathley Canyon Blocks 874, 875, 918 and 919. Anadarko will operate the unit with a 35% working interest. Following the unitization agreement, the Lucius interest owners entered into an agreement with the Hadrian South co-venturers whereby natural gas produced from the Hadrian South field will be processed through the Lucius facility in return for a production-handling fee and reimbursement for any required facility upgrades. Anadarko reports that it has already placed orders for long-lead items, including the truss spar floating production facility, which will have a capacity of over 80,000 b/d of oil and 450 MMcfd of natural gas. The company expects sanctioning the project later this year, with first production expected in 2012.

The total U.S. land rig count has topped 1,800 for the first time since 2008, according to the July 8 Land Rig Newsletter Biweekly Report. Leading an overall gain of 40 rigs was a pickup of 36 in the Traditional (≥5,000 ft) rig count, including 17 in Louisiana, 13 in Texas, and 9 each in North Dakota and California. Oil rigs accounted for 28 of the increase, mainly in North Dakota and California. The Golden State hasn’t had that many active rigs since July 2008; most of the added California rigs were being run by 7 operators that weren’t working there as of the previous Biweekly Report.

 

Meanwhile, the Biweekly Report’s Featured Operators group has posted its smallest market share YTD. That likely reflects the growing role of small, private operators drilling shallow oil wells with oil prices exceeding $90 per barrel for most of the year. This market share has been steadily drifting down since early 2Q 2011, with ExxonMobil and EnCana throttling back the most even as many other Featured Operators expanded their rig fleets significantly.

Three major operators, Exxon Mobil Corporation, Royal Dutch Shell, plc, and BHP Billiton Petroleum, have announced recent discoveries and/or developments in the deepwater Gulf of Mexico. These projects are the result of resuming deepwater drilling following the moratorium put in place in May 2010 after BP, plc’s Deepwater Horizon incident.

 

Exxon Mobil Corporation announced the KC 919 #3 wildcat well confirmed the presence of a second oil accumulation in Keathley Canyon 919 in 7,000 feet of water. The well encountered more than 475 feet of net oil pay and a minor amount of gas. The company estimates a recoverable resource of over 700 mmboe combined in its Keathley Canyon blocks, reporting that more than 85% of the resource is oil with additional upside potential. Other interest owners include Eni Petroleum US, LLC and Petrobras America, Inc.

 

Royal Dutch Shell, plc announced a multi-billion dollar investment to develop its Cardamom oil and gas field in the deepwater Gulf of Mexico. The Cardamom project is expected to produce 50,000 boe/d at peak production and more than 140 MMboe over its lifetime. As a result of today’s final investment decision, Shell will move ahead with further development drilling and installing undersea ...