From the October 2010 issue of The Land Rig Newsletter:


Just as fast as shale-suitable rigs in the 1,000 and 1,500 hp classes are being built, drillers are also scrambling to refurbish and upgrade rigs in those horsepower classes—or to get them there.And the emphasis is on making them shale-suitable. We recently surveyed 47 drillers regarding their plans for refurbs and upgrades, and the results are telling. Almost half of them acknowledged plans to refurbish or upgrade their rigs. Generally, plans include adding top drives, engines or generators, and other components to rigs’ drawworks configurations in an effort to upgrade the horsepower rating to 1,000 hp or greater to drill horizontally. Some plan to upgrade power packages to AC to drill more efficiently. Another common refurb was to boost mud pump capacity.


In addition to refurbishing older rigs, 10 surveyed drillers plan to build a total of 27 new rigs, mostly in the 1,000–1,500 hp range. Of the 27 new rigs under order or likely to be built, drillers reported that a dozen of them will be powered with AC electric motors. One Permian driller said he plans as many as three refurbs in 2011, expanding drawworks capacity from ...

From The Unconventional Drilling Report with data as of October 21, 2010:

We keep hearing talk of drilling activity slowing in the Haynesville, but the numbers aren’t bearing that out when you factor in East Texas. True, the core Louisiana Haynesville has dropped about a dozen units since its summer peak. But the East Texas side of the play has rebounded almost to its 3Q peak and is seeing full rig utilization. SM Energy alone added 3 rigs since the prior biweekly period, while EXCO hiked its count by 2. EOG, ExxonMobil, and Devon also added rigs. Some recent farm-in deals, evidently oblivious to slumping gas prices, could be driving some of this revived action.

How long can the newest “rock stars” sustain the overall unconventional rig count? The Eagle Ford has shown remarkable growth, up 143% since 2Q 2010 and accounting for 75% of the increase in the unconventional tally since then, according to last week’s issue of The Unconventional Drilling Report. And the Bakken count is up 140% since the first of the year. There is certainly more room for the Eagle Ford to run, with gas/condensate targets attracting increased activity.  And the Bakken has room to grow, as the Montana side sparks interest anew.

 

But the other major shales have shown a surprising resilience too, holding steady across the board—and with the Marcellus even posting a 39% gain since 2Q 2010. Also worth noting are 14% and 43% increases, respectively, for the overall tight sands and CBM rig counts since the 2Q—despite a drop of about 30% in gas prices. It looks as if it will take sub-$3/Mcf gas to knock the unconventional rig count off its plateau, even if its growth slows down.

Cameron International Corporation’s board of directors has elected president and chief executive officer Jack B. Moore as chairman of the board, effective May 3, 2011. Moore will replace retiring chairman Sheldon R. Erikson, who will continue to serve as a director of Cameron.

Diamond Offshore has received a one-well plus options extension from Ankor Energy, LLC for jackup Ocean Titan. The rig has just started the new well in Ship Shoal Block 242, with workover operations expected to keep the rig busy for about 14 days. The rig has been under contract with Ankor since August 2009. Meanwhile, well complications at Ship Shoal Block 230 will now keep jackup Ocean Columbia busy with Chevron until around mid-November, after which the rig will be released. Diamond currently does not have any follow-up work in place for the rig.

 

Ensco, PLC reports it has sold jackup ENSCO 60, currently cold stacked in Sabine Pass. Sale price was $26 million, with closing expected shortly. It is understood the rig will be mobilized out of the Gulf of Mexico, likely to the Mediterranean area where it will be converted to a mobile offshore production unit. ENSCO 60 is a Levingston 111-C design jackup, built in 1981 and rated to drill in up to 300 fsw. It has not worked since June 2009. Jackup ENSCO 99 is scheduled to complete its contract with Nexen Petroleum USA, Inc. this weekend. Upon completion of work in West Delta Block ...

BP, PLC has reached agreement to sell its recently acquired interests in four mature producing deepwater fields in the Gulf of Mexico to Marubeni Oil & Gas (USA), Inc. for $650 million. BP acquired the interests in the Magnolia, Merganser, Nansen, and Zia fields from Devon Energy Corporation earlier this year. BP’s net production from these fields is about 15,000 boe/d.