Recent events support the view that the latest upstream M&A push is in full swing, according to The Land Rig Newsletter’s Biweekly Report. Of course, the elephant in the room here is BHP’s proposal to acquire Petrohawk for $12 billion:  a shot across the bow of the other non-U.S. international oil companies looking into U.S. unconventional plays that says, in effect:  Joint venture deals with U.S. independents won’t suffice any more vs. equity deals. The JV deals clearly have accelerated drilling in the key unconventional plays. The big carries in those deals have enabled a lot of E&D capex and drilling that would not have happened at the same pace otherwise. But it’s a good question whether the same thing will happen with outright company acquisitions. The 1990s merger boom actually reduced drilling, chasing some E&P capex out of the industry as companies struggled to service debt loads while digesting their acquisitions. It’s doubtful that will happen again, but the current M&A surge leads one to think that a repeat of the JV-induced drilling spurt isn’t a slam-dunk scenario.

Hornbeck Offshore Services, Inc. and Marine Spill Response Corporation (MSRC) have entered into a long-term agreement for spill response services in the Gulf of Mexico. Two multi-purpose support vessels owned by Hornbeck Offshore, the HOS Centerline and the HOS Strongline, are being retained by MSRC and equipped with dedicated spill response capability. The 370-ft vessels, each with 24,000 barrels of recovered oil capacity, are being outfitted with dedicated skimming systems, ocean boom, and a support boat.

Market reports are that Noble Drilling could take two semis out of the U.S. Gulf of Mexico area for international work. Rumors have been circulating that the Noble Paul Romano will move to Egypt for a four-well contract with Gujarat State Petroleum Corporation, Ltd. starting in November; it is understood the final contract details are still being worked out. The rig has been idle in the gulf since late May 2010. Also, reports are that the Noble Amos Runner may also depart the Gulf of Mexico. While few details are known, it is believed the rig could be headed to South America. Further information will be published if and when a final contract is in place.

 

Diamond Offshore jackup Ocean Titan has moved onto location in South Timbalier Block 264 for the start of a newly awarded, three-well, 45-day contract with Magnum Hunter Resources Corp. The rig had been stacked since mid-June prior to receiving the new contract. Upon completion in the first half of September, the rig will begin 50 days of shipyard preparation for a contract with Pemex. The contract term, originally slated for 872 days starting August 13, will now run for 777 days from mid-November ...

Swift Energy Company announced 2Q 2011 production of 2.64 MMboe, 30% higher YOY but flat with 1Q 2011 production of 2.65 MMboe. In addition, the company has completed the LL&E No. 5 (Jelly Bowl) well with an IP rate of 2,294 b/d of oil and 1.2 MMcfd of gas in the Lake Washington field in Plaquemines Parish, Louisiana.

 

Newfield Exploration Co. reported its deepwater Gulf of Mexico production in the second quarter of 2011 was 9 Bcfe. The company’s Pyrenees development, located at Garden Banks Block 293, is expected to commence production in late 2011 at about 50 MMcfd of natural gas and 2,400 b/d of condensate. Outside-operated developments, Axe and Dalmatian, are scheduled for first production in 2013.

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.

Total mobile rig utilization in the Gulf of Mexico increased this week. Currently, 60 of 124 rigs are under contract or committed for work, for utilization of 48.4%. Marketed utilization, which excludes cold stacked and other non-marketed U.S. Gulf of Mexico rigs, rose to 83.3%, with 60 of 72 rigs under contract.

 

Within the jackup fleet, overall fleet utilization is 38.8%, with 33 of 85 units under contract or committed for work. One Noble Drilling unit entered the fleet but is not marketed in the area, and one previously idle Diamond Offshore jackup received a contract. Marketed utilization is higher at 75%, with 33 of 44 units contracted.

 

Floating rig utilization also rose slightly with the mobilization of Transocean Offshore drillship Discoverer India to the area. Currently, 27 of 33 rigs are under contract, for utilization of 81.8%, while marketed utilization is 96.4%, with 27 of 28 rigs under contract.

 

Total Platform rig fleet utilization is unchanged from last week. Currently, 23 of 52 units are under contract, for utilization of 44.2%. Marketed utilization stands at 63.9%, with 23 of 36 units under contract or committed for work.

 

Inland barge utilization is currently 55.9%, with 33 ...