August 30, 2010

Rig Utilization

Mobile rig utilization in the Gulf of Mexico dipped slightly as a number of changes took place.  Total fleet utilization stands at 53.3% with 64 of 120 mobile rigs under contract or committed for work.  Marketed utilization, which excludes those cold stacked and other non-marketed rigs, fell by one point to 79%, with 64 of 81 rigs under contract.

Jackup fleet utilization fell to 42.7% with 35 of 82 units under contract.  Marketed utilization dropped to 71.4% with 35 of 49 units contracted.  One rig was added to the fleet as newbuild Rowan EXL-II was delivered.  The rig will remain here for another month before leaving for a multi-year contract off Trinidad.  Meanwhile, Diamond Offshore’s Ocean Spartan was released from its contract and hot stacked.

Floating rig fleet utilization was unchanged this week.  Currently, 28 of 32 rigs are under contract for utilization of 87.5%.  Marketed utilization also remains the same at 90.3% with 28 of 31 units under contract.  One rig, drillship Aban Abraham, received a contract (for work outside the Gulf later this year), while semi Transocean Marianas departed the area for West Africa.  Finally, Diamond Offshore semi Ocean New Era was moved to the US Gulf from Mexico and was cold stacked.

Headline News

Schlumberger, Ltd. has closed its merger with Smith International, Inc. As previously announced, each Smith stockholder will receive 0.6966 share of Schlumberger common stock in exchange for each Smith share, with cash paid in lieu of any fractional shares of Schlumberger common stock. Schlumberger has issued approximately 176 million shares pursuant to the merger, representing a transaction value of approximately $11 billion. As a result, former Smith stockholders own approximately 12.9% of Schlumberger’s outstanding shares of common stock.

Operator News

BP has been authorized by the National Incident Commander, Thad Allen, to cease fishing operations at the Macondo well site to remove sections of pipe that have settled in the blowout preventer (BOP)  and to prepare for the removal of the well’s existing capping stack and BOP.  The equipment will be replaced with a BOP taken from the backup relief well being drilled by the Development Driller II.

Mainland Resources, Inc. announced the appointment of leading exploration and production executive, Nicholas W. Atencio, as Chief Executive and Director of the company.  Atencio previously held the positions of Vice President of Operations Gulf of Mexico and Vice President of International Exploration and Production for Kerr McGee Oil & Gas Corporation.

Plains Exploration & Production (PXP) plans to reduce its Gulf of Mexico (GOM) exposure and related capital spending.  PXP’s goals are to secure $1 billion to $2 billion of value from its GOM assets through third party joint ventures and/or asset sales and to align capital spending with operating cash flow.

Pemex has awarded CGGVeritas a contract to acquire a 3D wide–azimuth (WAZ) program in the Mexican waters of the Gulf of Mexico. The survey, valued at more than $200 million, will start in October 2010 and run for a period of 300 days. Two 3D seismic vessels, the Vanquish and the Oceanic Vega, as well as supporting vessels, will be dedicated to this project.

Driller News

Jackup Rowan Gorilla II completed its short P&A in West Cameron Block 561, completing its contract with Devon Energy.  The rig is now on location in Vermilion Block 348 for the start of a newly awarded 14-day workover with ERT.  At present, Rowan has no follow-up work for the rig, but the company is in discussions with a number of operators.  Also, jackup Rowan EXL-I has about a week remaining on its well with McMoRan E&P in High Island Block A-531.  The rig will then move to Eugene Island Block 223, where it is scheduled to drill a 280-300 day well for McMoRan.  However, the operator has yet to secure its permit for the location, and the rig is expected to remain on location until the permit is approved.  Rowan also christened newbuild jackup Rowan EXL-II late last week and will take delivery of the rig August 30.  The rig will then be moved to Corpus Christi where it will undergo 30 days of preparatory work for its upcoming three-year contract with BP Trinidad, which starts around November 1.  It is scheduled to depart the Gulf of Mexico around October 1.

As has been rumored for some time, semi Transocean Marianas has departed the U.S. Gulf for Nigeria, where it will continue its contract with Eni Petroleum.  Details of the Nigerian program are still unclear and will be reported once available.  It is understood the rig is being moved via wet tow, with the route likely changed, as it was headed directly toward the currently developing Atlantic storms.  Further market reports indicate that StatoilHydro will move drillship Discoverer Americas from the U.S. Gulf to Egypt shortly, but that report has yet to be confirmed.

Diamond Offshore semi Ocean New Era has arrived back in the U.S. Gulf after completing its contract with Pemex in mid-August and is now in the process of being cold stacked in West Cameron Block 117.  The rig, which is rated to drill in up to 1,500 fsw, had been working under a contract extension since mid-February.  Meanwhile, jackup Ocean Spartan completed its contract last week with Nippon Oil in West Cameron Block 587 and is now hot stacked in Diamond’s stacking location in West Cameron Block 184.  ANKOR Energy’s contract with jackup Ocean Titan is now expected to run into early October, but talks are underway for a possible further extension.  Details will follow as they become available.  ANKOR initially extended the contract for 90 days in mid-June.

Noble Drilling has received a 120-day extension for jackup Noble Earl Fredrickson from Pemex, effective from August 25.  The new term, at a day rate of $63,500, now keeps the rig working until late December.

Reactivation work continues on Aban Offshore drillship Aban Abraham at the Atlantic Marine yard in Mobile, AL.  The rig recently secured a five-year contract with Petrobras for work starting in December.  It is scheduled to depart the U.S. Gulf in late October, with work scheduled to begin in early December.

Ensco, plc is now in possession of ENSCO 69, a jackup that was reclassified as discontinued operations in the second quarter of 2009. As previously reported, Ensco terminated its contract for the rig with Petrosucre (a subsidiary of the Venezuela national oil company PDVSA) for non-payment in June 2009. Petrosucre then advised that it would continue to operate the rig without Ensco’s consent. Ensco personnel recently were granted access to the rig, and it has been moved to Trinidad from Venezuela.

Service/Supply News

Baker Hughes, Inc. has received notice that the Antitrust Division of the U.S. Dept. of Justice has approved the purchase of two of its stimulation vessels, the HR Hughes and the Blue Ray, and certain other assets used to perform sand control services in the Gulf of Mexico, by Superior Energy Services.  These assets are being divested in connection with the acquisition of BJ Services Co.

Deep Down, Inc. has teamed up with Core Industries to permanently locate a 3,200 metric ton umbilical storage carousel system at Core’s deepwater port facility near Mobile, Ala.  The carousel is currently under construction and will be ready in fourth quarter 2010.

Cal Dive International, Inc. announced the departure of Bruce P. Koch, the company’s Chief Financial Officer. Brent D. Smith, the company’s current Vice President-Finance, has been promoted to Executive Vice President, Chief Financial Officer, and Treasurer of the company.

DeepFlex announced one of its all-composite flexible pipes has been used by Saipem to commission a deepwater export line offshore Brazil for Petrobras. The Saipem vessel Normand Cutter deployed the DeepFlex downline in 4,950 feet of water.

Intermoor, Inc. has named David Cobb Vice President, Business Development, based out of its Houston office. He previously served as Business Development Manager and Projects Manager in the company’s Aberdeen office.

August 23, 2010

Rig Utilization

Mobile rig utilization in the Gulf of Mexico rose again this week as two previously idle rigs went back to work.  Total fleet utilization stands at 53.8% with 64 of 119 mobile rigs under contract or committed for work.  Marketed utilization, which excludes those cold stacked and other non-marketed rigs, rose to 80%, with 64 of 80 rigs under contract.

Jackup fleet utilization increased as Hercules Offshore put a previously idle jackup back to work.  Total utilization is now 43.2% with 35 of 81 rigs under contract or committed for work.  Marketed utilization increased to 72.9% with 35 of 48 units contracted.

Floating rig fleet utilization was unchanged this week.  Currently, 28 of 32 rigs are under contract for utilization of 87.5%.  Marketed utilization also remains the same at 90.3% with 28 of 31 units under contract.

Platform rig utilization fell as one rig went idle.  Fleet utilization is 29.4% with 15 of 51 units under contract, while marketed utilization dropped to 44.8% with 15 of 35 rigs contracted.  Inland barge utilization remains  at 44.8% with 26 of 58 units under contract, while marketed utilization is 63.4% with 24 of 41 units under contract.

Headline News

A joint industry task force made up of members from Chevron, ConocoPhillips, ExxonMobil, and Shell has been formed to design a marine well containment system as a result of the BP Deepwater Horizon incident. The member group is forming a non-profit corporation to fast-track the design and execution of the system and has committed $1 billion to fund the initial costs of the project.  The new rapid response system will be designed for use in water depths of up to 10,000 feet and will have an initial capacity to contain a wild well flowing as much as 100,000 bpd.

Operator News

Apache Corporation announced two new executive appointments. Paul McKinney will serve as the First Vice President of the new Gulf Coast onshore region. The new region will manage Apache's oil and gas assets on the Gulf Coast from Mississippi to South Texas. Dominic Ricotta has been promoted to Vice President and Associate General Counsel.

Houston American Energy Corporation announced the appointment of Kenneth A. Jeffers as Senior Vice President of Exploration.

Pemex has issued a tender for a 350-ft jackup.  The term will run for 486 days from January 7, 2011, to May 6, 2012.  Bid opening is scheduled for October 25, followed by contract award on November 19.  The well-publicized 10-year-old-or-younger rig age requirement is also in effect for the tender.

Contango Oil & Gas announced that its current production is approximately 89 mmcfg/d and 2,400 bopd, or 103 mmcfe/d.  Meanwhile, the company reported that capex for its fiscal year ending June 30, 2011, has been set at $85 million, which includes the drilling of four wildcat wells in the Gulf of Mexico.

Energy XXI has picked up previously idle jackup Hercules 204 for a one-well contract in South Timbalier Block 21.  Operations are expected to last around 25 days.  The rig had been idle for about a month prior to receiving the contract.  Apache has also extended its contract with Hercules to keep jackup Hercules 200 for another well.  The rig is now under tow to the new location in Mobile Block 821 for a 25-day workover.

As expected, Nexen Petroleum has signed an extension to keep jackup ENSCO 99 for an additional well in West Delta Block 45.  The 21-day recompletion will begin around the end of the month.  ENSCO also has inked a follow-up contract for the rig with Stone Energy, pending permit approval.  The operator has two potential locations in Ship Shoal Block 92, a 30-day oil well and South Pelto Block 5, an 80-day gas well.  It is expected that if a permit is secured, it will be for the South Pelto location.  Assuming that scenario plays out, the rig would not be available until the first half of November.

Driller News

Noble Drilling semi Lorris Bouzigard is now idle on location in Mississippi Canyon Block 503 undergoing BOP inspections and repairs.  While no definitive timetable has been established, the rig is expected to be down for at least 30-60 days.  Upon completion of the work and certification of the equipment, the rig will return to its contract with LLOG Exploration, which runs to late June 2011.  Noble’s newest acquisition, the Frontier Driller, also finished its well in Green Canyon Block 248 for Shell and the rig has been moved to the Signal International yard in Pascagoula, MS.  The rig’s contract with Shell will now be suspended during the drilling moratorium under the agreement reached with the operator about a month ago.  The rig’s contract with Shell runs to May 2012.

Market reports indicate that Hercules Offshore may have a contract in place shortly for jackup Hercules 204.  The rig has been idle in South Timbalier Block 32 since late June.  Details will follow once they become available.  Hall Houston will keep jackup Hercules 205 for a 2-3 week completion in High Island Block 88 after it finishes the current well in the block.  Current operations are expected to last another week, with the follow-up dual completion keeping the rig busy to around mid-September.  Finally, it is understood that Apache, with jackup Hercules 200, and W&T Offshore, with jackup Hercules 202, are discussing follow-up work for both rigs, depending on permit approvals being in place.

Atwood Oceanics, Inc. announced that Ronald L. Hall, vice president, operations, plans to retire from the company effective December 15.  The company has engaged an executive search firm to assist with evaluation and recruitment of a suitable successor.

Rowan Companies, Inc. has priced a public offering of $400 million of its 5% senior notes due 2017, in a registered public offering.  Rowan expects the proceeds from the notes offering to be used for general corporate purposes, including the potential repayment of indebtedness of Skeie Drilling & Production ASAa Norwegian jackup owner Rowan is acquiring.

Rowan has signed four contracts for three of its U.S. Gulf jackups and an extension for another.  First, the Bob Palmer moved onto location in East Cameron Block 334 over the weekend for the start of two recompletions for Energy XXI.  Operations are expected to last around 40 days.  As expected, McMoRan E&P has now been confirmed as the operator that will take newbuild Rowan EXL-III for a one-well program in a yet to be named block.  Drilling will start in March 2011 and last for around one year.  Meanwhile, Rowan has agreements in place with Saudi Aramco to take the Bob Palmer and Ralph Coffman for three-year terms starting in the second quarter of 2011.  The Palmer is due to complete its contract in October, with the Coffman following in November.  While it is likely that both will head to Sabine Pass to begin upgrade work required for the Saudi Aramco work, the Palmer could drill a well or two in High Island Block A-376 for Apache (permit pending) before heading to the yard.  The rigs are scheduled to leave in late December.  Finally, Apache has extended its contract for the Cecil Provine for a 45-day well in Grand Isle Block 47, now keeping it busy into the first half of October.  The rig moved to the new location over the weekend.  As previously noted, Apache is expected to continue extending the rig term on a well-to-well basis for the rest of the year.  Rowan also says that the Rowan EXL-1 will wrap up operations for McMoRan in High Island Block A-531 in about a week.  The rig will then be moved to Eugene Island Block 223, where McMoRan has a 300-day well planned.  While the operator does not yet have an approved permit in place, it is hoped that having the rig on location will speed up the process.  McMoran’s contract for the rig runs to July 2011.

Jackup Seahawk 2007 will complete wireline operations in West Cameron Block 110 with Mariner Energy this week.  The rig will then move to West Cameron Block 171 for a 35-day well with Breton Energy, stretching rig availability to late September.  Meanwhile, the recently awarded contract with Medco Energi for jackup Seahawk 2001 began August 23 when the rig arrived on location in Main Pass Block 64.  Operations are expected last 30 days.  Lastly, Hilcorp Energy secured a permit for its second well in South Marsh Island Block 77 with jackup Seahawk 2601.  The rig went on day rate August 19, with the sidetrack and completion taking the rig to late September.

Service/Supply News

Geokinetics, Inc. announced that Ronald D. Cayon has been appointed as the company's interim Chief Financial Officer, effective August 19.

FMC Technologies, Inc. has received a call-off order from Total E&P Angola for the manufacture and supply of additional subsea production equipment. The call-off is for one option included in an existing contract and has a value of approximately $36 million.

August 16, 2010

Rig Utilization

Mobile rig utilization in the Gulf of Mexico rose this week as two previously idle rigs went back to work and one other unit left the region.  Total fleet utilization stands at 52.1% with 62 of 119 mobile rigs under contract or committed for work.  Marketed utilization, which excludes those cold stacked and other non-marketed rigs, rose to 77.5%, with 62 of 80 rigs under contract.

Jackup fleet utilization rose as two idle Seahawk Drilling jackups were awarded contracts.  In addition, Diamond Offshore jackup Ocean Scepter departed the Gulf for a contract in Brazil.  Total utilization is now 42% with 34 of 81 rigs under contract or committed for work.  Marketed utilization increased to 70.8% with 32 of 48 units contracted.

Floating rig fleet utilization was unchanged this week.  Currently, 28 of 32 rigs are under contract for utilization of 87.5%.  Marketed utilization also remains the same at 90.3% with 28 of 31 units under contract.

Platform rig utilization fell as one rig went idle.  Fleet utilization is 31.4% with 16 of 51 units under contract, while marketed utilization dropped to 45.7% with 16 of 35 rigs contracted.  Inland barge utilization now stands at 44.8% with 26 of 58 units under contract, while marketed utilization is 63.4% with 24 of 41 units under contract.

Headline News

The State of Texas filed suit on August 11 challenging the federal ban on offshore drilling stating that it violates a law requiring officials to consult with the states on such matters first.  A six-month moratorium on drilling in water depths over 500 fsw was overturned by a New Orleans judge in May, after which the Interior Department reinstituted a revised drilling ban on July 12.

In the lawsuit filed in Houston Federal Court, Texas Governor Rick Perry and Land Commissioner Jerry Patterson said the administration did not follow the Outer Continental Shelf Lands Act, which requires the federal government to coordinate with states that might be affected by a drilling moratorium and weigh the economic impact.  The lawsuit points to an economic impact study done at Louisiana State University (LSU), which says Texas will suffer a $622 million decrease in gross state product due to the drilling moratorium. 

The suit asks the court to order the federal government to allow the state’s participation in formulation of offshore policy and to take into account the financial effect of the moratorium.  Justice Department  attorneys have asked the federal judge who overturned the initial six-month moratorium to throw out challenges to the drilling ban because the government revised the moratorium.  A separate lawsuit was filed by ENSCO challenging the new moratorium was also filed.  Judge Martin Feldman, who is presiding over both suits, has yet to rule in either case.
 

While the moratorium was for drilling in water depths over 500 fsw, the Bureau of Energy Management (BOEM) has issued only two permits (out of nine filings) to operators wishing to drill in shallow waters.  Apache and Rooster Petroleum were the recipients of the permits, both for natural gas wells.  Permit approvals for non-drilling operations is said to be speeding up a bit, but operators and rig owners continue to be frustrated with the process for approving new drilling.  New and stricter safety rules are said to be the reason for the delays.

Operator News

Devon Energy Corporation announced that Robert H. Henry and Duane C. Radtke have been appointed to its Board of Directors. These individuals fill the positions vacated by Tom Ferguson and Robert Howard who recently retired due to mandatory age limits.   Henry currently serves as President of Oklahoma City University. Radtke currently serves as President and Chief Executive Officer of Valiant Exploration, LLC.

Chevron Corporation announced further drilling success in the Carnarvon Basin, offshore Western Australia.  The Acme-1 exploration discovery well, located in the WA-205-P permit area, was drilled in 2,880 feet of water to TD 15,469 feet and encountered approximately 896 feet of net gas pay.

Noble Energy, Inc. has closed the previously announced sale of certain Mid-Continent and Illinois basin assets to an affiliate of Citation Oil & Gas.  Proceeds from the transaction were $552 million and included final closing adjustments from the effective date of April 1. 

Driller News

Seawell, Ltd. and Allis-Chalmers Energy, Inc. announced their Boards of Directors have unanimously approved a definitive merger agreement providing for the acquisition of Allis-Chalmers by Seawell in a transaction valued at approximately $890 million. The combined company will operate its Drilling and Well Services offerings in the US, Gulf of Mexico, Brazil, Argentina, North Sea, Middle East, Africa and Southeast Asia/ Pacific.

Seahawk has secured contracts for two idle jackups.  The Seahawk 2600 arrived on location in West Cameron 487 on August 16 for the start of two completions with Tarpon O&G.  Upon completion, the rig will move to East Cameron Block 240 for the second well.  Operations for both wells are expected to keep the rig busy for around 70 days to late September.  The rig had been idle since July 23.  Meanwhile, Medco Energi will pick up the Seahawk 2001 for a side track/completion in Main Pass Block 64.  The rig, which had not worked since July 10, will move to location this week.
 

Repairs and maintenance to jackup Hercules 350 have been completed and the rig has now returned to work for Chevron in South Timbalier Block 130.  The rig’s current term runs through the end of the year.
 

Jackup Rowan Gorilla II is now on location in West Cameron Block 561 for its final well with Devon Energy.  The 15-day P&A will keep the rig occupied until around the end of the month.

Diamond Offshore jackup Ocean Scepter has departed Brownsville, enroute for Brazil for a one-year contract with OGX.  The rig will arrive in early September after which it will undergo upgrades and preparatory work prior to the contract start in early December.
 

Atwood Oceanics submersible Richmond finally moved to location in Eugene Island Block 28 late last week after Rooster Petroleum received its drilling permit for the location.  ADTI will provide turnkey services for the well, which is expected to take around 40 days.
 

Nabors Offshore platform rig MODS 150 completed its contract with Anadarko in Garden Banks Block 668 and the rig is now stacked in New Iberia.  It is understood the rig will return to location for another well after hurricane season ends November 30.

Service/Supply News

KBR announced that Dennis S. Baldwin has been appointed as the company’s Vice President and Chief Accounting Officer effective August 16. Baldwin was previously the Vice President and Chief Accounting Officer for McDermott International.

Technip has been awarded by Statoil ASA a contract for the development of the Snorre field in the Norwegian North Sea. The contract covers the welding and installation of a rigid steel flowline to connect the Snorre A and B platforms. It also includes installation and tie-in of the flexible risers required to connect the flowline to the platforms. 

August 9, 2010

Rig Utilization

Mobile rig utilization in the Gulf of Mexico remained the same this week.  Total fleet utilization stands at 50.8% with 61 of 120 mobile rigs under contract or committed for work.  Marketed utilization, which excludes those cold stacked and other non-marketed rigs, rose to 75.3, with 61 of 81 rigs under contract as one idle rig was removed from the marketed fleet.

Jackup fleet utilization rose with the previously idle Spartan 303 returning to the payrolls.  Total utilization is now 40.2% with 33 of 82 rigs under contract or committed for work.  Marketed utilization increased to 67.3% with 33 of 49 units contracted.  The change in the fleet came with the cold stacking of the Seahawk 2500.

Floating rig fleet utilization dipped to 87.5% as one semi came off contract.  Currently, 28 of 32 units are under contract.  Meanwhile, marketed utilization fell to 90.3 with 28 of 31 units under contract.

Platform rig utilization is unchanged this week.  Overall utilization is 33.3% with 17 of 51 units under contract, while marketed utilization remains at 48.6% with 17 of 35 rigs contracted.  Inland barge utilization now stands at 43.1% with 25 of 58 units under contract, while marketed utilization is 62.5% with 25 of 40 units under contract.

Headline News

Noble Corporation announced that a subsidiary has signed contracts for the construction of a new, dynamically positioned ultra-deepwater Globetrotter-class drillship with South Korea's STX Heavy Industries Company, Ltd. and Dutch-based design and construction firm Huisman Equipment B.V.

The Noble Globetrotter II drillship is the second unit to be constructed for the company utilizing a two phase process wherein the hull will be built by STX at their facility in Dalian, China, and then the unit will be delivered to the Netherlands where Huisman will oversee the installation and commissioning of the topside equipment.  As previously reported, operations are expected to commence on this second unit in the second half of 2013 and on the first Noble Globetrotter in late 2011.  The delivered cost of Noble Globetrotter II, excluding capitalized interest, is estimated at $550 million.  Both units are contracted to work for Shell under 10-year terms as previously announced in conjunction with Noble's acquisition of FDR Holdings, Ltd.  The contract dayrates during the first five years are $410,000 per day plus a 15% performance bonus potential.  During the second five years, the dayrates will be based on a market index, repriced every six months, and will also be eligible for a 15% performance bonus.

The Deparment of Interior has informed BP that it must report all oil and gas-related activities at the damaged Macondo well and pay royalties on all oil and gas captured from the leaking well. The company also will be liable for royalties on lost or wasted oil and gas if it is determined that negligence or regulatory violations caused or contributed to the Deepwater Horizon explosion and subsequent leak.

Operator News

Stone Energy reported prices realized during the second quarter of 2010 averaged $72.14 per barrel of oil and $5.46 per  thousand cubic feet (Mcf) of natural gas, which represents a 7% decrease, on an Mcfe basis, over second quarter 2009. Average realized prices during the first six months of 2010 were $71.43 per Bbl of oil and $5.71 per Mcf of natural gas, representing a 1% decrease on a Mcfe basis compared to $63.01 per Bbl of oil and $6.73 per Mcf of natural gas realized during the first six months of 2009.

W&T Offshore completed the acquisition of all of the interest of Total E&P USA, Inc. in three federal offshore lease blocks located in the Gulf of Mexico with an effective date of January 1, 2010.  The purchase price, after adjustments, was $116.6 million.  The properties acquired from Total are producing interests with future development potential and include a 100% working interest in Mississippi Canyon 243 (Matterhorn) and a 64% working interest in Viosca Knoll 822 and 823 (Virgo).   The reserves acquired were estimated as 64% oil and 36% natural gas. 

ATP Oil & Gas reported production for the second quarter 2010 averaged 21.3 mmbbls/day, an increase of 24% from the comparable quarter in 2009 and a 29% increase from the first quarter of 2010. The increase was driven primarily from the first well at ATP’s Telemark Hub which was placed on production and new wells in the company’s Canyon Express Hub placed on production in March.

McMoRan Exploration Company announced that the Blueberry Hill #9 STK 1 well, located on La SL 340 in 10 feet of water, has been drilled to TVD of 23,630 feet. Logs indicate a possible hydrocarbon bearing zone in a high quality sand measuring 105 feet. McMoRan owns a 42.9% working interest and Plains Exploration & Production Company holds a 47.9% working interest.

Driller News

Nexen Petroleum has junked its well in West Delta Block 45 and respud the well with jackup ENSCO 99 at the end of July.  Drilling now will take the rig into the first-half of September, although it is believed Nexen may be close to extending its contract for a second well in the block.

Further to a report from last week, Seahawk Drilling says that further jacking system repairs and SPS inspections will tentatively be completed around October 1.  In addition, the company has signed a five-well contract with Arena Offshore that will begin after scheduled wells with Energy XXI (7 days in East Cameron Block 334) and Badger Oil (40 days in High Island Block A-309).  Work for Arena in East Cameron Block 328 will run for around 150 days, keeping the rig busy into March 2011.

Chevron extended its contract with Transocean for two years on drillship Discoverer Deep Seas.  The new term will begin in February 2011 and now keeps the rig in place to 2013.  The rig has been on standby in Ship Shoal Block 362 since the drilling moratorium began.  Chevron had declared force majeure, but that was dropped when the new term was agreed to.  Chevron also has drillships Discoverer Clear Leader and Discoverer Inspiration under contract, and while discussions are underway, it remains to be seen what agreements, if any, will be forthcoming for those rigs.

Diamond Offshore semi Ocean Victory completed operations for Newfield Exploration in Garden Banks Block 293.  At present, the rig does not have any work scheduled until November when it returns to its contract with ATP O&G for a 90-day stint.  In the meantime, Diamond has moved the rig to its stacking location in West Cameron Block 184.

Spartan Offshore jackup Spartan 303 remains on location in East Cameron Block 24 for ADTI/Apex O&G although operations have not yet begun.  Reports indicate that casing issues could force has secured the first of what could be multiple contracts for jackup Spartan 303.  The rig is now on location in East Cameron Block 24 for an ADTI turnkey completion for Apex O&G.  The work is expected to keep the rig busy for about 15 days, after which Spartan could have further work for the rig in place.

Jackup Rowan Gorilla II is expected to head for West Cameron Block 561 later this week to begin the 15-day P&A that will complete its contract with Devon Energy.  Rowan is currently waiting on tugs to arrive in Sabine Pass to begin tow to location.

Noble Drilling jackup Noble Eddie Paul completed work for Pemex and has been released.  The rig had been operating under a 45-day extension that began in late June, and it now joins the Noble Leonard Jones which was released in June.  It is expected that Noble will leave the Eddie Paul in Mexico with the aim of bidding it in upcoming tenders.

Driller Earnings...

Seahawk Offshore reported it incurred a net loss of $19.8 million on revenues of $22 million for the three months ended June 30, 2010.  That compared to a net loss of $8.8 million on revenues of $76.5 million for the same period in 2009.  Rowan Companies says that for the second quarter of 2010, it had a net income of $90.9 million on revenues of $490.1 million versus net income of $96.6 million on revenues of $482.2 million for the same period in 2009.  Transocean reported a net income of $715 million on revenues of $2.505 billion for the three months ended June 30, 2010.  For the same period in 2009, the company earned a net income of $806 million on revenues of $2.882 billion.  Meanwhile, Parker Drilling reported a second quarter 2010 net income of $507,000 million on revenues of $156.5 million compared with a net income of $4.39 million on revenues of $221.8 million for the same period in 2009.  Atwood Oceanics announced that for the quarter ended June 30, 2010 it earned a net income of $58.9 million on revenues of $166.6 million.  That compared to a net income of $67.6 million on revenues of $149.3 million for the same period in 2009.  Hercules Offshore reported a loss of $19 million on revenues of $165.9 million for the second quarter of 2010 versus a loss of $7.6 million on revenues of $183.7 million for the second quarter of 2009.

Service/Supply News

Nabors Industries, Ltd. and Superior Well Services, Inc. have entered into a definitive merger agreement whereby Nabors will acquire Superior Well Services.  The agreement contemplates that Nabors will commence a tender offer for all outstanding shares of Superior Well Services common stock at a price of $22.12 per share in cash in accordance with the merger agreement.  The transaction is valued at approximately $900 million.

Oceaneering International, Inc., through its wholly-owned subsidiary, Grayloc Products Canada, Ltd., has acquired all the operating assets of SMX International Canada, Inc. (SMX), a manufacturer of metal-to-metal seal clamp connectors, check valves, and universal ball joints. 

McDermott International, Inc. was awarded a contract to upgrade and enhance a water injection system for Abu Dhabi Marine Operating Company (ADMA-OPCO) in the Zakum field. The contract value is expected to be approximately $350 million.

August 2, 2010

Rig Utilization

Mobile rig utilization in the Gulf of Mexico edged back above 50% this week as one idle jackup returned to work and one semi left the area.  Total fleet utilization stands at 50.8% with 61 of 120 mobile rigs under contract or committed for work.  Marketed utilization, which excludes those cold stacked and other non-marketed rigs, moved up to 74.4% with 61 of 82 units under contract.

Jackup fleet utilization rose with the previously idle Seahawk 2007 going back to work.  Total utilization is now 39% with 32 of 82 rigs under contract or committed for work.  Marketed utilization increased to 64% with 32 of 50 units contracted.

Floating rig fleet utilization is now 90.6% with 29 of 32 units under contract, while marketed utilization rose to 93.5% with 29 of 31 units under contract.  The change was due to Diamond Offshore’s Ocean Endeavor departing the region for Egypt.

Platform rig utilization is unchanged this week.  Overall utilization is 33.3% with 17 of 51 units under contract, while marketed utilization remains at 48.6% with 17 of 35 rigs contracted.  Inland barge utilization fell as one newly contracted rig was offset by release of two units.  Total fleet utilization is 50% with 29 of 58 units under contract, while marketed utilization is 72.5% with 29 of 40 units under contract.

Headline News

Noble Drilling has closed its acquisition of FDR Holdings, Ltd (Frontier Drilling). The purchase increases Noble’s fleet size from 62 units to 69, with the addition of three DP drillships, including two Bully-class joint venture-owned units currently under construction, two conventionally moored drillships and one semi. In addition to the drilling units, the sale included a dynamically positioned FPSO vessel. The sale was closed one month after Noble’s announcement it had entered into the agreement with Frontier.
   

Operator News

Apache Corporation announced the completion of the previously announced sale of common stock and depositary shares with net proceeds from the offerings to the company totaling approximately $3.48 billion after underwriting discounts and before expenses. The option to purchase additional shares of common stock exercised by the underwriters increased the size of the common stock offering from 23 million shares to 26.45 million shares. The common stock offering was priced at $88 per share. Net proceeds, before expenses, from the common stock offering were approximately $2.26 billion.
Noble Energy reported the company's U.S. volumes were 120 MBoe/d, up over 7% from the second quarter of 2009. Onshore volumes totaled 102 MBoe/d for the quarter versus 90 MBoe/d in the same quarter last year. Offshore volumes were down 4 MBoe/d, primarily due to third-party processing downtime impacting the Swordfish field in the deepwater Gulf of Mexico during the second quarter of 2010.

Occidental Petroleum Corporation announced that James M. Lienert has been named Executive Vice President and Chief Financial Officer, effective August 15.

Hess Corporation and American Oil & Gas, Inc. jointly announced that Hess has agreed to acquire American Oil & Gas pursuant to a merger agreement approved by the boards of directors of both companies in an all-stock transaction.

Cobalt International estimates that its full year expenditures will be between $150 and $170 million, compared with Cobalt’s previously announced guidance of $430 million. The lower full year expenditures are due to delays to Cobalt’s drilling plans in the Gulf of Mexico caused by the moratorium, and the anticipated delay in commencing Angolan drilling operations from the fourth quarter 2010 to the first quarter of 2011.

BP is taking a charge of $32.2 billion to reflect the impact of the Gulf of Mexico oil spill, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund.

Driller News

Jackup Seahawk 2601 is now on standby in South Marsh Island Block 77 waiting on Hilcorp Energy to secure its permit for a 50-day drill well in the block. The rig has been on the location for Hilcorp since early June. Meanwhile, jackup Seahawk 2007 is now on location in West Cameron Block 110 for the start of a newly-awarded two-well plus option contract with Mariner Energy. Should Mariner not exercise its priced option, it is expected that Breton Energy will have its permits in place for its well in West Cameron Block 171. With that work, the rig is now next available in October. Jackup Seahawk 3000 will arrive in the Keppel FELS yard in Brownsville on August 4 where it will undergo leg and mat inspections as well as a scheduled SPS underwater survey. The rig will then head back to Energy XXI for a well in East Cameron Block 334, after which it will go to High Island Block A-309 for a three-workover, 40-day program with Badger Oil. Finally, it is believed that Seahawk may be close to securing a contract for idle jackup Seahawk 2600. No details are known, other than the work would start around mid-August. Further information will be reported as it becomes available.

Driller Earnings...

Nabors Industries reported a net income of $43.6 million (not including $12.2 million in non-operational items) on revenues of $915.3 million for the second quarter of 2010. Those figures compared to a net income of $90.9 million on revenues of $868 million for the same period in 2009. Pride International reported net income for the three months ended June 30, 2010 of $57.5 million on revenues of $350.3 million, compared to net income for the three months ended June 30, 2009 of $124.1 million on revenues of $439.5 million.

Chevron has received its permits and Nabors Offshore workover jackup Dolphin 106 has begun its four-well, 60-day contract. Work in Main Pass Block 41 will keep the rig busy to late September. The rig had been warm stacked on location since early June waiting on permit approval. Chevron has also wrapped up operations with platform rig Super Sundowner XVI in High Island Block A-582. The rig is now demobilizing to New Iberia where it will be hot stacked.

Rowan jackup Cecil Provine has about two weeks left on its current well in Grand Isle Block 40 with Apache. However, it is understood the operator will continue to extend its contract with Rowan on a well-to-well basis that will ultimately keep the rig working for the rest of 2010. Market reports also indicate that Rowan may be close to signing a follow-up contract for Rowan Gorilla II after it completes its contract with Devon Energy later this month. The rig is expected to leave Sabine Pass late this week for West Cameron Block 561 where it will perform a 15-day P&A that will complete the Devon contract. It is believed the new work would be for two wells plus two options, which would keep the rig working for a minimum of 60 days. Rowan may also have a 21-day workover in place shortly for jackup Bob Palmer, currently idle in High Island Block A-323. The rig has been idle since early June when it finished a contract in West Cameron Block 62 with El Paso E&P. It was scheduled to go to High Island Block A-376 for a 90-day program with Apache, and while the operator has not yet been able to secure the permit, it believes the BOEM could have it approved by the time it completes the potential workover. Rumors continue to circulate that the Palmer, along with jackup Ralph Coffman, will be moved to Saudi Arabia for three-year contracts with Saudi Aramco. Should Rowan secure the work, the rigs would not leave the Gulf until late December. Rowan also reports that newbuild jackup Rowan EXL-II will be delivered from the shipyard at the end of August, after which it will be moved to Corpus Christi for around 30 days before heading to Trinidad where it has a two-year contract with BP starting early November. Speculation also is that Rowan will have a one-well contract signed shortly for newbuild jackup Rowan EXL-III. While few details are known, it is understood the work would last up to one year. The rig is due to be delivered in February 2011, with the work beginning by mid-March.

Jackup ENSCO 82 finished its well for Chevron in Eugene Island Block 276 and has now been moved to Vermilion Block 170 for a 10-day spud can inspection. The rig will then mobilize to Vermilion Block 214 under its contract with Chevron, which runs through the end of 2010.

Northern Offshore, Ltd. announced that Gary W. Casswell has been appointed by the directors to serve as President and Chief Executive Officer of the company.  Casswell most recently served as Vice President, Eastern Hemisphere Operations for Pride International, Inc.   Separately, the company announced that the company's Senior Vice President Marketing, Steven J. Gangelhoff, and Senior Vice President Operations, Fred Brooks, have resigned effective in early September 2010.

Service/Supply News

Subsea 7 has chosen BlueView Technologies to provide an acoustic imaging system for its new line of Autonomous Inspection Vehicles (AIVs). Under this agreement, BlueView will deliver both forward looking navigation and tracking sonar as well as ultra-high resolution MicroBathymetry sonar for three dimensional tracking and mapping of pipelines.

Global Industries, Ltd. has been awarded a project from Pemex for pipeline work in Pemex's Ku-Maloob-Zaap Field in the Bay of Campeche. The project, worth approximately $40 million, is scheduled to begin in August 2010 and be completed by the end of March 2011.  This project will be linked to the recently awarded L59 project, bringing the integrated scope of works, including change orders on L59, to an estimated amount of $175 million for the second half of 2010.

McDermott International, Inc. has completed the spin-off of its power generation systems and government operations segments through the distribution of the shares of The Babcock & Wilcox Company (B&W) to holders of McDermott common stock.

Tidewater announced the election of Morris E. Foster, former Vice President of ExxonMobil Corporation, to its Board of Directors for a term expiring in July 2011.