| January 18, 2010
Rig Utilization The following is a summary of the US Gulf of Mexico jackup fleet utilization and day rates. This fleet has seen better and worse days. Currently, there are 64 rigs (excluding 11 workover jackups) in the fleet, with 31 of those under contract for utilization of a less than impressive 48.4 percent. However, utilization of the marketed fleet stands at 77.5 percent with 31 of 40 units under contract. In general, the marketed rig count is looked at more closely in the industry. Marketed is simply defined as those rigs reported by contractors as being readily available for work. A closer look at this fleet shows that, as expected, the premium segment is faring somewhat better than the rest. Premium jackups are those independent-leg units rated to drill in 250 feet of water or greater. Currently, there are 19 marketed rigs in this fleet; 16 have contracts in place for a utilization rate of 84.2 percent. This compares to utilization for the remainder of the marketed jackup fleet of 71.4 percent, with 15 of the 21 units under contract. Now that we know how many rigs have contracts, the next question is when do they end? Generally speaking, contracts in the US Gulf jackup market have historically been done on a well-to-well or one-well basis, usually thought of as 30-45 days. In down markets, however, contractors generally will look to tie their rigs up for longer periods. As a result, operators reap the benefits of lower day rates and contractors are able to keep most of their rigs working, thereby achieving higher fleet utilization. Currently, 10 of the 31 contracted jackups (32.2%) are due to finish work in the next 30-45 days. This leaves 21 contracted jackups having work that does not end for 60 days or longer. Specifically, 15 of the 21 rigs (71.4%) have initial terms ending in the second quarter between April and June, with the remaining six (28.6%) contracts ending in July or beyond. However, it is expected that several of these 21 contracts will ultimately extend beyond their initial terms. Day rates have been a mixed bag lately. Upward movement in some segments of the premium fleet has occurred due to a dwindling supply and high demand for these rigs. Recent fixtures for 250-IC units are now around $45,000, up from previous highs in the mid $30,000’s. Rates for 350-ft jackups are now reaching as high as $65,000, up from just $50,000 a few months ago. Meanwhile, the 375-400-ft units now get in the $85,000 to $110,000 range, a solid increase from $60,000 to $70,000 in the second half of 2009. As for the remainder of the fleet, rates for the 200-ft and 250-ft mat rigs have realized only slight increases recently. Rates for both are now in the $30,000 to $35,000 range, but it appears that the high $20,000 rates are a thing of the past. Contractors that own these rigs will be looking to move rates over $35,000; however, this is the segment of the fleet with the greatest available supply, so any significant upward movement is likely down the road. Headline News In its monthly Oil Market Report released January 15, the International Energy Agency (IEA) reported that the forecast for global oil demand remains virtually unchanged at 86.3 mb/d in 2010, up 1.7% from 2009. Growth is driven by non-OECD countries, most notably in Asia. Oil demand recovery in the OECD will likely remain sluggish, despite the recent cold weather. Operator News Murphy Oil Corporation recently joined in the drilling of a high potential Middle Miocene prospect called Deep Blue located across five blocks in the Green Canyon area. The Murphy interest of 9.375% resulted from a cross assignment of its interest in Green Canyon Block 679. The well is currently being drilled in Green Canyon 723 in 5,100 feet of water to TD 31,000 feet with results expected by the end of the first quarter. Apache Corporation made the following personnel changes recently. John Bedingfield has been named Vice President -Worldwide Exploration and New Ventures; John Christmann, Vice President - Business Development, was named Vice President of Apache's new Permian Region based in Midland; and Tom Maher was appointed Australia Region Vice President and Managing Director, Apache Energy, Ltd. Total Exploration and Production (E&P) and ESRI, in conjunction with ESRI France, have signed a three-year enterprise licenses agreement that will help Total E&P realize its goal of integrating spatial data with its mission-critical business processes. Driller News Seahawk Drilling has received a contract from Arena Offshore to use jackup Seahawk 2004. The one-well plus two options contract will begin in late February/early March after shipyard work on the rig is completed. Drilling in Eugene Island 99 is scheduled to take 65 days. The options, if exercised, will push the contract to well over 100 days. The Seahawk 2004 recently returned to the Gulf after completing a long-term contract with Pemex. Meanwhile, jackup Seahawk 2505 will likely depart Mexico this week headed back to the U.S. Gulf. The rig has been idle in Cd. del Carmen since September 2009 after completing a long-term contract with Pemex. The rig will mobilize to West Cameron 38 after which Seahawk will inspect the rig and decide whether or not to market the unit. The departure leaves Seahawk with one jackup in Mexico. The Seahawk 3000 is due to finish up work in early February, although rumors indicate it may stay a little longer. Service/Supply News Atlas Copco Compressors, LLC, USA, has purchased the compressor division of Premier Equipment Corp., Inc., based in Baton Rouge, La. |