| July 6, 2010
Rig Utilization Mobile rig utilization in the Gulf of Mexico fell again this week. Total fleet utilization is now 56.6% with 69 of 122 mobile rigs under contract or committed for work. Marketed utilization, which excludes those cold stacked and other non-marketed rigs, dipped to 82.1% with 69 of the 84 units under contract. Atwood Oceanics submersible Richmond completed its contract for Contango Operators and was moved to Sabine Pass. Within the jackup fleet, total utilization decreased to 46.3% as one previously working jackup was released. Overall, 38 of the 82 total rigs are under contract or committed for work. Marketed utilization dropped to 76% with 38 of 50 units contracted. The Hercules 204 accounted for the decrease after it finished its contract with LLOG Exploration. Floating rig fleet utilization remained at 91.2% with 31 of 34 units under contract, while marketed utilization was also unchanged at 93.9% with 31 of 33 units under contract. Total platform rig fleet remained at 31.4% with 16 of 51 rigs contracted, while marketed utilization stayed at 45.7% with 16 of 35 rigs under contract. Inland barge fleet utilization rose as one idle unit was put back to work. 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 Rowan Companies has entered into a Share Purchase Agreement to acquire Skeie Drilling & Production (SKDP). Rowan will purchase the common stock shares held by the ownership entities of the company, which consists of 1,037,006,792 ordinary shares of SKDP, or 48.8 percent of the total ordinary shares outstanding. Separately, Rowan has acquired 1.5 percent of SKDP’s outstanding ordinary shares. Under terms of the agreement, Rowan will issue 0.00574 shares of its common stock for each ordinary share of SKDP each company, or 5,741.67 Rowan shares per one million SKDP shares. Upon completion of the transaction, Rowan will own 50.3 percent of SKDP’s outstanding ordinary shares and will tender for the remaining shares under the same terms. Skeie Drilling & Production was established in 2006 and the company currently has three Keppel FELS N-Class jackups under construction scheduled for delivery in the September 2010 ($506 MM), December of 2010 ($528 MM) and June 2011 ($582 MM), although SKDP has an option to delay delivery of each rig for up to six months in exchange for paying a higher price. Based on Rowan’s closing stock price on June 30 and assuming the company secures 100 percent of SKDP shares, the total purchase price would be approximately $1.2 billion, or $410 million per rig, substantially below the estimated replacement cost of an N-Class jackup. The rigs are designed for both drilling and production operations and are capable of working in the harsh environments of the northern North Sea. The agreement is subject to satisfactory due diligence and approval by Rowan’s Board of Directors, both of which must occur by July 19 or the deal will be terminated. While one of the rigs was bid into Saudi Arabia recently, it is believed that the rigs will likely end up working in the environment they are being built for in the North Sea. The U.S. Dept. of the Interior has formed a new regulatory agency, the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), to oversee the former Minerals Management Services (MMS) duties. Michael R. Bromwich as been sworn in as the new Director after Elizabeth Birnbaum resigned in May. Bromwich has already launched an investigative/compliance team as a result of the BP oil disaster. Meanwhile, Bob Abbey, Acting Interim Director of the Bureau of Land Management (BLM) will now serve as its full-time director. Operator News BP reported that two containment systems continue to collect oil and gas flowing from the Deepwater Horizon’s failed blow-out preventer (BOP) and transport them to vessels on the surface. The lower marine riser package (LMRP) containment cap, installed on June 3, takes oil and gas to the Discoverer Enterprise where oil is collected and gas flared. The second system, which began operations on June 16, takes oil and gas to the Q4000 vessel on the surface where both oil and gas are flared. Preparations continue for the next step in containment operations. Work on the first floating riser containment system planned to be connected to the Helix Producer was delayed by heightened sea states caused by Hurricane Alex as it passed through the Gulf of Mexico. The floating riser system is designed to allow more rapid disconnection and reconnection of the system, reducing the time that collection may be impacted in the case of, for example, inclement weather. It is currently anticipated that this first floating riser system will be available to begin first operations towards the end of the week. Work on the first relief well, which started May 2, continues. The well reached a depth of 17,725 feet on July 4 and a sixth ‘ranging’ run was completed. The second relief well, which started May 16, has now reached a measured depth of 13,871 feet. Both wells are still estimated to take approximately three months to complete from commencement of drilling. W&T Offshore, Inc. announced the resignation of W. Reid Lea from his position as the company's Executive Vice President and Manager of Corporate Development. Chevron announced a new well in the Carnarvon Basin offshore Western Australia. The Clio-3 well, drilled in 3,186 feet of water to TD 14,137 feet, encountered 260 feet of net gas pay. Driller News Tana Exploration completed operations in High Island 73 with jackup Hercules 253 and released the rig. The unit is now hot stacked in West Cameron 38. Jackup ENSCO 90 is expected to finish operations this week with Stone Energy in Vermilion 267. As of now, the rig has no follow-up work in place. It was believed that Stone might extend the contract for a couple of drill wells, but it is now understood that program has been delayed until later in the year due to permitting issues. W&T Offshore will now complete its well in Main Pass 283 with jackup ENSCO 75, giving the rig about three more weeks on the location. Upon completion, the rig has a 180-day plus options contract with Apache in Eugene Island 330. In Mexico, ENSCO's contract with Pemex for jackup ENSCO 81 was extended for up to 182 days effective from the late June. However, the rig is scheduled to complete its current well at the end of July, so it remains to be seen if the rig will stay on or be released then. Repairs to jackup Seahawk 3000 have been completed and the rig is now on location in Eugene Island 275 for a 21-day workover with Energy XXI. Seahawk has also secured a follow-up 40-day P&A program with Badger Oil in High Island A-309 following the Energy XXI work. The two contracts stretch rig availability out now to early September. Bandon O&G secured its permit for a 45-day well in Vermilion 196 and jackup Seahawk 2004 has started work. The rig had been on standby in West Cameron 38. Arena Offshore has decided to defer its planned 70-day program in the Main Pass area to November with jackup Seahawk 2500. The contract will consist of three workovers, two in Main Pass 120 and one in Main Pass 122. In the meantime, it is understood Seahawk is looking to fill the gap, but for now the rig is stacked in South Timbalier 56. Finally, Seahawk will finish three other contracts shortly. Jackup Seahawk 2007 will wrap up operations with Mariner Energy on July 7, while the Seahawk 2600 finishes with Peregrine O&G on July 9 and the Seahawk 2001 completes its contract with Castex O&G on July 12. Seahawk also has a the second of its two-well contract with Hilcorp Energy scheduled to begin around July 9, but to date the permit is not secured. Diamond Offshore has received another 90-day extension from ANKOR Energy for jackup Ocean Titan. The new term now keeps the jackup working in South Marsh Island 69 to mid-September. Semi Ocean Saratoga has arrived at Signal International’s yard in Pascagoula where it will be stacked during hurricane season, which is a part of its contract term with Taylor Energy. The rig has been working on a P&A project for Taylor in Mississippi Canyon 20. Finally, rumors are circulating that Murphy E&P will move Diamond Offshore semi Ocean Confidence to the Republic of the Congo for a program there, and that Devon Energy will sublet semi Ocean Endeavor to Burullus for work in the Mediterranean. However, Diamond can neither confirm nor deny the rumors. Further details will be reported when they become available. Service/Supply News Baker Hughes, Inc. announced that its subsidiaries have signed an agreement to sell a package of assets including two stimulation vessels (the HR Hughes and Blue Ray) and certain other assets used to perform sand control and stimulation services in the Gulf of Mexico to a subsidiary of Superior Energy Services, Inc. The agreement, which is subject to approval of the Department of Justice, is expected to be completed by the end of July 2010. Technip has been awarded two North Sea contracts by BP. The first award, a three year diving repair & maintenance (R&M) frame agreement contract with two further one year options, covers all diving and R&M activities for BP’s platforms, subsea fields and pipelines within the U.K. North Sea area. The second award is a major engineering and installation contract for the development of the Devenick field, located northeast of Aberdeen. The contract covers project management, engineering, fabrication, installation and commissioning of production pipeline, a methanol line and infield pipelines. Technip has been awarded an engineering, procurement, installation and construction contract by Burullus Gas Company for the West Delta Deep Marine (WDDM) Phase VIII a development project offshore Egypt in the Mediterranean Sea. |