November 29, 2010

Rig Utilization

Total mobile rig utilization in the Gulf of Mexico is unchanged this week. Current fleet utilization is 49.6% with 59 of 119 mobile rigs under contract or committed for work. Marketed utilization, which excludes cold stacked and other non-marketed rigs, is currently at 80.8%, with 59 of 73 rigs under contract.

Within the jackup fleet, total utilization remains at 38.3% with 31 of 81 rigs under contract or committed for work. Marketed utilization holds steady at 70.5% with 31 of 44 units contracted. One contracted jackup was released and one previously idle unit received a contract, resulting in no net change in the count.

Floating rig total utilization remains the same this week, with 28 of 32 rigs are under contract for utilization of 87.5%. Marketed utilization is also stable, now at 96.6% with 28 of 29 units contracted.

Platform rig fleet utilization is unchanged at 35.3% with 18 of 51 units under contract, while marketed utilization stays at 51.4% with 18 of 35 rigs contracted.

Inland barge utilization rose this week. Current utilization is now at 53.4 with 31 of 58 units under contract. Marketed utilization is 77.5% with 31 of 40 units under contract.

Headline News

BP, plc has entered into an agreement to sell its interests in Pan American Energy (PAE) to Bridas Corporation. PAE is an Argentina-based oil and gas company owned by BP (60 percent) and Bridas Corporation (40 percent). Bridas Corporation will pay BP a total of $7.06 billion in cash for BP’s 60 percent interest in PAE, which is expected to close in 2011. The sale of its interests in PAE is part of BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011, in part related to the Deepwater Horizon incident in the Gulf of Mexico.

Operator News

Noble Energy, Inc. updated its activity on the Leviathan exploration prospect offshore Israel. The well has penetrated the first natural gas interval in the primary objective. Final results from these drilling and logging operations are expected in mid-December. Noble Energy operates the Leviathan prospect in the Rachel license, with a 39.66 percent working interest. Other interest owners are Delek Drilling and Avner Oil Exploration with 22.67 percent each and Ratio Oil Exploration with the remaining 15 percent.

Apache Corporation reported that the Spar-2 appraisal well in Permit WA-4-R offshore Western Australia tested 58 mmcfg/d and 950 barrels of condensate per day. Apache’s Australia subsidiary plans to bring gas from the Spar Field and nearby Halyard Field to Western Australia’s domestic gas market via an existing Apache-operated pipeline 10 miles southeast of Spar-2 and through the Varanus Island processing and transportation hub.

Driller News

Nabors Offshore workover jackup Dolphin 106 completed its four-well contract with Chevron late last week. Nabors has no follow-up work for the rig and has hot stacked it in Fourchon.

Posted inland barge Coastal Rig 22 is now moving onto location in South Marsh Island Block 212 to begin a 30-day workover with Chevron, on assignment from McMoRan E&P. The rig should return to McMoRan in early January 2011.

Jackup Hercules 120 has finished its current well in South Timbalier Block 37 for Chevron. The rig is now idle on location undergoing inspections and is expected back to work in about a week. Hercules’ contract with Chevron runs through 2010 with further contract extensions possible.

Seahawk Drilling has received a one-well P&A contract for previously idle jackup Seahawk 2001. Work in High Island Block A-1 will begin later this week and last for around 30 days. The rig is currently waiting on weather to move to location. The rig had been stacked since early November. Jacking system repairs on jackup Seahawk 3000 are now expected to be completed in mid-December, after which the rig will begin three contracts with Energy XXI, Badger Oil and Arena Energy. The work should keep the rig occupied for the first-half of 2011.

In addition, permit approval has been received and jackup Seahawk 2602 is now expected to mobilize to Main Pass Block 120 later this week, weather permitting, to begin its three-well program with Arena Energy. The rig has two wells in Block 120 and one in Main Pass Block 122 that will keep the rig working into February 2011. Finally, Castex O&G could have its permit approval this week, after which it will take jackup Seahawk 2007 for a onewell, 70-day term in High Island Block 176.

Driller Earnings…

Atwood Oceanics, Inc. earned net income of $64,229,000 or $0.99 per diluted share, on revenues of $160,613,000 for the quarter ended September 30, 2010 compared to net income of $48,284,000 or $0.75 per diluted share, on revenues of $131,044,000 for the quarter ended September 30, 2009. For the twelve months ended September 30, 2010, the Company earned net income of $256,996,000 or $3.95 per diluted share, on revenues of $650,562,000 compared to net income of $250,745,000 or $3.89 per diluted share, on revenues of $586,507,000 for the twelve months ended September 30, 2009.

Service/Supply News

Gulf Marine Fabricators, LP has signed a contract for the fabrication and integration of the topsides on a deepwater Gulf of Mexico project for an undisclosed customer.

Apache Corporation has selected OGN Group, a U.K.-based oil and gas engineering and fabrication contractor, to build a new satellite oil production platform for the UK Forties field. The new platform will be bridge-linked to the existing Forties Alpha installation. 

November 22, 2010

Rig Utilization

Total mobile rig utilization in the Gulf of Mexico inched downward this week. Current fleet utilization fell below 50%, now at 49.6% with 59 of 119 mobile rigs under contract or committed for work. Marketed utilization, which excludes cold stacked and other non-marketed rigs, is currently at 80.8%, with 59 of 73 rigs under contract.

Within the jackup fleet, total utilization fell to 38.3%, with 31 of 81 rigs under contract or committed for work. Marketed utilization also went down, to 70.5%, with 31 of 44 units contracted. Diamond Offshore Drilling, Inc. jackup Ocean Columbia was released, which accounted for the drop.

Floating rig total utilization remained the same this week, with 28 of 32 rigs under contract for utilization of 87.5%. Marketed utilization is stable, now at 96.6%, with 28 of 29 units contracted.

Platform rig utilization remains at 35.3%, with 18 of 51 units under contract, while marketed utilization stays at 51.4%, with 18 of 35 rigs contracted.

Inland barge utilization fell as two Moncla Marine, LLC barges were released. Current utilization is now at 50%, with 29 of 58 units under contract. Marketed utilization is 77.5%, with 29 of 40 units under contract.

Headline News

Energy XXI (Bermuda), Ltd. has executed a purchase agreement to acquire certain shallow-water Gulf of Mexico shelf interests from affiliates of ExxonMobil Corporation for $1.01 billion. The assets are currently producing about a net 20,000 boe/d. Proved reserves are estimated at 30.1 million bbl of oil and 116.1 Bcf of natural gas. The properties include nine fields on the Gulf of Mexico shelf, generally located between Energy XXI’s existing core South Timbalier and Main Pass operations in water depths of 470 feet or less.

Operator News

Callon Petroleum Company reported total proved reserves, based on internal engineering estimates, have increased to 13 MMboe as of September 30, 2010, a 34% increase year-to-date. In addition to its onshore assets in the Haynesville Shale and Permian Basin, Callon has operated onshore and offshore in the Gulf Coast region since 1950. Its proved reserves in the deepwater Gulf of Mexico and GOM Shelf account for 67% and 14%, respectively, of Callon’s total proved reserves.

Driller News

Noble Drilling (U.S.), Inc. reports that Noble Energy, Inc. will release semi Noble Clyde Boudreaux in mid- December after the previously agreed upon standby period that began June 15. The two companies had been attempting to negotiate a new 17-month contract that would have begun in mid-December, but the current permitting issues led the operator to declare its intent to not enter into the new agreement.

Houston-based Vantage Drilling Company, Inc. has taken delivery of newbuild drillship Platinum Explorer from Daewoo Shipbuilding and Marine Engineering Co., Ltd. in South Korea. The rig, which is capable of drilling 40,000-ft wells in water depths up to 10,000 fsw, is now under tow to India, where it will begin a five-year contract with Oil and Natural Gas Corporation, Ltd. at a day rate of $590,000. Vantage also owns four jackups and one other drillship and will manage several other rigs that are currently under construction.

Stone Energy Corporation has received new-well permit approval from the Bureau of Ocean Energy Management for its second well using jackup ENSCO 99 in Ship Shoal Block 93. The rig just moved onto the block last week for the start of the contract, a 20-day workover. It is expected the new well will begin in early December and should keep the rig busy for 30-45 days.

Tarpon Operating & Development, LLC also received permit approval for its 60-day well in South Marsh Island Block 50, and jackup Seahawk 2600 moved onto location November 21. The well is the second of a two-well deal for Tarpon. The rig had been stacked on the previous location in East Cameron Block 240 since completing that well October 22. It is believed that Arena Energy, LP and Castex Energy, Inc. are both close to securing permit approvals that will allow jackups Seahawk 2602 and Seahawk 2007, respectively, to begin work. Finally, Walter Oil & Gas Corporation could have permit approval in place shortly for a sidetrack in Ship Shoal Block 90 for jackup Seahawk 2004. The rig is currently working for Walter in Ship Shoal Block 189 through the end of the month.

Hercules Offshore reports it has signed its 20-30 day extension with W&T Offshore, Inc. for another well with jackup Hercules 202. Operations in Main Pass Block 108 should run for another week or so before the rig moves to the new location in Main Pass Block 98. Jackup Hercules 200 completed work in Grand Isle Block 46 and is now on location in Eugene Island Block 175 for a 30-day extension well with Apache Corporation. Meanwhile, jackup Hercules 205 has about another week of inspection work remaining, after which it will mobilize to Matagorda Island Block 633 for its 28-day well with Tana Exploration Company, LLC. Finally, jackup Hercules 204 will wrap up its current well in South Timbalier Block 21 for Energy XXI late this week or early next week. It is understood Hercules is close to securing follow-up work for the rig, with the details to be reported once the deal is done.

ANKOR Energy, LLC has received new-well permit approval for an oil well to be drilled in Ship Shoal Block 290 with Diamond Offshore jackup Ocean Titan. The rig, which moved onto the new location late last week, had been stacked on ANKOR’s location in Ship Shoal Block 241 after completing work there ANKOR a few weeks ago. The rig is expected to be on location through the end of the year. Meanwhile, Chevron Corporation finished up with jackup Ocean Columbia in South Marsh Island Block 229 and the rig is now hot stacked in West Cameron Block 184.

Service/Supply News

GE Oil & Gas has opened a new $3 million subsea equipment testing facility in Warsaw, Poland, in partnership with the Warsaw Institute of Aviation and Engineering Design Center.

Hughes Network Systems, LLC and Environmental & Safety Systems International, Inc. are equipping the entire Hercules Offshore, Inc. fleet of Class 120 to Class 230 liftboats in the Gulf of Mexico with Hughes satellite-based maritime broadband services.

November 15, 2010

Rig Utilization

Total mobile rig utilization in the Gulf of Mexico increased slightly this week. Current fleet utilization stands at 50.5%, with 60 of 119 mobile rigs under contract or committed for work. Marketed utilization, which excludes cold stacked and other non-marketed rigs, also increased, to 82.2%, with 60 of 73 rigs under contract.

Within the jackup fleet, total utilization remains at 39.5%, with 32 of 81 rigs under contract or committed for work. Marketed utilization also holds steady at 72.7%, with 32 of 44 units contracted.

Floating rig total utilization edged upward this week, with 28 of 32 rigs under contract for utilization of 87.5%. Marketed utilization also increased to 96.6%, with 28 of 29 units contracted. Previously idle Diamond Offshore Drilling, Inc. semi Ocean Victory went back to work, accounting for the increase.

Platform rig utilization remains at 35.3%, with 18 of 51 units under contract, while marketed utilization stays at 51.4%, with 18 of 35 rigs contracted.

Inland barge utilization increased modestly, to 55.2%, with 32 of 58 units under contract. Marketed utilization is 80%, with 32 of 40 units under contract. The change occurred as two previously idle units received contracts while one contracted rig was released.

Headline News

Apache Corp. has completed its merger with Mariner Energy. The merger closed last week following its approval by Mariner’s stockholders and subsequent completion of documentation. Apache issued about 17.5 million shares of its common stock and paid about $800 million in cash to Mariner stockholders. Apache also assumed Mariner’s debt with current fair value of $1.6 billion. As a result of the merger, former Mariner stockholders own roughly 5% of Apache’s outstanding shares of common stock.

The Shallow Water Energy Security Coalition has issued a statement regarding comments from Bureau of Ocean Energy Management (BOEM) Director Michael Bromwich to the President’s Oil Spill Commission regarding resources needed to carry out drilling reforms. The coalition stated that the obstacles that shallow-water drillers face in conducting operations in the gulf are greater than just a question of government resources. Further, the coalition urged that the BOEM make its entire review process more efficient, as permit applications that have been languishing for months must be rescued from limbo. The coalition also stated that offshore companies have long practiced many of the reforms that the Obama Administration has proposed to regulate offshore drilling, yet only 13 new drilling permits have been issued since April, and 14 rigs have left the Gulf of Mexico during the intervening seven months.

Operator News

Cobalt International, Inc. has executed a contract with Diamond Offshore for use of the Ocean Confidence drilling rig. Cobalt plans to use this rig to drill the first two wells on Block 21 offshore Angola in deep water. Cobalt has an option to drill up to two additional wells. The rig has a base operating rate of $360,000 per day. Cobalt expects the rig to be mobilized to Angola in the first quarter of 2011.

Chevron Corporation affirmed its full-year net production guidance for 2010 of 2,750 MMboe/d. This represents a 2% increase from 2009’s actual net production. Separately, the company announced it would acquire Atlas Energy, Inc. for $3.2 billion cash and assumed debt of $1.1 billion. The acquisition will provide Chevron with a natural gas resource position primarily located in southwestern Pennsylvania’s Marcellus shale play.

Driller News

Rowan Companies, Inc. has secured a 25-day coiled tubing job in Main Pass Block 280 for ENI Petroleum Company, Inc. using jackup Rowan Gorilla II. The rig is scheduled to begin the work in the first half of December after the current contract with Northstar Operating Company in Vermilion Block 379 is completed. Apache is then scheduled to take the rig to High Island Block A-376 for 90 days, but the start of that work is dependent on receiving revised permit approvals. Meanwhile, it is understood Rowan will mobilize jackup Rowan Gorilla III to the U.S. Gulf of Mexico from Canada sometime in December. The jackup completed work in the area in October and has since been warm stacked.

Hercules Offshore, Inc. inland barge Hercules 41 completed work for Gulf South Operators, Inc. in the Terrebonne Parish area and is now hot stacked in Houma. McMoRan Exploration Co. has picked up the Hercules 17 barge for an 80-day program in Vermilion Block 4. The rig, which is now next available in February 2011, had been working for Energy Partners in the South Pass area. McMoRan also has Hercules’ other working barge, the Hercules 49 under contract.

Jackup ENSCO 99 wrapped up work in West Delta Block 45 for Nexen Petroleum USA, Inc. late last week. The rig is now on location for Stone Energy Corporation in Ship Shoal Block 93 for a 20-day workover that keeps it busy to early December. It is believed Stone has further work for the rig, which of course is permit-dependent.

Jackup Spartan 303 is expected to finish work in Matagorda Island Block 625-L for Great Bay Operations, LLC around November 19. The rig then goes to a newly awarded 10-day P&A job in High Island Block A-64 for Helis Oil & Gas Company, LLC. That will be followed by a 9–12 day well for Transocean Inc.’s ADTI/Peregrine Oil & Gas, LP in Galveston Block A-133. With all the work, the rig should be next available in the first half of December.

Chevron has extended its contract for jackup Seahawk 2601 for three wells. The rig is now on location in Vermilion Block 245 waiting on weather to get started. The 75-day extension comprises two sidetracks and one workover and now will keep the rig busy through January 2011. Work on jackup Spartan 3000 is now expected to be completed around the end of November, after which it will mobilize to the East Cameron area for the start of three contracts that will keep the rig busy through the first half of 2011. The initial work for Energy Partners, Ltd. is a 10–14 day job, followed by a 40-day contract with Badger Oil Corporation and a five-well, 150-day program with Arena Energy, LP. Finally, regulatory work and inspections have been completed on jackup Seahawk 2001; the rig is now available in South Timbalier Block 56.

Apache has extended its contract for jackup Hercules 200 for another well in the Eugene Island area. The rig is scheduled to move to the new location around the end of the week. Operations are expected to last around 30 days to mid-December. Jackup Hercules 205 has completed its contract with MCX Gulf of Mexico, LLC in Mustang Island Block 726. The rig is now undergoing UWILD (Underwater Inspection in Lieu of Drydocking) inspections until around November 22, after which it will mobilize to Matagorda Island Block 633 for a 28-day well for Tana Exploration Company, LLC.

Service/Supply News

Subsea 7, Inc. has been awarded a new day rate contract with Petroleo Brasileiro, SA for the use of pipelay vessel Lochnagar. The contract, valued in excess of $110 million, is for a period of two years.

November 8, 2010

Rig Utilization

Total mobile rig utilization in the Gulf of Mexico increased slightly last week. Current fleet utilization stands at 49.6% with 59 of 119 mobile rigs under contract or committed for work. Marketed utilization, which excludes cold stacked and other non-marketed rigs, also increased, currently at 80.8%, with 59 of 73 rigs under contract.

Within the jackup fleet, total utilization is now 39.5% with 32 of 81 rigs under contract or committed for work. Marketed utilization is now at 72.7% with 32 of 44 units contracted. One previously idle rig, the Seahawk 2007, received a contract, while Perforadora Central’s Tuxpan departed the area for a contract off Mexico with Pemex.

Floating rig total utilization is again unchanged this week, with 27 of 32 rigs are under contract for utilization of 84.3%. Marketed utilization remains at 93.1% with 27 of 29 units contracted.

Platform rig fleet utilization is 33.3% with 17 of 51 units under contract, while marketed utilization also increased to 48.6% with 17 of 35 rigs contracted. Two idle Nabors Offshore units received contracts for work outside the U.S. Gulf, accounting for the rise.

Inland barge utilization stands at 56.9% with 33 of 58 units under contract. Marketed utilization is 82.5% with 33 of 40 units under contract.

Headline News

W&T Offshore, Inc. has acquired or intends to acquire interests in six offshore producing fields located in the Gulf of Mexico from Shell Offshore, Inc. with an effective date of September 1, 2010. The acquired interests are in the Tahoe, S.E. Tahoe, Marlin, Dorado and Droshky fields located in deep water. The sixth field, which is subject to a letter of intent with Shell, is a producing shelf property along with associated assets. Combined production (net to Shell’s interest) in the six fields is approximately 6,840 bopd and 68.8 mmcfg/d.

Friede & Goldman, Ltd. (F&G) and Alpha Petroleum Services, LLC have entered into a joint marketing agreement to offer full field development solutions to owners of previously abandoned offshore oil and gas resources. The alliance will utilize F&G’s newly designed floating production facility, the Centurion MVP, and Alpha Petroleum’s expertise in field development project management.

Operator News

Energy Partners, Ltd. (EPL) reported its production for the third quarter of 2010 averaged 13,069 boe/d. Oil production averaged 6,219 bopd and natural gas production averaged 41.1 mmcf/d.

Stone Energy announced that a development well at its Pyrenees deepwater discovery in Garden Banks 293 field was completed in late July and a subsea tree has been installed. Development planning and engineering design for this subsea tie-back is underway and initial production is expected by early 2012. Newfield Exploration is the operator. Meanwhile, Stone Energy announced that the Vili well at Mississippi Canyon 109 (Amberjack field) was successfully drilled and completed. The well encountered 156 feet of net oil pay in two zones and is producing approximately 2,500 boe/d from the initial completion.

Driller News

Perforadora Central jackup Tuxpan has departed the US Gulf and has begun its 430-day contract with Pemex in the Cantarell Field in the Bay of Campeche. The rig will be next available in January 2012.

Nabors Offshore has secured two contracts off India with ONGC for two of its Gulf of Mexico platform rigs. First, the Pool 16 has received a 1000-day contract starting in the fourth quarter of 2011, while the Sundowner V will work under a three-year deal starting next April. Both rigs are now in Houston undergoing upgrades and modifications to prepare for the work.

Seahawk Drilling says its Board of Directors has engaged Simmons and Company International to explore possible strategic alternatives for enhancing shareholder value, including, but not limited to, asset sale, a recapitalization or a sale or merger of Seahawk. The company says its liquidity and revenue generation have been adversely affected by the slow-down in the issuing of shallow water drilling permits in the US Gulf as well as continued low natural gas prices. Seahawk has not set any timetable for completion of the evaluation and says there is no guarantee that any transaction will occur. The Board of Directors believe Seahawk’s core strategy is sound and there are opportunities for domestic growth and international expansion.

Diamond Offshore jackup Ocean Titan has completed work for ANKOR Energy in Ship Shoal Block 241. ANKOR now has the rig on standby on location while it attempts to secure permit approval for further work. No timetable is known for if or when ANKOR might get its permits approved.

Seahawk Drilling jackup Seahawk 2004 moved onto location in Ship Shoal Block 189 over the weekend for the start of a 20-day workover with Walter O&G. Operations will keep the rig busy to the end of November. Seahawk has also signed a one-well contract for currently idle jackup Seahawk 2007. Castex O&G will take the rig for a 70- day well in High Island Block 176 once its well permit is approved, which Castex hopes to have within the next two weeks. Should that schedule occur, the rig would not be available until mid-January 2011.

Driller Earnings…

Rowan Companies reported income of $67.2 million on revenues of $437.9 million during the third quarter of 2010. For the same period in 2009, the company generated net income of $78.4 million on revenues of $393.4 million. Pride International reported a net income from continuing operations for the three months ended September 30, 2010 of $42.8 million on revenues of $346.2 million. During the same period in 2009, the company had income from continuing operations of $79.9 million on revenues of $386.1 million. Transocean reported net income of $368 million on revenues of $2.309 billion for the three months ended September 30, 2010. That compares to a net income of $710 million on revenues of $2.823 billion for the same period in 2009. Third quarter results included increased expenses of $27 million associated with the Macondo well incident.

Service/Supply News

GE Oil & Gas’ drilling & production business has been awarded two contracts totaling more than $120 million by Daewoo Shipbuilding & Marine Engineering Co., Ltd of South Korea. Under the first contract, GE will supply a blowout preventer (BOP) stack and controls system, to be installed on a Petroserv-owned drillship for oil and gas production activities offshore Brazil. In addition, GE has been selected to supply two complete drilling packages to be installed on Odebrecht Oil & Gas owned drillships. 

November 1, 2010

Rig Utilization

Total mobile rig utilization in the Gulf of Mexico increased last week. Current fleet utilization stands at 49.2%, with 59 of 120 mobile rigs under contract or committed for work. Marketed utilization, which excludes cold stacked and other non-marketed rigs, also increased, to 79.7%, with 59 of 74 rigs under contract.

Within the jackup fleet, total utilization is now 39%, with 32 of 82 rigs under contract or committed for work. Marketed utilization is now at 71.1%, with 32 of 45 units contracted.

Floating rig total utilization is unchanged this week, with 27 of 32 rigs under contract for utilization of 84.3%. Meanwhile, marketed utilization rose slightly as Diamond Offshore, Inc. cold stacked the Ocean Voyager semi, removing it from the marketed fleet. As a result, marketed utilization is at an even 93.1%, with 27 of 29 units contracted.

Platform rig fleet utilization is unchanged, now at 29.4% with 15 of 51 units under contract, while marketed utilization also increased, to 42.9%, with 15 of 35 rigs contracted.

Inland barge utilization remained at 58.6%, with 34 of 58 units under contract. Marketed utilization, however, increased as one unit was removed from the marketed fleet. As a result, marketed utilization is 85%, with 34 of 40 units under contract.

Headline News

The International Energy Agency (IEA) recently revised upward its estimates of global oil demand for 2010 and 2011 by an average 300,000 b/d to 86.9 million b/d and 88.2 million b/d, respectively, on new data showing stronger-than expected 3Q10 data, notably in the OECD, and updated GDP and price assumptions. The IEA also reported that global oil supply fell by 150,000 b/d to 86.9 million b/d in September on lower non-OPEC output.

Operator News

BP, PLC has reached agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP Ltd. for a total of $1.8 billion. The deal is of BP’s plan to divest up to $30 billion in assets by the end of 2011 to help meets its financial obligations stemming from the Deepwater Horizon oil spill incident. The agreement includes BP’s interests in the Petroperijá, Boquerón, and PetroMonagas joint ventures in Venezuela and BP’s 35 percent operating interest in the Lan Tay and Lan Do gas fields off Vietnam.

Chevron Corporation reported 3Q 2010 worldwide production was 2.74 million boe/d, up 1 percent from 2.70 million boe/d in 3Q 2009. Production increases in Thailand and Brazil were partially offset by normal field declines in the U.S.

ConocoPhillips reported 3Q 2010 worldwide production was 1.72 million boe/d, down from 1.79 million boe/d in 3Q 2009. The decrease was due mainly to normal field decline, primarily in North America and Europe, as well as asset dispositions. Increased production from China, Australia, Lower 48 shale plays, and Canadian steam-assisted gravity drainage projects partially offset the decrease. Late in the third quarter, the company initiated production curtailments of about 180 MMcfed in North America in response to continuing low natural gas prices. ConocoPhillips expects 4Q 2010 production to be about 1.71 million boe/d.

Driller News

Nabors Offshore Corporation workover jackup Dolphin 106 is now on location in Main Pass Block 59 for the third of a four-well contract with Chevron. Operations are expected to last around 15 days, after which the rig will move to the South Timbalier area for the final well. The rig should be next available in the latter part of November.

Spartan Offshore Drillers, LLC jackup Spartan 303 is expected to be on location in Matagorda Island Block 625-L until around mid-November, as it is expected that Great Bay Operations, LLC will complete the current well. It is further expected that Spartan will have a follow-up 20-day contract signed for the rig shortly. Details will be reported when the contract is finalized.

Rowan Companies, Inc. jackup Bob Palmer departed the U.S. Gulf of Mexico late last week, bound for Saudi Arabia and a three-year deal with Saudi Aramco. The rig is scheduled to arrive in a Bahrain shipyard December 16. Upon arrival in December, the rig will undergo upgrades and other shipyard work before starting work in April 2011. Jackup Ralph Coffman, which also has a threeyear program with Saudi Aramco, could leave as early as mid-January 2011, but its departure depends on when it completes its well in South Timbalier Block 144 with McMoRan Exploration Company Currently, the Saudi Aramco work is scheduled to begin in June 2011.

Ensco, PLC announced it has reached agreement with Nexen Petroleum USA, Inc. regarding the drilling contract for newbuild semi ENSCO 8502. Under the agreement, Nexen will pay a standby rate of $214,000 retroactive to August 13, 2010, until the rig begins mobilization to the first drilling location designated by Nexen. The two-year term under the rig’s original contract will begin once the rig begins mobilizing to its initial location, with the original $485,000 contract day rate also going into effect then. It is unclear at this time when Nexen will receive permit approval for its first location.

Driller Earnings…

Hercules Offshore, Inc. incurred a loss from continuing operations of $15.1 million for 3Q 2010. Revenues for the period were $168.5 million. In 3Q 2009, Hercules had a loss from continuing operations of $37.2 million (excluding the effects of non-recurring items) on revenues of $159.3 million.

Service/Supply News

GE has been awarded a $113 million contract to supply gas turbines and compressors for deployment in fields offshore Angola owned by Sonangol, Total SA, ExxonMobil, BP, and Statoil ASA. The CLOV project will bring on stream four fields: Cravo, Lirio, Orquidea, and Violeta.

FMC Technologies has signed a contract with Shell Group companies to supply subsea systems for the Parque das Conchas Phase II project offshore Brazil.