The last time we took a look at the level of rates charged
by deepwater contract drillers,
Transocean (NYSE: RIG) showed that near-term
availability continues to command a premium in this market.
The company
pulled downa handsome $530,000
dayratefrom
Noble Energy (NYSE: NBL) for work in the
Mediterranean Sea, beginning in September 2010. That followed
on the heelsof a $510,000-per-day contract award by
Petrobras (NYSE: PBR) for a multiyear spin on
the
Cajun Express.
These rates are well off
Transocean 's (NYSE: RIG)
record rateawarded by
Eni (NYSE: E) last year, but they're still
princely sums.
This week, Transocean landed a contract for the last of
its ultra-deepwater (i.e., 7,500 feet or more of water depth)
rigs with availability in 2010. The
Deepwater Horizonhas made waves lately, drilling a
well to record depth in the discovery of
BP 's
giant gusherin the deepwater Gulf of Mexico. Clearly
satisfied with the rig's performance, BP has signed a
three-year contract extension at $544 million, or around
$497,000 a day.
That's about a 6% slip from the rate Transocean got with
Noble, but it's important to note that that award only
covered 15 months of activity. BP got a slightly lower rate
by offering some significant terms on this deal. Transocean
shareholders should be quite pleased with this
arrangement.
For anyone long the drillers, be it
Noble (NYSE: NE),
Atwood Oceanics (NYSE: ATW), or
Pride International (NYSE: PDE), the key at
this point is to watch contract awards for the "out" years,
meaning 2011 and beyond. That's the true test of ongoing
deepwater demand. I have a hunch about where rates are
headed, but I'm interested to hear what you think.
This article was originally published as
Checking In on Deepwater Demandon
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