Friday, November 26, 2010

Flurry of Rig Orders Marks End of Two Year Drought

Since the start of October, drilling companies have ordered at least 17 new rigs, a wave of spending that signals optimism that oil prices will remain high and that producers will continue to demand the latest advances in equipment as they tap increasingly hard to reach offshore reservoirs. Largely built "on spec", that is, without an existing contract from an oil and gas explorer,those orders mark a clear ending to a two year drought in rig purchases as drillers like Transocean, SeaDrill and Atwood Oceanics look to update and bolster their fleets.

The move also indicates how the global enthusiasm for exploiting offshore oil and gas continues, despite the slowdown in U.S. drilling that came as a result of the Deepwater Horizon oil spill.
Of the 17 orders so far this quarter, 13 are for jackup rigs, which stand on legs and typically operate in water depths up to 400 feet. By comparison, only eight jackups were ordered in the two years that ended Sept. 30, according to Tom Curran, senior analyst with Wells Fargo Securities' Oilfield Services & Drilling team.

The quarter's four orders for floating deep-water rigs, which can take three years or more to construct, are the first shipyards have seen since 2008, Curran said. The orders primarily have gone to yards in Southeast Asia......Read the entire article.



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