ExxonMobil May Strike Deal for $1B Arctic Rig With Transocean [RIG]

Exxon Mobil Corp. is reportedly mulling over a deal with leading offshore rig contractor Transocean to construct a drilling rig capable of operating in extreme Arctic conditions for as much as $1 billion, according to Reuters.

Citing a person familiar with the matter, Reuters reported Friday that ExxonMobil may deploy the rig offshore Greenland, Iceland or Alaska at a dayrate close to record level contracts in the $650,000 range, such as those signed for ultra deepwater rigs by Seadrill and Transocean near the peak of the market in 2008.

In November, Transocean Chief Executive Bob Long stated that the company expected to unveil a new Arctic class newbuild rig order, along with a contract, by the close of the year.

Chief Operating Officer Steven Newman, who will take the helm as Transocean's next chief executive in the first quarter of 2010, also commented during a recent conference call: "We have progressed [the rig's] design fairly far along [and] are in very developed discussions with a customer." Newman was hopeful that the contract would be finalized by the end of 2009, although Transocean had confirmed neither the contract nor the customer as 2009 drew to a close.....Read the entire article.

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Transocean Rents Seen Sinking on Deepwater Rig Glut

Transocean Ltd. and Diamond Offshore Drilling Inc., [RIG] and [DO] the world’s biggest deepwater oil drillers, may face a drop in rig-rental revenue because of a glut of vessels that can operate in oceans two miles (3.2 kilometers) deep. The oversupply will develop in 2011 as rigs that drillers started building when oil prices surged to a record last year are completed, said Jud Bailey, an analyst at investment bank Jefferies & Co. in Houston. Rig rents are likely to drop 10 to 15 percent and stay down until new deepwater developments create enough demand to end the surplus in 2012 or 2013, he said.

“It was a classic case of panic on the part of operators when oil was over $100,” Bailey said. “A part of that panic was just the fact that they couldn’t get a rig. When that psychology reverses, it can be a pretty powerful dynamic.” Of the so called ultra deepwater rigs scheduled for completion between now and the end of 2011, 22 don’t have contracts to drill, according to researcher ODS-Petrodata Inc. in Houston. The most ultra-deepwater rigs to sit without a contract was three in April 2004, said Tom Kellock, head of consulting and research at ODS. Today there is just one......Read the entire article.

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Petrobras Focuses on Costs Ahead of Rig, Platform Tenders

Brazilian state run energy giant Petrobras continues to take a hard line on cost cuts as it prepares to launch tenders for drilling rigs and production platforms. The tenders will likely come to market soon, Chief Financial Officer Almir Barbassa said at a meeting with reporters. "We're in the final phase of the concession process," Barbassa said. The company is hammering out details for financing drill rigs, a complex task, the executive added.....Complete Story

Natural Gas Falls, More Rigs For Baker Hughes, Sinopec In Iraq

"Natural Gas Falls as U.S. Inventories Build in Mild Weather"
Natural gas futures fell for a fifth day in New York as a government report tomorrow may show that weak demand, prompted by mild weather and the recession, is pushing U.S. stockpiles toward a record high. Gas inventories probably increased 101 billion cubic feet last week, based on the median of 15 analyst estimates compiled by Bloomberg. The five year average increase for the week is 84 billion cubic feet. Storage levels rose to 2.557 trillion cubic feet.....Complete Story

"Is Rig Count About to Rebound? Scenarios for The Future"
Last week Baker Hughes reported that their rig count for active rigs in the United States increased by 23 rigs to 899 active rigs. While this count increased from the prior week, compared to a year ago, the rig count is down by over 1,000 rigs marking one of the worst downturns in the industry history. Our favorite chart shows the rig count for 2000-2009 compared to the rig count of 1973-1983. The similarities are stunning, but even more.....Complete Story

"Sinopec Buys Addax, Gains Reserves in Africa, Iraq’s Kurdistan"
China Petrochemical Corp. will gain reserves in Iraq’s Kurdistan and West Africa upon completing its C$8.3 billion ($7.2 billion) bid for Addax Petroleum Corp. The Chinese company, known as Sinopec Group, is the country’s second-biggest oil producer. It agreed to pay C$52.80 a share in cash for Addax, the Geneva-based company said in a statement yesterday. That’s 47 percent more than Addax’s closing price in Toronto on June 5.....Complete Story