Jaime Kammerzell • Houston
Deepwater GoM rates up
Drilling contractors reported in August that deepwater day rates are increasing. This follows the announcement that jackup day rates are up 10% over last year. The number of jackups operating in the US Gulf of Mexico continues to fall, however, as companies move jackups to areas where bigger reserves have been found, such as West Africa, Russia, and Southeast Asia.
In Transocean's 2Q 2004 report, the company reported "encouraging indications of growing customer interest and an improving offshore drilling environment." The company sees an improving level of interest supported by recent contract signings involving the company's high-specification deepwater rigs.
GoM semisubmersible utilization (contracted demand divided by total supply) has "skyrocketed" from late-June.
Anadarko Petroleum Corp. has awarded Transocean's ultra-deepwater drillship, the Deepwater Millennium, a six-month contract for drilling activities in the Gulf of Mexico. The contract is expected to start on December 1 and contains options to extend the contract over three, six-month intervals at mutually agreed pricing. Revenues, which could be generated over the initial six-month contract period, total $36.4 million, which puts the dayrate at $200,000/day.
"Semisubmersible day rates are skyrocketing," Chad Wilson, Noble Drilling Services Inc, said.
A Banc of America Research Brief said Diamond Offshore is seeing higher fixtures for GoM semisubmersibles.
Shawn Vigeant, Diamond Offshore, attributed the day rate increase to supply and demand. "After six quarters in a row of losing money, we've seen an increase in deepwater semi drilling to start in September through November," he said.
Diamond's semisubmersible Ocean Victory, rated for 5,500-ft water depth, currently working for $45,000, is contracted for $75,000 and has a letter of intent for $95,000. Second generation semisubmersibles Ocean Saratoga and Ocean Lexington also signed contracts at higher day rates, about $50,000 and $60,000, respectively. The Banc of America brief also says five of Diamond's nine domestic semisubmersibles will likely rollover at higher rates before year-end.
"Rigs that were idle are now booked into next year," Vigeant said. "It is too soon to know how long it will last."
GlobalSantaFe cited similar examples of increased day rates. "An ultra-deepwater semisubmersible day rate is $150,000 now," Richard Hoffman, GlobalSantaFe, said. "In January, it will be $155,000, in April it will be $180,000."
Hoffman believes of the 29 ultra-deepwater rigs working worldwide, demand will exceed supply by the end of the year.
Western GoM Sale 192
Deep gas remained an important focus of Western Gulf of Mexico Sale 192 held in New Orleans on Aug. 18. The offshore oil and natural gas lease sale, held by the US Department of the Interior's Minerals Management Service, attracted $171.4 million in high bids. Fifty-four companies participated in the sale, which offered 3,907 tracts comprising 21.2 million acres offshore Texas and Louisiana. The MMS received 421 bids on 351 tracts, up 15% from last year. Bids totaling $197.4 million were down 24% from last year, and only 54 companies submitted bids for tracts, compared to 63 companies last year.
"The Deep Gas Relief Incentives announced in January seem to be enticing more operators to drill for deep gas in the GoM," MMS Director Johnnie Burton said.
Of the 351 tracts receiving bids, 135 are in water depths less than 200 m. This number is a 22% increase from a year ago, when companies bid on 110 tracts in less than 200 m of water during Western GoM Sale 187.
Deepwater bids increased from 45 in 2003 to 60 this go-round. However, total high bids fell from $30 million last year to $21 million this year, and the average high bid decreased from $661,000 in 2003 to $355,000.
MMS GoM Regional Director Chris Oynes said the sale was "The best Western Gulf sale in six years in terms of the number of bids received and the number of tracts bid on."
The Houston Exploration Co. submitted the highest bid, $6.7 million, for High Island East Addition, South Extension, block A 270. Approximately 44% of the tracts receiving bids are in ultra-deepwater, which fell to 156 from 180 a year ago. The average of total high bids increased to $497,000 from $322,000 in 2003 and total high bids equaled $89 million, up from $66 million. The deepest tract bid on was Keathley Canyon block 1009 in 2,824 m of water.
Interest in deepwater and ultra-deepwater tracts was also high. Of 193 deepwater tracts bid on, 37 are in 400-799 m of water, 101 in 800-1,599 m, and 55 in 1,600 m or greater.
Anadarko divests $1.3 billion in GoM shelf
Anadarko Petroleum Corp. has divested its Gulf of Mexico shelf properties through two transactions totaling $1.3 billion. The company has agreed to sell an overriding royalty interest to Morgan Stanley Capital Group Inc., and thereafter, the shelf properties to Apache Corp.
The package represents 98.6 MMboe of proved reserves as of year-end 2003 and 46,000 boe/d.
Anadarko's GoM shelf properties include 78 fields and 112 platforms. Upon completion of the announced sales, Anadarko will operate only one offshore platform, the Marco Polo facility at deepwater Green Canyon block 608.
"By exiting the shelf, we can focus our Gulf program on the deepwater, which is expected to be the single-largest contributor to Anadarko's targeted 5%-9% annual growth rate through 2009," Jim Hackett, Anadarko president and CEO, says.
