Further consolidation among offshore oil and gas drillers is inevitable because companies will seek to achieve the scale needed to cope with rising equipment and labor costs and meet rising demand for rigs, Pride International Inc. Chief Executive Officer Louis Raspino said.
``I've always believed that consolidation is a good thing because it's a very fragmented industry,'' Raspino said today in a telephone interview. ``Scale is really important, especially in the market for deepwater, where the customers you're dealing with tend to be very large customers.''
Raspino's comments come a month after Houston-based Transocean Inc., the world's largest offshore driller, agreed to buy its biggest competitor, GlobalSantaFe Corp., for $17 billion. Raspino said Pride is open to becoming part of what he expects will be a consolidation trend.
``There are going to be consolidation opportunities as I think that the benefits of scale are beginning to be recognized,'' Raspino said.
Pride's shares rose $1.61, or 4.9 percent, to $34.19 in New York Stock Exchange composite trading. The gain was Pride's biggest since Jan. 19.
Houston-based Pride operates 58 offshore rigs, including two deepwater drillships, 12 semi-submersibles and 28 jack-up units. The company recently sold its land-drilling business in Latin America to capitalize on more lucrative offshore contracts at a time when the most prized rigs are being rented under multiyear contracts at more than $500,000 a day.
Spare Parts
Size is important in recruiting and retaining rig crews and is helpful in controlling materials costs, Raspino said.
``The more scale you have, the more you can afford to have enough spare parts laying around to address what might go wrong with the fleet,'' Raspino said. ``And with high day rates that's extremely important.''
Daily rents for rigs that can drill in water depths of over 7,500 feet range from $450,000 per day for Gulf of Mexico floaters to $555,000 per day for drillships that can withstand conditions in the North Sea, according to publisher ODS- Petrodata.
Raspino said prices of rig hulls and other drilling equipment have all increased significantly. ``The higher day rate is not all going into the drilling contractors' pockets, especially when you get to new builds,'' he said.
New Rigs
Pride has two deepwater drillships and is building two more set for delivery in 2010. The company hasn't yet secured contracts for its new drillships, and Raspino said today there is no timeline on contracting the new equipment.
``We're quite comfortable with our ability to contract those rigs at an attractive valuation,'' Raspino said. ``We're not in a rush to do so, although we're being offered several opportunities to look at right now. It's a competitive world, and we'll have to play in that competitive marketplace.''
The company today said it acquired the remaining 9 percent stake in its joint venture with Angola for $45 million. The agreement with Sonangol, the national oil company of Angola, gives Pride full ownership of two deepwater drillships, a jack- up rig and management agreements for two other rigs.
``I've always believed that consolidation is a good thing because it's a very fragmented industry,'' Raspino said today in a telephone interview. ``Scale is really important, especially in the market for deepwater, where the customers you're dealing with tend to be very large customers.''
Raspino's comments come a month after Houston-based Transocean Inc., the world's largest offshore driller, agreed to buy its biggest competitor, GlobalSantaFe Corp., for $17 billion. Raspino said Pride is open to becoming part of what he expects will be a consolidation trend.
``There are going to be consolidation opportunities as I think that the benefits of scale are beginning to be recognized,'' Raspino said.
Pride's shares rose $1.61, or 4.9 percent, to $34.19 in New York Stock Exchange composite trading. The gain was Pride's biggest since Jan. 19.
Houston-based Pride operates 58 offshore rigs, including two deepwater drillships, 12 semi-submersibles and 28 jack-up units. The company recently sold its land-drilling business in Latin America to capitalize on more lucrative offshore contracts at a time when the most prized rigs are being rented under multiyear contracts at more than $500,000 a day.
Spare Parts
Size is important in recruiting and retaining rig crews and is helpful in controlling materials costs, Raspino said.
``The more scale you have, the more you can afford to have enough spare parts laying around to address what might go wrong with the fleet,'' Raspino said. ``And with high day rates that's extremely important.''
Daily rents for rigs that can drill in water depths of over 7,500 feet range from $450,000 per day for Gulf of Mexico floaters to $555,000 per day for drillships that can withstand conditions in the North Sea, according to publisher ODS- Petrodata.
Raspino said prices of rig hulls and other drilling equipment have all increased significantly. ``The higher day rate is not all going into the drilling contractors' pockets, especially when you get to new builds,'' he said.
New Rigs
Pride has two deepwater drillships and is building two more set for delivery in 2010. The company hasn't yet secured contracts for its new drillships, and Raspino said today there is no timeline on contracting the new equipment.
``We're quite comfortable with our ability to contract those rigs at an attractive valuation,'' Raspino said. ``We're not in a rush to do so, although we're being offered several opportunities to look at right now. It's a competitive world, and we'll have to play in that competitive marketplace.''
The company today said it acquired the remaining 9 percent stake in its joint venture with Angola for $45 million. The agreement with Sonangol, the national oil company of Angola, gives Pride full ownership of two deepwater drillships, a jack- up rig and management agreements for two other rigs.
Via: Bloomberg
by Amy Strahan
by Amy Strahan
