http://www.bloomberg.com/apps/news?pid=20601109&sid=aV._LdPUcaNU&refer=home
The Tightness of SUPPLY in the deep-water oil rig market is why I remain bullish on the future earning streams + prospects of companies like Transocean (RIG) and National Oilwell Varco (NOV). Furthermore, the type of deepwater rigs in shortage take about 3-5 years and Billions of dollars to manufacture. In other words, it will take a while (AT LEAST 3-5 years) until WW deepwater oil rig supply can catch up to WW Demand (client demand from 'exploring countries' like Brazil, India, Russia, China etc.).
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From the article:
*Brazil's state-owned Petrobras (PBR) is hiring rigs that can drill in at least 3,000 meters (9,800 feet) of water, Chief Executive Officer Jose Sergio Gabrielli said in an interview last week...The world has 21 such vessels, according to Rigzone.com, which tracks the offshore drilling industry.
*PBR's "insatiable'' demand is forcing other oil producing companies like Exxon Mobil Corp (XOM) and BP Plc (BP) to pay more as they compete for the remaining (rig) units, said Kjell Erik Eilertsen and Truls Olsen, analysts at Fearnley Fonds AS in Oslo..."The oil majors have their backs against the wall as Petrobras has aggressively locked up significant rig capacity" said Omar Nokta, head of maritime research at Dahlman Rose & Co. in New York.
*U.S. and European oil companies probably will pay $50,000 more per day to lease deepwater rigs during the next three years because Petrobras has already contracted for so much of the worldwide fleet, Nokta said. Such units are designed to cope with high seas and hold equipment needed to bore beneath the seafloor and identify oil and gas deposits as much as 6 miles below the ocean surface...BP spokesman Daren Beaudo: "There's more demand than there are available rigs...we expect that over the next couple of years, the rig count will return to balance.''
*Petrobras is negotiating for as many as 17 more vessels to probe the Tupi discovery and neighboring fields, said Bill Herbert, an analyst at Simmons & Co. International in Houston. The company already controls almost seven times as much capacity as the next biggest user of rigs that can drill in 7,500 feet of water, according to research by Dahlman Rose.
*Petrobras has signed leases this year for six deepwater rigs, more than twice as many as any other producer, according to Dahlman Rose. The contracts have an average duration of five years and four months at rates of $410,000 to $580,000 a day.
*Petrobras plans to start pumping oil in the first quarter of 2009 from Tupi, the biggest find in the Americas since Mexico's 1976 discovery of the Cantarell field in the Gulf of Mexico.
*It will take at least a year of additional drilling for Brazil to get a good picture of how much oil there is in an offshore region that includes Tupi, Carioca and other fields, said Lobao, the government minister.
*Petrobras is in talks with Transocean Inc., the world's biggest offshore driller, to extend leases as much as three years ahead of expiration, Robert Long, chief executive officer for the Houston-based contractor, said last week.
Data Courtesy: Bloomberg.Full Disclosure: I own shares of RIG.
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