Global Marine: Rig Profitability Drops Slightly in Gulf

Global Marine last week reported the first decline in 23 months in its June Summary of Current Offshore Rig Economics (SCORE) for the Gulf of Mexico. The SCORE report measures the profitability of drilling operations. Global Marine Chairman Bob Rose said softening jackup rates due to declining natural gas prices have "taken a toll on the Gulf SCORE." However, strong oil prices have "continued to fuel improvement in international offshore rig markets."

"Basically we've had 23 months of continuous increases. The last time we posted a negative for the Gulf of Mexico was June of 1999," said Elizabeth T. Wilkinson, spokeswoman for Global Marine. "The Gulf was the one area that really led the way with one positive increase after another...but obviously the drilling on the shelf is dependent on natural gas prices, and you're getting an effect there [from the decline in prices]."

Global Marine reported its worldwide SCORE for June 2001 increased by 0.6% from the previous month despite the reduction in the Gulf. The SCORE compares the profitability of current mobile offshore drilling rig dayrates to the profitability of dayrates at the 1980-1981 peak of the offshore drilling cycle, when speculative new rig construction was common. In the 1980-1981 period, when Global Marine's SCORE averaged 100%, new contract dayrates equaled the sum of daily cash operating costs plus $700 per day per million dollars invested.

In addition to a worldwide SCORE covering key types of competitive offshore drilling rigs in key drilling markets, a separate SCORE is calculated for certain types of rigs and certain regions to indicate the relative condition of rig markets. Separate SCORE calculations are made for the U.S. Gulf of Mexico, the North Sea, West Africa, and Southeast Asia. Rig types include jackup and semisubmersible rigs.

For the complete SCORE go to http://www.glm.com/invest/press_releases/071601sc.pdf.

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