Coming as no surprise due to the recent announcements that exploration and production companies are slashing their drilling prospects because of unfavorable natural gas commodity prices, Houston-based offshore drilling contractor Global Marine reported that its worldwide Summary of Current Offshore Rig Economics (SCORE) for September 2001 decreased by 4.3% from the previous month.
“The decline in the worldwide SCORE clearly reflects deteriorating dayrates and utilization in the Gulf of Mexico, where weakening natural gas prices and front-loaded drilling budgets have depressed recent activity; however, international markets remain rock solid, sustaining significant gains made over the past year,” said Global Marine CEO Bob Rose.
The company said the SCORE decrease was led by the Gulf of Mexico (GOM), which declined by a little more than 12% from August. West Africa and Southeast Asia also fell off by 3.2% and 0.6%, respectively. The only region that scored an increase in September was the North Sea, which experienced a 1.3% increase.
The Global Marine announcement follows reduction reports in recent weeks from EOG Resources and Newfield Exploration. EOG, a large U.S. independent producer, announced late last month that it plans to reduce production by about 75 MMcf/d, with most of the reduction occurring in the Gulf Coast region of Texas and Louisiana (see Daily GPI, Sept. 26). “Natural gas is too hard to find, and we’re not going to give it away,” EOG Resources spokeswoman Maire A. Baldwin said at the time of the company’s announcement.
Just last week, Newfield said that due to the current low-price environment it is curtailing approximately 30 MMcf/d of production, most of which is coming out of the GOM (see Daily GPI, Oct. 10). “We’ve already trimmed back our rig count in some key operating areas over the last couple months,” Newfield spokesman Steve Campbell told NGI last week. “Some of that is in response to falling service costs and rig rates and some is in response to gas prices that have deteriorated. Drilling costs are falling at this point, so we think we can pick up cheaper rigs and service costs a month from now.”
Global Marine said its 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. The company said during the 1980-1981 period, when its SCORE averaged 100%, new contract dayrates equaled the sum of daily cash operating costs, plus approximately $700/d per million dollars invested.
In addition to a worldwide SCORE covering key types of competitive offshore drilling rigs in key drilling markets, Global Marine said a separate SCORE is calculated for certain types of rigs and certain regions to indicate the relative condition of rig markets. Global Marine releases the findings on the third Monday of each month, which includes separate SCORE calculations for the U.S. Gulf of Mexico, the North Sea, West Africa, and Southeast Asia. Rig types in the data include jackup and semisubmersible rigs.
Global Marine has 33 premium mobile drilling units including jackups, semisubmersibles, and dynamically positioned ultra-deepwater drillships. In addition, the company provides drilling management services, including turnkey, management and daywork drilling.
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