GlobalSantaFe Corp.’s CEO said Wednesday that the utilization rate for its 59 oil and gas drilling rigs will reach 95% by the end of this year, and utilization rates across the industry will continue to climb to the mid 90% level by the middle of 2005.

CEO Jon Marshall spoke at the Lehman Brothers CEO Energy/Power Conference. He said the lack of ultra-deepwater rigs already is being reflected in higher prices. Utilization rates across the industry reached 85% in August.

Natural gas winter storage volumes are ahead of schedule in the United States, but it hasn’t led to price declines that occurred in recent years, he said. The higher gas prices suggest that longer-term supply concerns are outweighing the short-term scenario. Demand for onshore rigs is high — and 85% of them drill for gas, Marshall added.

“The decline (in oil and gas production) is becoming a real part of this business and people are finally starting to pay attention to it,” he said.

Although the Houston-based contract driller is wary of building new rigs without a contract with a producer, Marshall said acquisitions could build earnings growth, along with continued higher day rates for rigs. “This industry is too fragmented,” Marshall said of the drilling sector. He said the industry needed “fewer owners controlling more iron and exercising much more capital discipline” before adding capacity to the market.

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