Jack up rig market improves in Gulf of Mexico

By OGJ editors

HOUSTON, June 19 -- Continued improvements in the Gulf of Mexico market for jack up rigs inched up the Summary of Current Offshore Rig Economics (SCORE) by 1% worldwide for all classes of rigs in May over April, said officials at GlobalSantaFe Corp., Houston.

"This month's SCORE shows continued improvement in the Gulf of Mexico jack up market, as the cash-flow sensitive independents ramp up their 2002 gulf-based drilling programs following several months of stable U.S. natural gas prices," said C. Stedman Garber Jr., president and CEO of GlobalSantaFe.

"With heightened gulf drilling activity reducing excess jack up capacity, the concern subsides that gulf-based rigs will move internationally and upset the balance of rigs in those markets," he said. "On the other hand, the (semisubmersible rig) market in the North Sea is beginning to show signs of softness, as the major oil companies pull back spending to prioritize their best drilling prospects."

GlobalSantaFe's SCORE compares the profitability of current mobile offshore drilling rig day rates with the 1980-81 peak in offshore drilling, when new contract day rates equaled daily cash operating costs plus $700/day for each $1 million invested in a rig.

The Gulf of Mexico showed the biggest improvement for May, up 7.5% for all classes of rigs to a SCORE of 30.5. West Africa also improved, by 6.2% to 55.8 for all rig classes. However, Southeast Asia was down 4.9% to 52.3 for the month, and the North Sea dropped 2.1% to 51.9 for all rig classes.

Jack up rigs' SCORE worldwide improved by 2.7% to 46.3, while semisubmersibles dipped by 0.9% to 41.6.

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