By OGJ editors
HOUSTON, June 13 -- US drilling activity rebounded this week, up 17 rotary rigs with 1,071 units working as the count surged past last week's temporary 5-rig decline, officials at Baker Hughes Inc. reported Friday. Last year at this time, there were 844 rotary rigs working in the US and its waters.
However, analysts at Texas offices of RBC Dain Rauscher Inc., New York, said Thursday, "Revenue growth is not as robust for many service companies as the increase in the US rig count would suggest, due to the relatively flat offshore market, which generally has a much greater revenue intensity than the land market." They noted, "The Gulf of Mexico jack up market appears to be flattening out a bit over the next several months."
RBC Dain Rauscher analysts said some drilling contractors reported a "noticeable" increase in inquiries for the "mid-depth floater market" in the US gulf. "Mexico is expected to tender for another 4 (semisubmersible rigs), which would reduce the available depth semi supply to 5 rigs" in the gulf, they said. "The deepwater market remains sloppy, in line with our expectations. Potential pick up appears to be a 2004 event."
Still, one veteran of the US offshore contract drilling business told OJG Online that he sees little hope for a significant increase in activity through the rest of this year or even in 2004.
Meanwhile, a midyear survey of 247 oil and gas producers by Lehman Bros. Inc., NY, indicated those companies plan to raise their exploration and production budgets by 2% this year. "Given the rise in the US rig count to date (up 23% at the time of the report), we had expected spending to be greater than the survey results indicate," Lehman Bros. analysts reported earlier this week.
"We believe that this is a result of overspending of 2002 budgets (by $1.4 billion, or 5%), and given that the rise in the US rig count has been limited primarily to the land rig count (up 28% at the time), which tends to be driven by the smaller oil and gas companies," they said. "Smaller independents typically respond more quickly to industry trends. We anticipate that certain larger independents and majors may follow suit and may simply just overspend their existing 2003 budgets or raise budgets after midyear."
Rig count
In line with the trend indicated by Lehman Bros. analysts, US land drilling operations increased by 16 rotary rigs with 948 units working this week. There were 14 rigs working inland waters this week, 2 more than the previous week. But offshore drilling was down 1 unit to 105 rigs drilling in the Gulf of Mexico and 109 active in the US as a whole.
Canada's rig count jumped by 47 to 315 rotary rigs drilling this week, up from 178 during the same period a year ago.
Canadian E&P spending is expected to increase by 12.8% this year. "Canadian E&P budgets were modestly underspent (by $136 million, or 1%, in 2002), and 2003 budgets were increased by $478 million, or 4%," said Lehman Bros. analysts.
All of the increase in US activity involved drilling for natural gas, up 18 rigs to 910 this week. The number of US rigs drilling for oil was down 1 to 158. Three rigs were unclassified. Directional drilling increased by 3 units to 272, while horizontal drilling was up 9 rigs to 92.
Texas led the rebound, increasing its rig count by 7 units to 470 active this week. Louisiana and Oklahoma were up 3 rigs each to 155 and 130, respectively. California's rig count increased by 1 to 22, while Wyoming was unchanged with 63 rotary rigs working. New Mexico's rig count dipped by 1 to 70, and Alaska was down 2 to 8 units.
ODS-Petrodata, Houston, reported 2 more mobile offshore rigs under contract in the Gulf of Mexico this week. That boosted fleet utilization in those waters by more than one point to 70.3%, with 128 rigs contracted out of an available fleet of 182.
One more rig is under contract in European waters in European waters this week, increasing utilization to 87% with 87 rigs contracted out of 100 available. Worldwide, there was a net increase of 2 mobile offshore rigs with contracts, for a total of 530 out of a global fleet of 659. That inched up the global utilization rate to 80.4%.