Gulf of Mexico pushes global rig index upward
Strong oil and natural gas prices and increased Gulf of Mexico drilling activity helped push Houston-based Global Marine Inc.'s Summary of Current Offshore Rig Economics, or SCORE, up 4.3% to 29.8% in June from 28.6% in May.`
Strong oil and natural gas commodity prices and increased Gulf of Mexico drilling activity helped push Houston-based Global Marine Inc.'s Summary of Current Offshore Rig Economics, or SCORE, up 4.3% to 29.8% in June from 28.6% in May.
The SCORE compares the profitability of current mobile offshore drilling rig rates with the profitability of rates at the 1980-81 offshore drilling cycle peak, when speculative new rig construction was common. Global Marine's SCORE then averaged 100%, and new contract day rates equaled the sum of daily cash operating costs plus $700/day per million dollars invested.
The June 2000 global SCORE represents a 28.3% increase over June 1999 and a 26.4% decrease over the same period 5 years ago. The Gulf of Mexico SCORE continued to play a dominant role in the worldwide SCORE's upward trend.
In the gulf, Global Marine's June SCORE rose 2.9% to 35.2% from May's 33.6%. The June 2000 SCORE is 83.3% above June 1999 and 2.5% above the level seen 5 years ago.
While Global Marine's SCORE for the North Sea of 20.5% is up 2.6% from May, the region's SCORE fell 13.4% for the 1-year period and is down 57.7% from the level seen 5 years ago.
In West Africa, the June SCORE rose 1.4% to 36% from May to June. The region's SCORE is up 21.5% over last year but 5.5% off the SCORE seen in June 1995. Meanwhile, Southeast Asia's June SCORE inched up 0.6% to 28% for June. However, the region's SCORE is down 15.5% from June 1999 and 29.2% below June 1995's level.
The score for jack up drilling rigs rose 5.7% from May to June, pushing the 35.2% SCORE for June up 54.7% vs. the SCORE for June 1999. But the SCORE for June 2000 remains 13.7% below the level seen 5 years ago. Semisubmersible rigs recorded a June SCORE of 24.1%, a 3.5% increase from May 2000. That score also rose 2.3% from its year-ago level but remains 40.3% below its level 5 years ago.
Typically, Global Marine said, it expects day rates to rise sharply as utilization rates rise above the 85% level. "This is clearly what we're seeing in the Gulf of Mexico, where jack up utilizations have surpassed this important threshold and reached 90% in June," said Global Marine.
The company added that it remains optimistic about a continued recovery in the offshore drilling industry in the coming months, thanks to strong commodity prices, growing demand for oil and gas, and indications that exploration and production companies are increasing their capital spending.