Offshore Drilling Companies Report Boost in US Gulf Contracts

Date : 12/16/2010 @ 2:40PM
Source : Dow Jones News
Stock : Ensco Plc Class A Ordinary Shares (ESV)
Quote : 8.35  -0.05 (-0.60%) @ 6:04PM

Offshore Drilling Companies Report Boost in US Gulf Contracts

Hercules Offshore, Inc. (USOTC:HEROQ)
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Offshore drilling companies Hercules Offshore Inc. (HERO) and Ensco PLC ADS (ESV) reported an uptick in contracts and day rates for rigs in the Gulf of Mexico in fleet status reports this week.

Each of the contracts relates to jobs in water depths below 500 feet, and much of the new work has been commissioned by Chevron Corp. (CVX), according to the reports released late Wednesday.

Hercules announced six-month extensions to three contracts with Chevron as well as rate increases that push the average price the San Ramon, Calif., oil giant will pay Hercules for each rig higher by as much as $6,000 per day. Hercules, of Houston, also reported shorter-term contracts for four other Gulf of Mexico rigs with other energy producers.

Ensco said contracts for two of its shallow-water Gulf of Mexico rigs were extended into July by Chevron. Day rates for the Ensco 82 and Ensco 68 are set to increase on Jan. 11 to the mid $60,000s and mid $90,000s from the mid $50,000s and high $80,000s, respectively.

"Probably the most surprising development in both reports is the fact that contractors have been able to modestly push pricing in the gulf of Mexico despite the uncertain permitting environment," analysts with Jefferies & Co. wrote in a research note.

Shares of Hercules recently traded up 5.9%, at $3.03. Ensco's stock rose 1.9% to $51.98.

-By Ryan Dezember, Dow Jones Newswires; 713-547-9208; ryan.dezember@dowjones.com

 
 



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