Diamond Offshore Drilling, one of the world's top-five offshore rig contractors, reported a slightly higher quarterly profit, helped by demand for its high-tech ultra-deepwater rigs and a drop in operating costs. Demand is strong for modern, faster rigs because they are cheaper to run and can drill more efficiently for oil and gas companies, which have been cutting spending due to low prices. Diamond Offshore, owned 52 percent by New York-based conglomerate Loews, said on Monday that revenue from its ultra-deepwater business rose 72.8 percent to $315.7 million in the second quarter ended June 30.
Imagine parking your $300 million boat for months out in the open sea, with well-paid mechanics hovering around it and the engine running. The Gulf of Mexico and the Caribbean Sea have become a garage for deepwater drillships -- at a cost of about $70,000 a day each. It’s either that or send your precious rig to a scrapyard. The dilemma underscores how an offshore industry that geared up for an oil boom is grappling with a bust. Rig owners are putting equipment aside at unprecedented numbers as customers including ConocoPhillips pull back from higher-cost deepwater exploration. That’s helped make Transocean Ltd. and Ensco Plc two of the three worst performers in the Standard & Poor’s 500 Index over the past year.
The US onshore rig count has continued a steady decline according to research by the Gaffney, Cline and Associates (GCA) oil and gas monitor. It was launched earlier this month to track onshore and Gulf of Mexico (GOM) activity it the wake of lower oil prices. The Baker Hughes rig count showed a fall of a further 43 over the past week in the US onshore total, with this now having declined by 297 from a high of 1,876 in November last year down to 1,579 this month.
Hercules Offshore said it will be taking five drilling rigs off the market in the Gulf of Mexico. The company also expects to write off $117million in asset value in the second quarter of the year.
The Canadian Association of Oilwell Drilling Contractors (CAODC) has released its 2015 Drilling Activity Forecast, which projects a 10% decrease in activity. The forecast is that Canadian land-based drilling rigs will drill 10,354 wells next year. The uncertainty around pipeline construction was a determining factor in the activity outlook.
US oil drillers idled the most rigs in almost two years as they face oil trading below $60 a barrel and escalating competition from suppliers abroad. Rigs targeting oil dropped by 29 this week to 1,546, the lowest level since June and the biggest decline since December 2012, Houston-based field services company Baker Hughes Inc. (BHI) said. As OPEC resists calls to cut output, US producers including ConocoPhillips (COP) and Oasis Petroleum Inc. (OAS) have curbed spending. Chevron Corp. (CVX) put its annual capital spending plan on hold until next year.
Songa Offshore have announced a loss of $6.4million in its third quarter statement. The company’s profit was $1.1million during the same period which it said had been affected by the lower revenue contribution from the sale of the Songa Venus and Songa Mercur rigs. Last month, the company cut its financial liabilities in relation to its Song Venus bareboat charter agreement.