Hercules sees more rigs in GOM

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Hercules Offshore expects to end the year with more rigs in the Gulf of Mexico, as the top shallow-water driller in the region looks to cash in on higher day rates, a report said.

News wires  26 January 2012 05:42 GMT

Day rates could rise further as oil majors ramp up spending in the Gulf of Mexico after the government eased up restrictions on drilling permits that were imposed following the Macondo oil spill, chief executive John Rynd told Reuters in an interview.

“As we exit 2012, we may be running 19 or 20 rigs versus the current 18 (in the Gulf of Mexico),” said Rynd, who joined Hercules in 2005 after working with peers like Rowan Co and the drilling unit of Noble Corp.

A total of about 40 shallow-water rigs are active in the region and all of them are contracted, he added.

Houston-based Hercules has been commanding day rates of about $55,000 on average. The cost of renting a rig by the day has risen about $20,000 in the last one year.

“The rates are stable… we have a positive outlook for 2012,” Rynd said.

Activity in Gulf of Mexico is picking up after the 2010 oil spill brought drilling there to a standstill and higher oil prices are boosting exploration work in the region.

Oilfield services leader Schlumberger expects rig count in the Gulf of Mexico to top the level seen prior to the BP disaster, later in the year.

Rynd said Hercules is still in talks with Petroleos Mexicanos regarding its jack-up rigs. The Mexican state oil company did not renew contracts for two Hercules rigs following an accident in 2008.

The company, which is valued at about $618 million, caters to Chevron and Apache in the US Gulf and Oil and Natural Gas Corporation Limited (ONGC) in India.

Hercules shares were trading up 2% at $4.57 on Wednesday afternoon on the Nasdaq.

The stock has gained nearly two-thirds of its value in the October-December quarter, outperforming the broader S&P Oil & Gas Drilling Sub-Industry Index, which has grown 21% during the period.

Published: 26 January 2012 05:42 GMT  | Last updated: 26 January 2012 05:45 GMT

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Posted on January 26, 2012, in GoM and tagged , , , , , , , . Bookmark the permalink. Comments Off on Hercules sees more rigs in GOM.

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